Corruption House

US Vice-President Dick Cheney, before entering office, resigned from oil services company Halliburton and ring-fenced any remaining shareholding interests he has in the firm to ensure that he could in no way personally benefit from (or be financially hit by) the company’s performance.

The company has since won services contracts worth at least $1,7-billion from the US Department of Defence. Most of them involve the reconstruction of post-invasion Iraq. Calls for impeaching Cheney or Bush or both haven’t got far, mostly because it couldn’t be shown that anybody in the Bush administration stood to gain by the contracts in any way.

But this isn’t the end of the story. It has now emerged that members of the Republican party, including its treasurer, play an active role in managing a company that owns a 25% stake in Halliburton. Worse, senior Republican Party officials have admitted that the sole purpose of this vehicle is to fund the GOP itself. So, the Grand Old Party has grandly profited from the reconstruction contracts awarded after the invasion of Iraq.

This, surely, will put the final nail in the coffin of the Bush administration? Surely, in any civilised democracy, such a government must fall?

Except … none of this is true. At least, this picture isn’t true unless you change a few names.

Meet Mendi “Money Man” Msimang (photo courtesy M&G) Substitute ANC for GOP. Change Halliburton to Hitachi Africa. Let state-owned utility Eskom play the role of the Department of Defence. Replace reconstructing Iraq with upgrading South Africa’s neglected and decrepit power-generation infrastructure. For the Republican party treasurer, insert the name of ANC treasurer Mendi Msimang, and for the senior Republican party officials, substitute the name of Kgalema Motlanthe, the ANC’s secretary general.

The value of $1,7-billion, however, is just about right. That’s roughly equivalent to the 60% share of the R20-billion contract that Hitachi Africa will handle to build six utility steam generators for the Medupi power station. Medupi, in the Limpopo province, is the first new base-load station to be built in two decades. The contract in question is the largest slice of the R80-billion project and the largest contract Eskom has ever awarded. By comparison, the largest arms-deal component, for the Gripen jet fighters and Hawk trainers, was worth less: a trifling R16-billion and change.

And to match the final detail in the picture sketched earlier, Hitachi Africa has a 25% shareholder in the form of Chancellor House, which has been described by none other than Motlanthe as funding vehicle for the ANC. This is according to the Mail & Guardian‘s exposé on the deal, written by veteran corruption-busters Stefaans Brümmer and Sam Sole. The paper also wrote an editorial explaining why the use of public money to fund the private political ambitions of the ruling party is a problem.

This, surely, will put the final nail in the coffin of the Mbeki administration? Surely, in any civilised democracy, such a government must fall?

The growth of state corporatism and the corrupt cronyism it breeds is a very troubling development in South Africa. I’ve argued before why the notion that it’s OK for politicians to own interests in media companies needs revisiting. Perhaps it goes too far to argue that they shouldn’t have any private interests at all, but if they are permitted to own and operate private businesses, surely they should not benefit from juicy government contracts paid for by taxpayers? Even when such deals are not intrinsically corrupt, the scope for embezzlement and political gain bought at the public’s expense should be cause for alarm.

I’m surprised this case has received so little media coverage in the 10 days since the M&G first broke the story. But the silence of the usually strident media may be a blessing in disguise. The ANC could take the moral high ground and hand out leaflets to its members at its national congress explaining the difference between outright corruption and mere crony capitalism. It could even stage an informative public debate: Jacob Zuma and Thabo Mbeki could each take a side, and explain why their version is the more honest and defensible way of spending taxpayers’ hard-earned money.

This was first published on my own blog.