[South Africa] Massive debt and unpaid salaries provoke hard questions for the ANC

The true financial position of the ANC is not known since its books are not open to the public or even audited but South Africa’s governing party is facing troubles on multiple fronts, Daily Maverick reports. 

The ANC is reportedly facing a staggering debt of more than R200-million; it owes more than R100-million to the South African Revenue Service (Sars) and is heading into the third month of not paying salaries to its workers.

The latter problem came to a head when disgruntled ANC workers planned to - but eventually did not - lay charges of fraud, corruption and theft against the party’s leadership. The allegations against the ANC’s top five (excluding suspended Secretary-General Ace Magashule) about the party’s financial mess are damaging and are laid bare in an unsigned affidavit drafted by workers.

The workers have accused the ANC’s top five of deducting their monthly salaries for Unemployment Insurance Fund (UIF) benefits and Sars pay-as-you-earn (PAYE) tax for the past three years (from January 2018 to August 2021), but failing to hand over the deducted funds to the two institutions. The ANC has allegedly done the same when deductions are made from workers’ salaries for provident fund and medical aid benefits.

“The practices [of not paying taxes, medical aid, UIF and provident fund benefits] … are widespread and have taken place on a massive and nationwide scale over a substantially long period, amounting to hundreds of millions of rands, if not more,” the affidavit says. It would have formed the basis for criminal charges to be laid against the party’s top five. The workers said ANC senior officials have admitted to the wrongdoing of deducting salaries and pleaded with them not to refer the matter to the police.

The ANC and its treasurer-general, Paul Mashatile, were not available to comment to Daily Maverick about the allegations made by its workers, who have also gone into detail about the hardships they face.

The affidavit continues, “The [number of] victims have run into hundreds or thousands of people over the years. Some of the victims have since passed on and thereby created further victims in the form of their family members and/or dependants who have had to incur unnecessary and unanticipated hospitalisation, funeral and other costs when they shockingly discovered at the time of their bereavement that their departed loved ones were not entitled to the benefits, which the accused persons [the ANC top five] had falsely misrepresented to be due to them.”

Deducting from workers’ salaries and failing to hand the funds over to relevant authorities is illegal and such behaviour carries sanctions, including a criminal sentence or an organisation being slapped with a large bill for arrears.

In the private sector, business owners have been prosecuted for not paying over PAYE, UIF and provident fund deductions. Beyond the ANC, state-owned entities including SAA, SA Express and Denel have, at some point, failed to pay tax, UIF and provident fund benefits, but faced no legal consequences. Political analyst Moeletsi Mbeki said the ANC becoming a tax evader is a “visible sign of its failure to govern”. 

“In a way, it says a lot about the incompetence of the ANC. Not paying tax tells us that the ANC is above the law. It doesn’t have to follow the laws of SA but requires the public to do so.”

The ANC has blamed several factors for its current cash crisis; COVID-19, a struggling economy and donors who fear exposure owing to the Political Party Funding Act, which requires every donation above R100,000 to be disclosed and caps the annual contribution of donors at R15-million. The ANC’s reputation has also taken a further hit from revelations about corruption around COVID-19 personal protective equipment, making donors nervous to be associated with the party.

The Mail & Guardian recently reported that Mashatile and ANC Deputy President David Mabuza received at least $2 million from donors but the money did not materialise in the Luthuli House bank account. ANC President Cyril Ramaphosa is reportedly angered by this and has refused to help the party with its current funding crisis.

Source: Daily Maverick

(Quotes via original reporting)

The true financial position of the ANC is not known since its books are not open to the public or even audited but South Africa’s governing party is facing troubles on multiple fronts, Daily Maverick reports. 

The ANC is reportedly facing a staggering debt of more than R200-million; it owes more than R100-million to the South African Revenue Service (Sars) and is heading into the third month of not paying salaries to its workers.

The latter problem came to a head when disgruntled ANC workers planned to - but eventually did not - lay charges of fraud, corruption and theft against the party’s leadership. The allegations against the ANC’s top five (excluding suspended Secretary-General Ace Magashule) about the party’s financial mess are damaging and are laid bare in an unsigned affidavit drafted by workers.

The workers have accused the ANC’s top five of deducting their monthly salaries for Unemployment Insurance Fund (UIF) benefits and Sars pay-as-you-earn (PAYE) tax for the past three years (from January 2018 to August 2021), but failing to hand over the deducted funds to the two institutions. The ANC has allegedly done the same when deductions are made from workers’ salaries for provident fund and medical aid benefits.

“The practices [of not paying taxes, medical aid, UIF and provident fund benefits] … are widespread and have taken place on a massive and nationwide scale over a substantially long period, amounting to hundreds of millions of rands, if not more,” the affidavit says. It would have formed the basis for criminal charges to be laid against the party’s top five. The workers said ANC senior officials have admitted to the wrongdoing of deducting salaries and pleaded with them not to refer the matter to the police.

The ANC and its treasurer-general, Paul Mashatile, were not available to comment to Daily Maverick about the allegations made by its workers, who have also gone into detail about the hardships they face.

The affidavit continues, “The [number of] victims have run into hundreds or thousands of people over the years. Some of the victims have since passed on and thereby created further victims in the form of their family members and/or dependants who have had to incur unnecessary and unanticipated hospitalisation, funeral and other costs when they shockingly discovered at the time of their bereavement that their departed loved ones were not entitled to the benefits, which the accused persons [the ANC top five] had falsely misrepresented to be due to them.”

Deducting from workers’ salaries and failing to hand the funds over to relevant authorities is illegal and such behaviour carries sanctions, including a criminal sentence or an organisation being slapped with a large bill for arrears.

In the private sector, business owners have been prosecuted for not paying over PAYE, UIF and provident fund deductions. Beyond the ANC, state-owned entities including SAA, SA Express and Denel have, at some point, failed to pay tax, UIF and provident fund benefits, but faced no legal consequences. Political analyst Moeletsi Mbeki said the ANC becoming a tax evader is a “visible sign of its failure to govern”. 

“In a way, it says a lot about the incompetence of the ANC. Not paying tax tells us that the ANC is above the law. It doesn’t have to follow the laws of SA but requires the public to do so.”

The ANC has blamed several factors for its current cash crisis; COVID-19, a struggling economy and donors who fear exposure owing to the Political Party Funding Act, which requires every donation above R100,000 to be disclosed and caps the annual contribution of donors at R15-million. The ANC’s reputation has also taken a further hit from revelations about corruption around COVID-19 personal protective equipment, making donors nervous to be associated with the party.

The Mail & Guardian recently reported that Mashatile and ANC Deputy President David Mabuza received at least $2 million from donors but the money did not materialise in the Luthuli House bank account. ANC President Cyril Ramaphosa is reportedly angered by this and has refused to help the party with its current funding crisis.

Source: Daily Maverick

(Quotes via original reporting)