[PEN-L:753] Re: Indian gambling casinos

["Patrick Bond" <pbond@xxxxxxxxxx>]

> Date:          Thu, 29 Oct 1998 08:14:16 -0500
> From:          Louis Proyect <lnp3@xxxxxxxxx>
> Subject:       Indian gambling casinos
....
> outsiders skim off a lot of the money from the casinos--accountants, lawyers, etc.

A lovely example:

                  Can Nelson Mandela be bribed?
             (Multinational Monitor, October 1996)

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

At the core of the conflict is Holomisa's claim that the
leadership of the ruling African National Congress has
been corrupted by casino magnate Sol Kerzner. But the
complicated affair also recalls chronic suspicions that
the ANC can be bought by large corporations and foreign
states.

>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 and 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 South African reputation.

In Atlantic City, Kerzner also announced in August that he
and entertainer Merv Griffin will revitalize Griffin's
Resorts Casino Hotel, formerly owned by Donald Trump, and
that a new $800 million casino would follow. Griffin had
twice declared bankruptcy, and the day the deal was
publicized, Sun International lost seven percent of share
value. According to Bloomberg news service, Kerzner "is
also interested in using Griffin as a tax shelter for
profits from the Mohegan casino."

Kerzner is legendary at wheeling and dealing, and there is
no dispute that a decade ago he paid R2 million (then $1
million) to the former prime minister of the pseudo-
independent Transkei "homeland" in exchange for exclusive
rights to open a casino on the unspoiled Wild Coast.
Kerzner initially denied giving 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 Durban), by a few international tourists
and by the tiny class of rich blacks in the homeland, the
Wild Coast Sun's profits allowed Kerzner to augment his
infamous "Sun City" complex -- which hosted dozens of
sanctions-busting musicians -- with a new "Lost City" that
is uniquely luxuriant and gauche. The latter two casinos
are located in what was once the Bophuthatswana homeland,
not far from Johannesburg, and their construction also
involved huge favors from corrupt officials, including
more than R1 billion in tax breaks for Lost City during
the early 1990s.

In 1987, not long after the Wild Coast Sun was completed,
Holomisa exploded onto the political scene with a coup.
The young 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.

But Holomisa organised a second coup just three months
later, partly on grounds that Sigcau had received R50,000
of Kerzner's R2 million. She responded that the money was
actually a gift from her predecessor, not a bribe from
Kerzner, and an investigation into the matter by
apartheid-era officials 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 tiral. As Holomisa persevered, South African
military leaders realised that the young general would
never be the consistent authoritarian ruler they had hoped
for, and began to harass him. But their tactics -- an
attempted coup, cross-border military raids into the
Transkei against liberation movement targets, and homeland
budget cutbacks -- failed to dislodge Holomisa.

As a result, the Transkei steadily drifted into formal
alliance with the ANC following its 1990 unbanning, and
the ANC and PAC liberation armies to operate freely in the
homeland. Holomisa became an ANC member in 1994, was named
deputy minister after the election, and at an ANC
convention in 1995 won the most votes amongst all
contenders for the ANC's National Executive Committee.
Alongside ANC Deputy President Thabo Mbeki, the
attractive, mildly-charismatic Holomisa was clearly
Mandela's favoured son.

But this status was not to last. Extremely fluid power
relations within the ANC allowed several contradictory
political currents to flow during the first year of the
new government. Mandela then moved more decisively to
ensure that Mbeki would dominate the movement's mainstream
for the 1999 election, when the president is due to
retire.

Thus from mid-1995, the country's highest-profile
politicians -- ANC secretary-general and chief negotiator
Cyril Ramaphosa, left-wing intellectual Pallo Jordan,
popular grassroots mobiliser Winnie Madikizela-Mandela
(her post-divorce surname), former trade union leader Jay
Naidoo, and ex-president FW de Klerk of the National Party
-- all gradually lost or surrendered their positions.
Mbeki was universally considered responsible for the
behind-the-scenes manipulation that truncated or diverted
the careers of his main competitors.

With his own career stagnating, Holomisa began to exhibit
a self-destructive streak. He endorsed Madikizela-
Mandela's public condemnation that "elites" were now in
charge of ANC policy-making, an allegation that
contributed to her dismissal from the cabinet in 1995.
Notwithstanding his public popularity, Holomisa was passed
over for senior cabinet posts and was rarely taken
seriously by the ANC's inner-circle.

Sigcau, meanwhile, had been named Minister of Public
Enterprises by Mandela in the latter's bid to retain the
loyalty of powerful leaders of his own Xhosa ethnic group.
But when mandated to sell many of South Africa's large
parastatal firms, Sigcau was derided for her failure to
consult trade unions -- in late 1995 this oversight led to
threats of a general strike, and to unprecedented tensions
within the alliance between the ANC, the unions and the SA
Communist Party -- and then to get on with a privatization
plan that Mandela and Mbeki announced was essential to win
the confidence of multinational financiers and
corporations.

Then in April this year, while testifying to the Truth and
Reconciliation Commission about the 1987 coup, Holomisa
mentioned in passing Sigcau's share of the Kerzner bribe.
This mushroomed into a major news story, apparently to
Holomisa's surprise, and Mbeki quickly came to Sigcau's
defense by endorsing the apartheid-era commission that
partially cleared her name. Holomisa was then sharply
criticized by ANC leaders for having made the allegation
to the Commission without "clearing" his testimony with
the ANC first.

Such public rebuke only egged Holomisa on further, for he
had given Mandela his submission beforehand and now
realised that a purge was being prepared. He countered
with a series of blockbuster allegations against Mbeki and
another minister, culminating in the claim that both Mbeki
and 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.

Holomisa's allegations were officially denied, 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, Holomisa was fired from the cabinet
and was replaced by Peter Mokaba, the fiery former ANC
Youth League leader who was earlier a firm ally of both
Holomisa and Mbeki. Madikizela-Mandela begged Mokaba not
to split the "populists" -- as Holomisa, Madikizela-
Mandela and Mokaba were known -- but her ex-husband's
stature was unchallengeable and Mokaba broke ranks.

The president's strategy immediately backfired, as
Holomisa unleashed his most serious charge yet. He
recounted that during a private chat just before the
election, Mandela divulged that immediately after making
a R2 million (then $600,000) campaign contribution,
"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."

With the startling new corruption charge, Holomisa had now
overreached, and the ANC's Shell House headquarters in
Johannesburg immediately labeled his statements "not only
blatantly false, but also malicious and defamatory." Mbeki
sought an injunction to prevent Holomisa 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."

But the uproar only grew when, to the surprise of
everyone, Mandela had to correct his staff two days later,
admitting, "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." 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 said he
would prohibit anyone in his party saying sorry. Holomisa
was again summoned before the ANC Disciplinary Committee
on August 30, and having succeeded in forcing its chair,
Minister Kader Asmal, to step down because of bias, was
then expelled from the ANC, simultaneously losing his seat
in parliament. Promising to fight the explusion in the ANC
National Executive Committee and in the country's
Constitutional Court if necessary, Holomisa warned his
accusers that "They will have to sweat and swallow their
pride."

At issue is Kerzner's alleged attempt at bribery, for
although some aspects of the legal proceedings against him
were indeed withdrawn in 1995 (because they interfered
with his international activities), government prosecutors
now say they had simply postponed action due to a case
backlog, but that the charges still stand. The ANC claims
that neither Mandela nor the organisation would have been
in a position to interfere in such judicial matters even
if they had wanted to, an interpretation Holomisa rejects.

Popular opinion remains divided, with most ANC members
disappointed in Holomisa for his carelessness -- and
apparent disloyalty -- for not airing his charges through
appropriate channels. But there is an enduring sense that
Holomisa's integrity, honesty and youthful naivety are
still intact. Rumors of his forming a new political party
made the rounds, but for Holomisa, "My home is the ANC."

The Holomisa affair also reminds observers that Mandela
received tens of millions of rands in party donations from
repressive East Asian regimes prior to the 1994 election,
which apparently influenced the new government to both
endorse "constructive engagement" with Jakarta and
strengthen inherited apartheid-era trade ties with Taiwan
(in the process deeply alienating the People's Republic of
China). At the same time, Morroco's King Hassan also
apparently bought an ANC about-turn against former allies
in the Polisario Front. The Front requested formal South
African government recognition of the Sahwari Republic
(formerly known as the Western Sahara), which was refused
by Mandela at Hassan's urging, notwithstanding Sahwari's
fast-growing support in the United Nations and with many
other countries.

It 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. By way of
illustration, corporate pressure on the ANC at the time
South Africa's interim and final Constitutions were being
drafted won companies both fundamental Bill of Rights
protections (equivalent to those of natural persons) and
protection from being taxed at provincial level, both
highly contentious concessions. A campaign to revoke
corporations' constitutional protections has been launched
by public interest groups, trade unions, and
environmentalists, backed by Ralph Nader and his Essential
Information staff.

In spite of nascent public interest watchdog activity, 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 by progressives to translate the Kerzner
scandal into campaign finance reform or even a disclosure
requirement will probably be derailed in the short-term.
The two largely-white political parties that traditionally
gained corporate support say that they will oppose funding
reform because -- in the context of monolithic ANC rule
for at least the next decade or two -- companies will be
intimidated not to make gifts to opposition forces if
these become public knowledge.

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. Because
of this, 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 -- it is too early to tell how far power
relations may shift -- but one benefit is that Sol Kerzner
will likely curtail any further expansion plans within
South Africa. American and European observers should take
heed, though, that rather than being resolved within South
Africa, this particular problem will shift elsewhere.

Patrick Bond
email:  pbond@xxxxxxxxxx * phone:  2711-614-8088
51 Somerset Road, Kensington 2094 South Africa
work:  University of the Witwatersrand
Graduate School of Public and Development Management
PO Box 601, Wits 2050, South Africa
email:  bondp@xxxxxxxxxxxxxxxxxxxx
phone:  2711-488-5917 * fax:  2711-484-2729