JOHANNESBURG (Reuters) - The ruling African National Congress (ANC) has ordered an internal audit at the party's in-house investment firm, which is controlled by allies of South African President Thabo Mbeki, the Sunday Times reported.
The probe of Chancellor House Holdings comes some twomonths after Jacob Zuma defeated Mbeki for the ANC leadershipin a bitter contest that was marked by allegations on bothsides of dirty tricks, vote-buying and political smearcampaigns.
It will include an audit of black empowerment deals andtenders won by the firm and is also expected to look at theroles played by Mbeki, Deputy President Phumzile Mlambo-Ngcukaand ex-ANC treasurer-general Mendi Msimang, the newspaper said.
Black economic empowerment refers to the process by whichcompanies, usually publicly traded but not always, give stakesto groups of blacks as part of an effort to make ownership ofthe economy more equitable after apartheid era.
Ernst & Young will carry out the audit, the report said.
The ANC's current treasurer-general, Mathews Phosa, toldthe Sunday Times that the party wanted to establish the truevalue of the deals in question and ascertain whether there hadbeen conflicts of interest in Chancellor House's business.
Chancellor House has significant stakes in a number ofcompanies, including mining and engineering companies. Msimang,an Mbeki loyalist who is married to the country's healthminister, is among the trustees who guide the firm.
Phosa, a Zuma-loyalist elected into the top ranks of theANC at a leadership conference in December, suggested that theprobe could lead to criminal proceedings.
"The law will have to take its course," Phosa said.
The move, however, threatens to widen the split between theZuma-controlled ANC and Mbeki's ANC-led government and lead tofurther instability in the country. Investors are alreadynervous about Zuma's ties to labour unions and communists.
Tensions between the Mbeki and Zuma camps have risen in thepast two months as pro-Mbeki officials were removed from keyparty and parliamentary posts in what the media have describedas a political purge.
A corruption case against Zuma, the frontrunner to takeover the state presidency when Mbeki leaves office in 2009, hasfuelled the hostilities.
Zuma is due to go on trial in August for corruption, fraud,money-laundering and racketeering in connection with an armsdeal scandal. He is accused of accepting hundreds of thousandsof dollars in bribes from a French arms manufacturer.
He denies the charges and has described the case againsthim as a political conspiracy by Mbeki and other officials.
(Reporting by Paul Simao; Editing by Jon Boyle)
