SABMiller, the world's second largest brewer, is to give more than £400,000 in campaign donations to the African National Congress ahead of next year's general elections in South Africa, with lesser sums going to rival parties.
Donations totalling 9m rand (£650,000), split among the top six parties in proportion to the share of votes won in the 2009 election, are being made despite most UK institutional investors being against such political dealings.
Governance campaigners believe such contributions are not an appropriate use of shareholder cash – and, in some cases, give rise to perceptions of corruption.
SABMiller has made cross-party contributions of 5m rand in South Africa in each of the last three general elections, but has chosen to raise the amount given ahead of next year's vote. The FTSE 100 brewer gave no explanation for the increase other than to note South Africa had experienced some inflation in recent years.
Because it won close to two-thirds of the vote in 2009, the governing ANC party will receive the lion's share of funding on offer. This will delight Cyril Ramaphosa, a non-executive on the brewer's board and senior figure within the ANC and trade union movement. In December, Ramaphosa returned to the front line of South African politics after he was elected deputy president of the Jacob Zuma-led ANC.
Graham Mackay, who was promoted from chief executive to executive chairman in breach of governance guidelines last year, said: "This is an extremely important cause and it deserves our support ... South Africa has a vibrant, open democracy and SABMiller is proud to have made a contribution to that achievement."
Asked when SABMiller expected South Africa's democracy to have reached sufficient maturity not to require party donations from the brewer, a spokesman said: "At the next election we will assess what level of further support we will provide, if any."
Last year, the International Corporate Governance Network, whose 500-plus members have $18tr under management, produced a paper ahead of the US election – during which corporate contributions reached record levels – warning of "the potential for abuse, corrupt practice and reputational risk when companies seek political influence ... in ways that are not of clear benefit to its shareholders."
SABMiller, which also makes donations to parties in El Salvador and channels funds from US staff to federal candidates in the US, was founded in South Africa in 1895. The business, which had grown extensive operations across Africa, was effectively forced to retreat into its South African heartland during the apartheid era.
At that time SAB became a sprawling conglomerate and the country's largest employer. Divisions under the SAB umbrella included a supermarket chain, a clothing store, hotel and gambling companies as well as manufacturing interests in shoes, razors, matches, furniture, textiles and plate glass.
During that period SAB attracted particular controversy when it became involved in the first of a series of controversial "rebel tours" by English cricketers, flouting a sporting boycott of apartheid South Africa. In 1982 the English rebels, including Graham Gooch and Geoffrey Boycott, officially played as the South African Breweries English XI.
Today SABMiller has transformed into a global brewer after listing on the London stock market in 1999 and pursuing a series of major acquisitions around the world. However, its South African business still accounts for about 20% of SABMiller's top line operating profits. In 2009, 8.5% of this South African business was transferred to a broad base of black stakeholders, including staff and liquor store operators, under a government sponsored black empowerment initiative.
