{"id":9474,"date":"2019-08-13T00:25:29","date_gmt":"2019-08-12T22:25:29","guid":{"rendered":"https:\/\/amabhungane.org\/?post_type=stories&p=9474"},"modified":"2024-09-20T19:11:13","modified_gmt":"2024-09-20T19:11:13","slug":"how-state-capture-inc-funded-the-anc","status":"publish","type":"post","link":"https:\/\/further.co.za\/amabwp\/how-state-capture-inc-funded-the-anc\/","title":{"rendered":"How State Capture Inc funded the ANC"},"content":{"rendered":"\n

Last month the Independent Electoral Commission (IEC) held public hearings on the Political Party Funding Act, which will force parties to disclose donations and, in the process, reveal how money shapes our politics.<\/em> <\/em><\/p>\n\n\n\n

At the same time, President Cyril Ramaphosa is under fire after a public protector report and a series of leaks identified those who bankrolled his CR17 campaign for the ANC presidency. As struggle veteran Mavuso Msimang put it: \u201cHe who pays the piper expects to call the tune.\u201d<\/em> <\/em><\/p>\n\n\n\n

This story offers one example of the corrosive effect of money in politics and how a politically-connected firm, Regiments Capital, built a financially symbiotic relationship with the ANC \u2013 attempting to convert donations into goodwill, lobbying into favours, and facilitation fees into contracts. <\/em><\/p>\n\n\n\n

But it is really a story about the cancer eating the ANC and how a supposedly loyal funder fueled the toxic practices that are killing the party.<\/em><\/p>\n\n\n\n

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The bar tab that night was nearly R6 000.<\/p>\n\n\n\n

Compared to the value of the contract it was intended to unlock, the bill should have been as insignificant to him as the hotel bar\u2019s complimentary peanuts. But it still stuck in the chairman\u2019s throat.<\/p>\n\n\n\n

Investigative journalism takes time and money. Help us do more. Be an amaB supporter<\/a>.<\/p>\n\n\n\n

\u201cOn the lobbying front \u2026 I think that went exceedingly well, albeit expensive,\u201d Litha Nyhonyha told his colleagues in an email two days later. \u201cThe Ekurhuleni chaps can drink you dry.\u201d<\/p>\n\n\n\n

It was 28 July 2008 and Nyhonyha, the executive chairman of financial services firm Regiments Capital, had spent his Saturday watching Kaizer Chiefs play Manchester United with two senior ANC members from Ekurhuleni.<\/p>\n\n\n\n

Although the Chiefs\u2019 4-0 defeat had been \u201cdisappointing\u201d, he was hopeful that his primary goal of securing political support for a R1.8-billion property deal in Ekurhuleni municipality would be successful.<\/p>\n\n\n\n

Back in March 2008, the Ekurhuleni Development Company (EDC) had appointed Xihangu Realty Developers, a consortium led by Regiments\u2019 fund management division, to build 14 000 low-cost houses on government-owned land. But at the beginning of July, Ekurhuleni\u2019s then-mayor Duma Nkosi unexpectedly resigned, and in the political turmoil that followed, \u201cbureaucratic obstacles\u201d had sprung up that now threatened to derail the lucrative property deal.<\/p>\n\n\n\n

Hoping for a political solution, Regiments had deployed Nyhonyha and his credit card to get the deal back on track.<\/p>\n\n\n\n

There were good reasons to send Nyhonyha. A chartered accountant by training, he was both a self-made businessman and a loyal member of the ANC. In 1992, Nyhonyha co-founded Thebe Investment Corporation, a pioneering black-owned investment company whose founding shareholder, the Batho Batho Trust, has long been regarded as a funding vehicle for the ANC.<\/p>\n\n\n\n

\u201c[O]ur contacts [are] our currency,\u201d Nyhonyha told a fellow Regiments\u2019 director in a 2005 email.<\/p>\n\n\n

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For the 13 years until Regiments closed its doors in 2018, it would perfect the art of turning those contacts into capital.<\/p>\n\n\n\n

Like many new firms, Regiments would focus its attention on securing contracts from municipalities and state-owned entities where it could leverage both its black ownership credentials and political connectivity \u2013 a consequence, perhaps, of how apartheid\u2019s legacy had skewed access to private sector opportunities.<\/p>\n\n\n\n

Leaked emails show that Regiments initially courted the ANC in Johannesburg, where it had also received and would continue to receive lucrative contracts from the city. With time the relationship became symbiotic but also problematic: the same elected officials who were meant to oversee Regiments\u2019 work for the city, also asked Regiments for money for the ANC. And no one was inclined to switch off the tap or check if it was leaking.<\/p>\n\n\n\n

The emails also show that when lobbying and donations did not work, Regiments turned to more underhanded tactics.<\/p>\n\n\n\n

According to Nyhonyha\u2019s email, one of the two people present at the Kaizer Chiefs match in July 2008 was Sochayile Khanyile, the then-secretary of the ANC in Ekurhuleni.<\/p>\n\n\n\n

\u201cThey have both given support for the project and offered to unblock the apparent bureaucratic obstacles we are now experiencing,\u201d Nyhonyha reassured his colleagues that Monday morning.<\/p>\n\n\n\n

Khanyile, who is now chief whip of the ANC in the Gauteng legislature, told amaBhungane he would not comment on \u201ccorrespondences \u2026 written by other people, unless they themselves explain the facts\u201d, but added that during his time in Ekurhuleni he only got involved in \u201cmatters requiring our strategic\/political guidance to the municipality to implement both the ANC manifesto \u2026 and the medium-term vision of the municipality\u201d.<\/p>\n\n\n

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Whatever strategic\/political guidance Khanyile offered back in 2008, if any, evidently did not work. Four months later, with the deal still stuck, Nyhonyha instructed his partners to draw up a \u201cfacilitation fee agreement\u201d with an unnamed facilitator.<\/p>\n\n\n\n

\u201c[T]he facilitators of this contact with the city manager want us to formalize our proposal regarding their involvement and compensation for that. They are confident that they can facilitate a speedy conclusion of this project,\u201d he told his Xihangu partner Swazi Tshabalala in a 12 November 2008 email. In exchange, \u201cwe will pay them R10m, being a once off facilitation fee\u201d.<\/p>\n\n\n\n

Tshabalala was the chief executive of a company called the Industrial Development Group, the other major shareholder in Xihangu consortium. She would later be appointed to the boards of Tiger Brands, South African Airways, Stanlib and, in 2018, MTN.<\/p>\n\n\n\n

What Nyhonyha was talking about back in 2008 appears to be a thinly-disguised kickback agreement.<\/p>\n\n\n\n

If the fixers could persuade Ekurhuleni municipality to transfer land to Xihangu\u2019s property fund, they would receive R10-million, including a R1-million \u201cadvance payment\u201d as soon as the land was transferred, according to a draft version of the contract.<\/p>\n\n\n\n

Detailed questions were sent to Regiments last year. The firm\u2019s attorney confirmed that the directors had received our request and would \u201crespond if they are inclined to engage the media\u201d. They did not respond.<\/p>\n\n\n\n

Tshabalala, who is now the chief financial officer and vice president for finance of the African Development Bank, also ignored detailed questions emailed to her directly at the bank and via a spokesperson at MTN.<\/p>\n\n\n

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Patrick Flusk, the city manager that the facilitators claimed to represent, told amaBhungane this week: \u201c[Nyhonyha] was clearly lying to his partners because there was no way I would have allowed anybody to get land like that.\u201d<\/p>\n\n\n\n

When we suggested that it was more likely the facilitators had promised something to Nyhonyha but failed to deliver, he added: \u201cIt would have been difficult to persuade me to go that route; I think there were shenanigans happening behind me that didn\u2019t come to my attention.\u201d<\/p>\n\n\n\n

Despite the R10-million incentive, the property deal in Ekurhuleni did not go ahead \u2013 instead the municipality\u2019s 2011 financials show that the contract was cancelled and that Xihangu \u201creserve their rights\u201d to sue.<\/p>\n\n\n\n

Even though Regiments had failed in Ekurhuleni, emails show that the firm\u2019s partners would keep looking for ways to leverage their political connections in other places.<\/p>\n\n\n\n

Political parties: Bankrolling democracy<\/strong><\/h5>\n\n\n\n

Around the time that the Ekurhuleni deal was being derailed, an SOS landed in Nyhonyha\u2019s inbox from a different part of Gauteng.<\/p>\n\n\n\n

It was July 2008, and with just 10 days to go before the Greater Johannesburg region of the ANC held its elective conference, there was still no funding for the auditorium in Midrand or the 350 hotel rooms for delegates.<\/p>\n\n\n

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\u201cThe total cost (venue and tshirts and bags and printing) for this conference is in the region of R1 000 000.00,\u201d the ANC beg-letter, attached to an email in Nyhonyha\u2019s inbox, read.<\/p>\n\n\n\n

\u201cWe also want to acknowledge and thank you sincerely for the fact that you have over the years always been receptive and understanding whenever approached to assist with our fundraising initiatives. We thank you very much even for this contribution.\u201d<\/p>\n\n\n\n

Although the letter was signed by the region\u2019s then-treasurer, Vincent Smith, it was forwarded to Nyhonyha by Geoff Makhubo, a business partner of Regiments who would be elected as Smith\u2019s successor a few days later.<\/p>\n\n\n\n

By 7pm, Nyhonyha had instructed Regiments to pay R250 000 towards the conference.<\/p>\n\n\n\n

That Regiments funded the ANC was never a secret.<\/p>\n\n\n\n

\u201cWe believe in this country democracy should be supported financially and, yes indeed, we do donate to the ANC,\u201d Nyhonyha once told amaBhungane an interview.<\/p>\n\n\n\n

Evidence collected from Regiments emails suggests that every time the party needed money, the Regiments chequebook delivered.<\/p>\n\n\n\n

Regiments, from what we can tell, paid it all.<\/p>\n\n\n\n

The majority of Regiments\u2019 donations would not go to Luthuli House, however, but to Regiments\u2019 local branch in Johannesburg where Makhubo was now treasurer. Emails show Makhubo would repeatedly ask Regiments for money for the ANC, often at short notice.<\/p>\n\n\n\n

In August 2010, Makhubo told Regiments he \u201curgently\u201d needed R200 000 to R250 000 to fund \u201cthe realignment of branches with new municipal demarcations ahead of the 2011 local government elections\u201d (nine months away).<\/p>\n\n\n\n

In March 2013, he requested R500 000 to \u201ckickstart our election campaign\u201d (more than a year away) and in July that same year, an unknown amount for \u201celection events\u201d happening that weekend.<\/p>\n\n\n\n

In November 2013, the Johannesburg ANC requested another R300 000 for \u201cfunding of elections\u201d.<\/p>\n\n\n\n

\u201cThey will send a formal request in due course but require the funding before the week end,\u201d Nyhonyha told his colleagues, instructing them to transfer the money immediately.<\/p>\n\n\n\n

But as generous as Regiments was with the party, its real investment was in people who were willing to move the \u201cbureaucratic obstacles\u201d standing in its way.<\/p>\n\n\n\n

<\/a>Politicians: A new kind of trickle-down economics<\/strong><\/h5>\n\n\n\n

It is clear from the emails that Nyhonyha could be ruthless when it came to business.<\/p>\n\n\n\n

When Regiments was trying to close the Xihangu deal in Ekurhuleni, Nyhonyha told a minority shareholder that its stake would be cut from 15% to 5%, because \u201cwe need to accommodate other shareholders whom we think can assist with the closing of this project\u201d.<\/p>\n\n\n\n

\u201cWhilst you added value at the early stages of the project, it has been abundantly demonstrated over the past months that you are no longer able to add any value or can only add limited value going forward,\u201d he told the partner in an email.<\/p>\n\n\n\n

But were all of Nyhonyha\u2019s partners chosen with their political connections in mind?<\/p>\n\n\n\n

Around the same time, Regiments was also putting together a consortium to buy shares in Vox Telecom. Included in a group of shareholders dubbed \u201cstrategic partners\u201d was Makhubo (then regional ANC treasurer) and Parks Tau, Johannesburg\u2019s then- member of the mayoral committee (MMC) for finance.<\/p>\n\n\n\n

Tau, who would later become Johannesburg mayor, withdrew shortly before it was finalised. (Read his response<\/a>.)<\/p>\n\n\n\n

Also in this politically-connected group was ANC fundraiser Miles Nzama, Gauteng health MEC Brian Hlongwa and businessman Sipho Twala. Documents show that each of the \u201cstrategic partners\u201d was allocated R1.1-million in shares, while Nzama doubled his stake when Tau withdrew.<\/p>\n\n\n\n

Nzama told us that the deal was done in his private capacity and that he was not acting as a proxy for the ANC, while Hlongwa, who resigned as chief whip of the ANC in Gauteng last year following a damning Special Investigations Unit report, was deliberately obtuse and said he did not \u201cknow anything about the Telkom deal\u201d.<\/p>\n\n\n\n

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(One of the report\u2019s findings was that a separate division of Regiments paid a R1-million deposit on Hlongwa\u2019s house.)<\/p>\n\n\n\n

Twala, meanwhile, sat on the board of the Ekurhuleni Development Corporation (EDC) and had a hand in approving the Xihangu deal, making his presence in the Vox deal even more problematic. When contacted last week he told us: \u201cI was not aware of the transaction,\u201d and speculated that while his name appears in \u201cdraft documents [it] may not have been included in the final one\u201d.<\/p>\n\n\n\n

He also told us in a response <\/a> that he had \u201cno business dealings with Regiments\u201d and it was therefore \u201cnot necessary\u201d for him to recuse himself when the Xihangu deal came before the EDC board.<\/p>\n\n\n\n

When we pointed out that his name does appear in the signed shareholders agreement and that there was ample evidence that he had business dealings with Regiments, he failed to respond further.<\/p>\n\n\n\n

Ultimately, no one got rich from the Vox deal though. The share price collapsed and the Industrial Development Corporation, which had provided R105-million to fund the deal, agreed to write off a significant loss by accepting the consortium\u2019s devalued shares as settlement. (Read the IDC\u2019s response<\/a>.)<\/p>\n\n\n\n