When lobbying becomes lathering

IN A course on lobbying I attended in the US, the Harvard professor asked any foreigners to raise their hands. “OK,” he said. “Now, don’t go back home and try any of this lobbying there: in your country, it’s probably called corruption.”

This illustrates the dental floss-thin ethical line that companies who sluice millions to politicians must walk. Why, after all, do companies donate? Scholars are pretty clear: “political donations are seeking favours for managers rather than firms”, says one study.

As our corruption act makes clear, delivering any “gratification” to anyone in power expecting any “favour” in return is textbook corrupt.

Many South Africa don’t give shareholder cash to politicians — in the US, 89% of listed companies don’t either. Some, like SABMiller, do. Last week, South Africa’s largest primary-listed company, MTN, admitted to furnishing the Addis Ababa home of the new African Union (AU) president, Nkosazana DlaminiZuma.

But MTN wasn’t impressed that this newspaper questioned its “relationship with politicians”, saying it is “very damaging to our brand”. After all, MTN argued, many other companies donated to the AU.

That is true: one insider says no less than 15 companies donate to the AU. But, this hardly means we should demure from questioning the motives of the donors, and asking what quid pro quo they expected.

MTN took offence to the suggestion it “woos officials in a bid to penetrate new markets”.

Come now, MTN, let’s not be coy. After all, a KPMG audit showed you used shareholders’ money to buy designer cufflinks of 9ct gold and 0.25ct diamonds for the Iranians during a visit to South Africa, before bidding for Iran’s cell licence.

There was also the guided tours for Iranian politicians and suites at the Michelangelo that you paid for. So, it’s not as if the scepticism isn’t earned.

MTN argues that furnishing Dlamini-Zuma’s home is its way of being a “responsible corporate citizen and a proud global African company”. MTN simply “heeded the call of the SA government for South Africans to support the new AU Commission chairperson with furnishings”, it argues.

Perhaps. But it just so happens to come at a time when cellphone companies are facing all sorts of political hurdles on the continent, as ministers pledge to ‘bring down cellphone costs’. A friend in high places never hurts.

Of course, donations aren’t necessarily corrupt — though handing cash to a politician expecting a payback is corrupt.

But the thing is, it doesn’t work. Research by the University of Kansas and Minnesota showed it doesn’t bring political protection, or investment returns. In the US between 1991 and 2004, companies that donated cash to politicians saw returns drop by 7.4 basis points for every $10 000 donated.

“It may also explain why 89% of publicly-traded firms do not donate directly from corporate funds — donations are associated with bad outcomes for shareholders,” they said.

Americans lavish plenty on politicians, but that’s hardly a model democracy. Its effort to nail CIA whistleblower Edward Snowden would make Security Minister Siyabonga Cwele blush, and it is ranked 23rd in the world on the press freedom rankings, below Estonia and the Marshall Islands. But in the US, political donations are largely transparent, so you can assess the donor’s motives.

At least when asked, MTN admitted buying the furniture. Now, if MTN is truly keen on transparency, it will detail all donations in its annual report.

A Harvard paper this month said “investors strongly believe that public companies should disclose political spending”.

This is the prevailing view, so the JSE should insist that political donations be disclosed.

But if the JSE won’t risk angering its clients, companies should do the right thing voluntarily — anything less would be failing their investors.