OCTOBER 1996 · VOLUME 17 · NUMBER 10

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C O R R U P T I N G    D E M O C R A C Y

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JOHANNESBURG, South Africa -- South Africa's two most popular politicians -- President Nelson Mandela and former Deputy Minister of Environment and Tourism Bantu Holomisa -- have recently found themselves dueling in the country's most vicious interpersonal political fight since apartheid formally ended in 1994.

Holomisa claimed in May of this year that the leadership of the ruling African National Congress (ANC) has been corrupted by South African casino magnate Sol Kerzner. Mandela later shocked supporters by confirming that Kerzner had made huge, secret donations to the ANC. The complicated affair has fed chronic suspicions that the ANC can be bought by large corporations and foreign states.

The house always wins

From the early 1970s, Kerzner operated several extremely profitable casinos in South Africa, gradually moving much of his wealth offshore and beginning to focus on new markets in the Bahamas, France and the United States through his company Sun International.

He is presently attempting to gain access to the lucrative Connecticut market, through the Mohegan Native American tribe, but the license for a $275 million casino has been delayed by gaming authorities who are questioning Kerzner's suitability based on his shady reputation in South Africa.

Kerzner also announced in August that he and entertainer Merv Griffin will revitalize Griffin's Resorts Casino Hotel in Atlantic City, and that a new $800 million casino will follow.

Kerzner is legendary at wheeling and dealing, and there is no dispute that a decade ago he paid 2 million rand (then $1 million) to the former prime minister of the pseudo-independent Transkei "homeland" for exclusive rights to open a casino on the unspoiled Wild Coast (part of South Africa's East Coast). In an initial court hearing, Kerzner denied making the bribe, perjuring himself in the process, but in 1989 confessed, arguing that he was coerced and that he was merely following Transkei business norms.

Frequented by white South Africans living along the Indian Ocean (especially in Durban), by a modest number of international tourists and by the tiny class of rich blacks in the homeland, the Wild Coast Sun was sufficiently profitable to allow Kerzner to augment his infamous "Sun City" complex -- which featured concerts by musicians who spurned apartheid sanctions -- with a new "Lost City" that is uniquely luxuriant and gaudy. Sun City and Lost City are located in what was once the Bophuthatswana homeland, not far from Johannesburg. To construct these playgrounds, Kerzner extracted huge favors from corrupt officials, including more than R1 billion ($350 million) in tax breaks for Lost City during the early 1990s.

Political bets

In 1987, not long after the Wild Coast Sun was completed, Holomisa exploded onto the political scene with a coup. The young Transkei army officer led an anti-corruption faction that transferred power over the burgeoning Transkei government to Stella Sigcau, then a cabinet minister with close connections to the homeland's Xhosa tribal leaders.

Just three months later, Holomisa organized a second coup in which he deposed Sigcau, partly on grounds that she had received R50,000 ($25,000) of Kerzner's R2 million bribe. Sigcau countered that the money was actually a gift from her predecessor, not a bribe from Kerzner. An investigation by apartheid-era officials later concluded there were no grounds for prosecution "on the available evidence."

Holomisa maintained a vendetta against Kerzner, however, charging him with corrupting the homeland government, and for many years sought his extradition from South Africa to stand trial. As Holomisa persevered, South African military leaders realized that the young general was too independent for their tastes. South African leaders unsuccessfully attempted to dislodge Holomisa with an attempted coup, cross-border military raids into the Transkei against liberation movement targets and homeland budget cuts.

These persecutions gradually pushed the Transkei into a formal alliance with the ANC following the ANC's 1990 unbanning, and the ANC and Pan Africanist Congress liberation armies were permitted to operate freely in the homeland. Holomisa became an ANC member in 1994, was named deputy minister after the election and, at a 1995 ANC convention, won more votes than any other contender for the ANC's National Executive Committee. Along with ANC Deputy President Thabo Mbeki, Holomisa was clearly Mandela's favored son.

But this status was not to last. Extremely fluid power relations within the ANC allowed several conflicting political currents to flow during the first year of the new government. In 1995, however, Mandela moved decisively to ensure that Mbeki would dominate the movement's mainstream for the 1999 election, when the president is due to retire. Starting in mid-1995, Mbeki's potential challengers all gradually lost or surrendered their positions; Holomisa's career stagnated.

Unexpected truths

Then in May of this year, while testifying to the Truth and Reconciliation Commission about the 1987 coup, Holomisa mentioned in passing that Sigcau -- whom Mandela had appointed Minister of Public Enterprises in an effort to retain the loyalty of powerful leaders of his own Xhosa ethnic group -- had received a share of the Kerzner bribe.

Seen as a direct attack on a fellow cabinet member, Holomisa's testimony mushroomed into a major news story, apparently to Holomisa's surprise. Mbeki quickly came to Sigcau's defense, endorsing the apartheid-era commission that partially cleared her name. ANC leaders sharply criticized Holomisa for having made the allegation to the Commission without "clearing" his testimony with the ANC first.

Holomisa countered with a series of blockbuster allegations against Mbeki and another minister, culminating in the claim that both Mbeki and former ANC Secretary General Cyril Ramaphosa were "in Sol Kerzner's top pocket." Attempts to impose discipline within the ANC's own structures, he added, were fatally compromised by its leaders' ties to Kerzner.

ANC leaders officially denied Holomisa's allegations, as conflicting accounts emerged as to who paid for several "favors" -- especially free accommodation at casino resorts -- in which Kerzner appeared deeply implicated. Days later, in July, Mandela fired Holomisa from the cabinet.

Holomisa responded with his most serious charge yet. He recounted that during a private chat just before the election, Mandela divulged that Kerzner made a R2 million (then $600,000) campaign contribution to the ANC. According to Holomisa's account of the conversation with Mandela, "Kerzner raised the issue of pending charges against him in Transkei, and asked if the ANC could assist him in asking me [Holomisa] to review the case and drop charges."

ANC spokespeople immediately labeled Holomisa's statements "not only blatantly false, but also malicious and defamatory." Mbeki sought an injunction to prevent Holomisa from making further remarks. Reached for comment in the south of France, Kerzner confidently confirmed, "I did not pay R2 million to the ANC to help it fight the 1994 election."

Two days later, however, Mandela stunned the country by confirming Holomisa's account. "I was the only one who knew [about the Kerzner donation]. Even the treasurer-general of the ANC didn't know where the money came from," he said. Mandela revealed that Kerzner contributed R500,000 and an additional R1.5 million came from a closely related firm.

Holomisa demanded a public apology for the ANC's harsh words, but a bitter and clearly agitated Mandela refused. On August 30, the ANC Disciplinary Committee expelled Holomisa, thereby ousting him from his seat in Parliament.

Holomisa promises to fight the expulsion in the ANC National Executive Committee and in the country's Constitutional Court if necessary, warning his accusers that "they will have to sweat and swallow their pride."

At issue is Kerzner's alleged 1987 attempt at bribery, for although some aspects of the legal proceedings against him were indeed withdrawn in 1995 -- as Kerzner's lawyer successfully argued that they were preventing him from carrying out international business activities -- government prosecutors now say they had simply postponed action due to a case backlog and that the charges still stand. The case is complicated by uncertainty about the Transkei's legal status -- as a former "independent state" in South African law -- and its main prosecutor may drop it entirely when it is reviewed later this year.

The ANC claims that neither Mandela nor the party would have been in a position to interfere in such judicial matters even if they had wanted to, an interpretation Holomisa rejects.

The influence of big money

The Holomisa affair has reminded observers that the ANC received tens of millions of rands from repressive East Asian regimes prior to the 1994 election. Subsequently, the new government endorsed "constructive engagement" with Indonesia and strengthened inherited apartheid-era trade ties with Taiwan. At the same time, Morocco's King Hassan also apparently bought an ANC about-face against former allies in the Polisario Front. The Front requested formal South African recognition of the Sahwari Republic (formerly known as the Western Sahara), which Mandela refused at Hassan's urging, notwithstanding Sahwari's fast-growing support in the United Nations.

The bribery scandal also recalls the role that the "Brenthurst Group" -- the country's half-dozen largest corporate tycoons, named after the estate at which they meet -- plays in giving Mandela secretive and decisive economic advice. Notwithstanding the fact that nearly all its members endorsed and profited from apartheid, and opposed one-person, one-vote as recently as the 1980s, Mandela turned to the corporate tycoons for approval of his choices for Finance Minister in 1994 and again in 1996, for example.

The smell of political corruption is strong in the air. Opposition parties are having a field day in parliamentary debates, and media interest remains strong.

But attempts to translate the Kerzner scandal into campaign finance reform or even a disclosure requirement will probably be derailed in the short term. The National Party and the Democratic Party, the two largely white political parties that traditionally gained corporate support, say they will oppose such reforms because, given the ANC's assumed lock on political power for at least the next decade, companies will not openly contribute to opposition groups.

More broadly, however, political consciousness may have been indelibly altered over the past few months. The dignity of the presidency, and the ethics of the president himself, are in question. The deputy president is profoundly tainted, along with several colleagues. As a result, progressive factions within the ANC may make headway against the increasingly conservative power-brokers.

Such gains may not be worth the sacrifice of Bantu Holomisa, but one benefit is that Sol Kerzner will likely curtail any further expansion plans within South Africa.

Watch out, North America.