South Africa: Ramaphosa’s Phala Phala scandal plunges ANC deeper into crisis

Just a week before the ANC’s 55th National Conference, South African president Cyril Ramaphosa is embroiled in a scandal involving the theft of huge sums of undisclosed foreign currency from his Phala Phala game farm in the Limpopo province. This scandal has deepened the factional fighting that has seen the ANC lurch from one crisis to the next for nearly two decades. At bottom though, this is part of a struggle within the ruling class for control of the party.

The Phala Phala scandal blew up in June this year when Arthur Fraser, a former Director-General of the State Security Agency, the country’s chief spy agency, opened a police case against president Ramaphosa. He alleged money laundering, bribery, kidnapping and the concealment of a crime. Fraser claimed that millions of dollars in cash had been stolen from Ramaphosa’s Phala Phala game farm in February 2020, but that Ramaphosa had not reported this to the police because the money itself may have been criminally obtained by him.

Fraser said he believes the money was not the proceeds of the sale of buffaloes, as Ramaphosa contends. Rather, he says the cash was illegally brought into the country after the president’s advisor, Bejani Chauke, “collected the money for both him and the President on certain trips he undertook to Middle Eastern and African countries Saudi Arabia, Egypt, Morocco, and Equatorial Guinea.”

Fraser said that the president did not report the theft of this large amount of cash, which is a crime under the Prevention and Combating of Corrupt Activities Act. Furthermore, he alleged that the existence of such a large amount of foreign currency was not declared to the Reserve Bank, breaking foreign exchange regulations. Fraser’s case also alleges that the thieves supposedly involved in the theft were kidnapped and interrogated by the Presidential Protection Unit in Cape Town, and bribed not to tell anyone about the incident. The head of the Presidential Protection Unit even allegedly flew by helicopter across the border to Namibia to retrieve the stolen money from a suspect who had fled there.

Investigations and political power plays

Multiple investigations into this matter were launched by different agencies, including the Reserve Bank, the Revenue Service, the Public Protector, and the Directorate for Priority Crime Investigation. The Independent Police Investigative Directorate also launched an investigation into the conduct of the Presidential Protective Unit.

Mbeki Zuma Image GovernmentZAState agencies themselves have a history of getting involved in ANC factional fighting, an example being Thabo Mbeki’s rivalry with Jacob Zuma / Image: GovernmentZA

However, it is important to understand that state agencies themselves have a history of getting deeply involved in internal ANC factional fighting, as different wings of the ruling class jostle for control of the party. During Thabo Mbeki’s terms in office, the National Prosecution Authority was used blatantly to settle scores with Jacob Zuma, who was his main rival. This was repeated when Zuma himself was president. When Arther Fraser raised the complaint against Ramaphosa, he was in possession of documents, video and surveillance footage, which bore all the hallmarks of the State Security Agency. Fraser, a shadowy figure in the intelligence world, is himself a close associate of former president Zuma and part of the rival wing to Ramaphosa.

Meanwhile, in June, parliament accepted a motion from one of the smaller opposition parties, the African Transformation Movement, to set up a panel led by the former chief justice Sandile Ngcobo. Its remit was to conduct a preliminary enquiry into circumstances surrounding the theft of the undisclosed amount of foreign currency and to investigate whether there were grounds for impeachment proceedings against the president. This report, which was made public last week, has now thrown the cat amongst the pigeons.

The panel found that there was prima facie evidence that Ramaphosa violated his oath of office and the constitution. This would be grounds for impeachment. In his submission to the panel, Ramaphosa said that the amount that was stolen was US$580,000 and that this money was for the sale of 20 buffaloes to a Sudanese man, who arrived on the farm unannounced on Christmas Day 2019 with this large sum of cash. However, the panel was clearly unimpressed by this explanation, because, having bought the 20 buffaloes, the Sudanese man never collected them, nor were they ever transferred off the farm!

The report also found that there was no evidence as to how this money ever came into the country. Meanwhile, other than the name of this Sudanese man, no other personal information or particulars were obtained from him. Furthermore, the money was never taken to a safe or a bank but was stored in a sofa for over a month before the burglary took place. Lastly, it found that the theft of the money was never reported to the police, which is itself a crime.

Ultimately, the panel found that there was a “deliberate intention” not to openly investigate the burglary and theft of funds; that there were two violations of sections of the Prevention and Combating of Corrupt Activities Act “to keep the investigation a secret”; that Namibian police being asked to “handle the matter with discretion” in apprehending the mastermind in that country confirmed the request for secrecy; that Ramaphosa abused his position as head of state by asking the Namibian president to “apprehend a suspect”; and that there was more foreign currency “concealed in the sofa than the amount reflected in the acknowledgement of receipt”.

These revelations should not come as a surprise at all. Corruption scandals are now endemic in the ANC and the state itself, reflecting the utter rottenness of South African capitalism. But why have the intelligence agencies chosen this movement to lodge a case against Ramaphosa? What interests are at play?

Legalised corruption

Nearly five years after Cyril Ramaphosa replaced Jacob Zuma as president of South Africa, all the euphoria of the big capitalists has evaporated. With the departure of Zuma and his replacement with Ramaphosa, they had been ecstatic. Ramaphosa has had close relations with the big bourgeoisie for more than 30 years, going back to when he was General Secretary of the National Union of Mineworkers in the late 1980s. After mass revolutionary movements overthrew the apartheid regime, Ramaphosa was appointed as chief negotiator for the ANC during the CODESA negotiations and the ‘transition’ from white minority rule. He was a key figure in the negotiated settlement, which kept all economic power in the hands of the big capitalists.

For his services, he was handsomely rewarded with lucrative deals in the name of ‘Black Economic Empowerment’ (BEE), which made him one of the wealthiest men in the country. Part of the intention behind the BEE, which originated from the mining bosses, was to buy off the leaders of the ANC and to hold back the masses from challenging capitalism’s foundations. It is itself a legalised form of corruption, and through measures such as these, an entire layer of the ANC and the former liberation movement has been systematically bought off.

Ramaphosa’s ‘new dawn’, in which he promised to ‘clean up’ the government – i.e, taking state power away from the emerging black bourgeoisie around Zuma and putting it back under the direct control of big business – was greeted with great enthusiasm by the ruling class. The open and rampant looting of state resources by the junior wing of the ruling class under Zuma was destabilising the whole situation.

But as these Phala Phala revelations clearly reveal, corruption is part and parcel of the whole ruling class, not just its junior wing. Fear of losing control of the situation forced the big bourgeois to come out against Zuma. What the ruling class needed was a strong government to push through a programme of counter-reforms and put the whole burden of the crisis of the economy on the shoulders of workers. But these expectations have fallen flat on their face. Instead, the situation has worsened under Ramaphosa, hence the moves to push him out.

Corruption is part of capitalism

Corruption is inherent in a system based on private ownership of the means of production and mutual competition between capitalists for markets. But in South Africa, there is a peculiar variety of corruption, which has its origin after the 1994 negotiated settlement. The revolutionary movements of the 1980s and 1990s did not lead to the overthrow of capitalism. Under the so-called ‘National Democratic Revolution’, which meant postponing the fight for socialism to a distant future, the liberation movement led by the ANC set itself the task of creating a layer of black capitalists.

Through mechanisms like the BEE, the government set itself the task of creating a black bourgeoisie (nowadays called creating ‘Black Industrialists’). The problem was that this weak black bourgeoisie had to compete in an economy whose most important and profitable industries were already concentrated in the hands of the big, well-established capitalists. The only avenue open to it was to use its close proximity to high political office and the state as a primary source of plunder through the tender system.

This tender system has now grown into a monstrous source of corruption. It has built a whole parasitic layer of crude ‘businessmen’ with direct ties to government officials, state functionaries and politicians. In the South African lexicon, this parasitic layer are called ‘tenderpreneurs’ or the ‘predatory elite’. Their only function is to syphon wealth from the state. For this ‘predatory elite’, access to state resources is paramount. It is akin to the lifeblood of the host, which feeds the parasite. Therefore it must do everything to gain access to political office.

Parallel with this, another process unfolded involving the even more corrupt traditional big bourgeoisie. The formal overthrow of Apartheid brought it face to face with the very real possibility of being overthrown by the militant South African working class. Having to concede democratic rights to the black majority or face being expropriated, the ‘old guard’ of the ruling class faced the dilemma of how best to rule society.

The massive growth of the proletariat meant that the balance of class forces favoured the working class. As such, the ruling class was too weak and small to govern directly. Thus, they have been forced to rule for the last two decades through the leaders of the ANC. The ruling bourgeoisie used all legal and illegal mechanisms of corruption, including bribery, BEE deals, and the creation of a revolving door between business and government, in order to chain the ANC leaders to itself.

Widening contradictions

The ANC is holding its 55th National Conference from 16 to 20 December in the midst of an open split between two bourgeois factions. The fierce class struggle of the last decade has transformed the political situation fundamentally. The ANC is now a very different organisation to what it was when it first came to lead the country 28 years ago.

NUMSA members Image National Union of Metalworkers of South AfricaThe advanced layers of the workers and youth, organised in the likes of NUMSA, are now outside of the ANC / Image: National Union of Metalworkers of South Africa

The advanced layers of the workers and youth, organised in the likes of NUMSA (National Union of Metalworkers of South Africa), and the leadership of the former leaders of ANC Youth League, are now outside of the ANC. In 2007, the ANC had a parliamentary majority of nearly 70 percent. Now it runs the risk of losing its majority altogether in the 2024 elections. The bulk of its support now comes from the rural provinces, while the urban centres are seeing record low electoral turnouts.

The party has lost control of some of the biggest metropolitan areas in the country in the local government elections. The clearing out of the advanced layers of the working class and the youth opened up the space for pro-capitalist elements to increase their influence in the party. As a result, leadership contests are always between representatives of different capitalist factions.

Since at least the 1950s the African National Congress has held a near monopoly of support from the black working masses. Now, the former liberation movement is facing a deep crisis. Its moral authority has collapsed after decades of corruption scandals and attacks on the working class. It has thus become mired in its deepest ever crisis.

While the ANC leadership has joined the ranks of the ruling class, being bought off and living lavish and luxurious lives, the conditions of the working masses, for whom the party was their traditional political vehicle, have either stagnated or worsened. The crisis in the party reveals that the interests of these two forces cannot be reconciled. These class contradictions are tearing the party apart. The building of a genuine socialist alternative is the most urgent task facing the working class and the revolutionary youth of South Africa today.

What next?

The move to oust Ramaphosa was clearly timed to coincide with the party’s 55th National Conference which will take place from 16 to 20 December.

Strike Image SAFTU TwitterThe root cause of this political crisis is the capitalist system, which can only be fought by uniting the working class in a struggle against all wings of the ruling class / Image: SAFTU Twitter

Although Ramaphosa was elected party president at the last conference five years ago, his faction did not achieve an outright victory. That conference was split down the middle with the junior wing of the party winning powerful roles in the party and eventually in the state.

The outcome of the conference was determined by a deal, which was reached between the rival factions. This entailed that Ramaphosa’s rivals in the party would have access to powerful positions in the state.

Ramaphosa does not have complete control of the party nor does he have control over the state. This explains the precarious position he now finds himself in.

After the last conference five years ago, we predicted the following:

“The compromise has only succeeded in creating paralysis and has sown the seeds for further turmoil. With the top six and the NEC split down the middle, the party will find it nearly impossible to implement its programme. In addition to this, the compromise has led to the inclusion of the most reactionary elements of the party into its leading bodies. This is a huge victory for some of the party’s most powerful and reactionary barons of the rural provinces. This shows where the support base of the party now lies.”

In the end, this is exactly what has happened.

When the panel’s report was released, it was clear that Ramaphosa was considering tendering his resignation as president. Later, he cancelled a scheduled television address and instead decided to challenge the report in the Constitutional Court after the intervention by his allies in the party. Parliament is now due to debate the panel’s findings on 13 December.

The ANC has now instructed its MPs not to discuss the findings in parliament, on the grounds that it is now sub judice. However, the real reason is that the party is concerned that some may break ranks and vote with the opposition to establish impeachment proceedings. But whether or not parliament impeaches the president – a process which could take months – this matter will not go away anytime soon. There are still investigations into this matter ongoing in eight different agencies. This means that Ramaphosa and the party will be in the grip of this scandal for some time to come.

This means that the paralysis and turmoil in the party will continue and deepen. This is not good news for the ruling class. All of this comes at a time of increasing strike action. After a period of relative calm, the South African working class is beginning to move again.

Just a few weeks ago, workers in the public sector embarked on a strike for higher wages. This has raised the possibility of an all-out strike in the public sector. This follows a 30-fold increase in work days lost due to strike action in a six month period. The paralysis and splits in the ruling class could open a period of intense class struggle. The period ahead will be characterised by big developments. The class struggle will intensify exponentially and South African capitalism will be shaken further. The root cause of the political crisis is the capitalist system, which can only be fought by uniting the working class in a struggle against all wings of the ruling class.