Is South Africa seeing a return to the rule of law? More evidence is needed

South Africa’s President Jacob Zuma and Deputy President Cyril Ramaphosa. Which one of them does the criminal justice system support?
EPA-EFE/Cornell Tukiri

It appears as if the Gupta family, known for being politically connected to South Africa’s President Jacob Zuma and accused of “state capture”, have not had a good start to the year. The country’s Asset Forfeiture Unit has indicated that they’re pursuing 17 cases to recover R50 billion linked to state capture and corruption. The unit, which falls under the country’s National Prosecuting Authority, is reportedly going after the Gupta family and their associates.

The phenomenon of “state capture” in South Africa epitomises unconstitutional conduct. It has involved private interests using illegal means to gain influence over public representatives or state officials with the aim of getting them to take decisions that benefit both parties but compromise the public interest and the constitutional integrity of state institutions.

Capturing the criminal justice system is critical to those pursuing the state capture agenda: it becomes a self-fulfilling prophecy in the sense that it’s aimed at securing protection against any criminal prosecution. In turn this creates a favourable environment for ongoing state capture.

The question then is whether the latest developments of possible charges and asset seizures requested by the NPA against Gupta related companies amount to a paradigm shift?

To answer this question we need to keep in mind four factors: the rule of law, the relationship between politics and the criminal justice system and the professional independence of the country’s prosecuting system. In addition, it’s important to remember that putting a stop to state capture requires a myriad of actors to play their part.

Other countries have faced this predicament. Examples of investigations with explosive political implications include the FBI’s probe into Hillary Clinton’s e-mails days before the 2016 American presidential election and the Robert Mueller special investigation into possible Russian interference in the US election.

The difference in South Africa is that the democratic checks and balances to prevent long-term harm are not yet fully consolidated.

The rule of law

State capture and the rule of law are mutually exclusive. This is because the rule of law depends on effective judicial independence and incorporates the separation of powers principle.

South Africans have welcomed the latest developments because they believe they will strengthen the rule of law. For many this principle is sacrosanct because it’s part of a democracy as well as quality government. In principle it insists on equality before the law for all, and no exceptional treatment.

It also confirms that all disputes in society involving constitutional or legal principles, governance matters and private matters affecting legal rights must – in the final instance – be resolved by judicial means.

In addition, the rule of law confirms that all executive and administrative actions are subject to judicial adjudication or review.

A more complex issue is how the judiciary and criminal justice system can become entangled in political dynamics. How should a government relate or interact with its criminal justice component? What is the acceptable norm? On the one hand it is part of government. On the other it has to be independent.

The criminal justice system is immensely attractive to politicians in power who want to use its investigative and intelligence capacity to deal with political foes. This has certainly been the case in South Africa over the past decade.

The question is whether the latest actions taken by the NPA are a continuation of the abuse of its power, or the beginning of a genuine rule of law regime.

The new president of the African National Congress President Cyril Ramaphosa has said that he wants the NPA to act swiftly against those implicated in state capture. This is significant given that developments since the early 2000s have compromised the independence of South Africa’s investigative and prosecutorial institutions.

But South Africans should be cautious about uncritically accepting the latest moves as a new-found sense of independence. Is it not simply a change in allegiance from Zuma to the new ANC leadership?

Over the past 10 years the country’s criminal justice system has been exploited by the government to deal mainly with internal ANC factional dynamics. The country’s Revenue Service, which also has investigative and semi-judicial powers, has also been drawn into these dynamics. This is graphically captured in the book The President’s Keepers written by investigative journalist Jacques Pauw.

There are a number of examples of the criminal justice system being exploited for political ends. One of the most prominent examples was the 2007 “spy tape” saga. This involved taped conversations between former NPA and Scorpion officials in which the timing of Zuma’s corruption charges were discussed. In 2009 the tapes were appropriated by the National Director of Public Prosecutions as a justification to withdraw the charges because the conversations politically compromised the NPA. This, on its own, was an extraordinary self-indictment.

Another example was the Hawks and NPA investigations against Finance Minister Pravin Gordhan and SARS officials responsible for tax crime investigations. This was meant to neutralise the threat posed by the tax authority to Zuma’s networks.

The reverse side of this trend was numerous court judgements initiated by opposition parties, NGOs and foundations to counter executive actions deemed to be unconstitutional and to challenge parliamentary procedures or prosecutorial decisions. Often the judiciary landed up reprimanding the criminal justice system.

A paradigm shift?

The NPA’s new approach to the Guptas should not be seen in isolation. Other important institutions are playing their part in challenging bad behaviour.

For example, a parliamentary portfolio committee is making impressive inroads into poor governance and corrupt behaviour at the state power utility Eskom.

In the private sector South Africa’s main commercial banks have closed the bank accounts of the company owned by the Guptas, Oakbay Energy and Resources. Internationally companies implicated with the Guptas such as Bell Pottinger, McKinsey, KPMG have been called to account.

The international business response has been followed by court orders for the seizure of company assets. The prosecution of individuals could be next. This will be complex because in these situations it’s difficult to know who to prosecute when the scale of involvement is so widely spread.

Any prosecutions will have to satisfy the public’s quest for justice. They will also have to serve as a deterrent against a repetition of the mismanagement, criminal behaviour and political complicity in hijacking government institutions.

The main objective should be to restore public confidence in key institutions that make up the criminal justice system. These include the Hawks, NPA, state and crime intelligence and the revenue service. It is a huge task, not least because the NPA is caught in the shifting power relations between Zuma and Ramaphosa. This makes its mandate to act without “fear or favour” a Herculean task.

The positive side is that the judiciary is not politically compromised in the same way.

Dirk Kotze, Professor in Political Science, University of South Africa

This article was originally published on The Conversation.

Why shaking up South Africa's power utility matters for the economy

Cyril Ramaphosa, South Africa’s deputy president who was recently elected as the leader of ruling party, is seen to be fighting corruption.
EPA

South Africa’s power utility Eskom has seen a remarkable leadership shake up in the past few days. Almost the entire board has been replaced with seasoned businessmen. And a well respected acting CEO has been put in place, too. The developments appear to reflect resolve by the country’s deputy president Cyril Ramaphosa, who was elected as president of the African National Congress in December. Sibonelo Radebe asked Jannie Rossouw to discuss what the changes at Eskom mean.

What do you make of the shake up at Eskom?

The announcement of a new board at Eskom is welcome for a number of reasons.

Firstly, the previous board and top executive layer proved to be incompetent if not downright destructive. Secondly, the power utility had sunk into dire financial difficulties on their watch. Recent reports suggested that the power utility has run out of funds and wouldn’t be able to meet its obligations unless government stepped in with another huge bailout. This, after the government injected R23 billion in equity and and wrote off about R60 billion over the past five years.

Over the past five years or so, Eskom has been hit by a series of corporate governance breaches of the worst kind. These included the former CEO Brian Molefe trying to secure a R30 million payout for only 18 months at the helm.

And it’s become clear from the Gupta leaks that the power utility had come to play a central role in a raft of activities related to state capture. It appears to have served as a conduit to transfer government resources to well-connected and corrupt individuals and families in South Africa.

Given the damage that’s been done, the previous board at Eskom simply could not continue. It had no plan to turn the company around or stop corruption. Its only strategy was to lean on the South African government for more financial assistance.

The Eskom shake up is also significant because it’s a signal that the new president of the ANC Cyril Ramaphosa is committed to fighting corruption in both the public and private sectors.

Why does Eskom matter?

Eskom is arguably South Africa’s most important state owned enterprise. The South African economy depends on continuous and uninterrupted power supply. This puts Eskom in a different league to other embattled state owned enterprises like the national airline, South African Airways (SAA).

SAA is also dependent on government bailouts, but the South African economy will continue to function without it. Eskom, on the other hand, is a monopoly power supplier. All South Africans depend on it for power.

There seems to have been an urgency to make changes. Why?

It seems that Ramaphosa moved quickly to wrap up the Eskom shake up before he left for the World Economic Forum in Davos. It’s not difficult to understand why. South Africa has had some very bad headlines over the past few years, including downgrades by international rating agencies, and its economy is in the doldrums.

A significant portion of South Africa’s economic pressure originates from declining confidence of local and international investors in the country’s economy. This is evident from the South African business confidence index, which has plummeted. Since 2013 business confidence has been on a declining trend from above 50 to a current level below 35.

Replacing the Eskom board before the Davos meeting was a smart and necessary move. Davos is a rare occasion to showcase South Africa as an investment destination of choice for international investors. One condition for attracting international investment is a clear commitment to addressing corruption and instilling sound management in government enterprises.

What in your view is the long term solution around Eskom?

The long term solution to the problems at Eskom and other troubled state owned enterprises is a rethink of their role in the South African economy.

Some, such as South African Airways, are really unimportant and their disposal or even their closure would have little impact on the domestic economy. Disposal or closure are necessary options as these entities add an unnecessary burden on the national fiscus.

But others, like Eskom, are more strategic and matter enormously and the government should retain them.

It has also become necessary for South Africa to rethink the remuneration policies for executives of state owned enterprises. They earn salaries that aren’t commensurate with the risks they face. The consequences of failure are much more severe for executives in the private sector. Executives of state owned enterprises simply apply for bailouts when they’re in trouble.

So there’s no justification for exorbitant remuneration at state owned enterprises. And no executive at any state owned enterprise should get a bonus: how can a bonus be justified when the South African government provides the bailout in the event of financial difficulty?

The new Eskom board should urgently revise the company’s remuneration policy to restore some sanity in the level of remuneration. The board should also review business practices to ensure that Eskom remains financially viable without any financial assistance from the government.

It is also important that the South African government and the board of Eskom should make it clear to the general public and to investors that the proposed nuclear procurement project plan will not go ahead: neither the South African fiscus nor Eskom can afford such a project.

Jannie Rossouw, Head of School of Economic & Business Sciences, University of the Witwatersrand

This article was originally published on The Conversation.

Stability in southern Africa hinges on how leaders gain and lose power

Protesters demand Congolese President Joseph Kabila step down.
Reuters/Thomas Mukoya

While each country in Southern Africa has its own politics, recent developments involving presidents provide interesting contrasts across the region. Which presidents gain and lose power in 2018 – and how they do so – will have significance for the region as a whole, not least in helping determine its continued stability.

As 2018 begins, Joseph Kabila is clinging to the presidency of the Democratic Republic of the Congo (DRC), claiming that there is insufficient funding to hold an election, amid growing protests against him in Kinshasa and elsewhere. It remains to be seen if he will fulfil the undertaking he has made that elections will be held in December this year.

Other countries in the region start 2018 on a much more promising footing. In Botswana, President Ian Khama, approaching the end of his two presidential terms, is expected to step down in an orderly succession in April and will be suceeded by the vice-president.

In both Zimbabwe and Angola autocratic presidents who had been in power for almost four decades lost power in 2017 in very different ways.

Military intervention in Zimbabwe

In the case of Zimbabwe the country’s army intervened in November 2017 to force Robert Mugabe to give up power. This came after he had, under the influence of his wife Grace, sacked Emmerson Mnangagwa as vice-president. The Southern African Development Community did not need to intervene, and even the mediation mission it planned wasn’t required.

Instead, the Zimbabwe military acted, with the ruling party, Zanu-PF, to replace Mugabe with Mnangagwa. It did so peacefully, denying during the entire process that a coup was underway. The 93-year-old Mugabe, in office since 1980, initially refused to step down, but was finally removed both as president of the country and of the ruling party.

The country will go to the polls in mid-2018, and Mnangagwa, who was confirmed in December 2017 as Zanu-PF’s presidential candidate, has said that the election will be credible, free and fair, but he has yet to confirm that he will allow international and other observers.

With the military more obviously involved in government than anywhere else in the region, Zimbabwe’s opposition parties divided, and with Morgan Tsvangirai, leader of the Movement for Democratic Change Alliance seriously ill, there is little likelihood that Zanu-PF or Mnangagwa will lose power.

Angola

In Angola José Eduardo dos Santos, suffering from ill-health, agreed in early 2017 to step down as president of the country. He nominated a man he thought would be a trusted successor, hoping to continue to wield influence as president of the ruling MPLA.

After elections for the National Assembly in August, João Lourenço duly succeeded Dos Santos as president. To widespread surprise, he began sacking the heads of some of the country’s key institutions. These included Dos Santos’s daughter, Isabel dos Santos, who was CEO of the state oil company Sonangol.

Former Angolan President Jose Eduardo dos Santos, left, and his successor Joao Lourenco.
EPA/Manuel de Almeida

And in early 2018 her brother José Filomeno dos Santos, was removed as head of Angola’s sovereign wealth fund. Their father’s influence was rapidly slipping away.

In Angola, as in Zimbabwe, a change of leader to one with a more reformist approach probably means that the ruling party has consolidated itself in power.

South Africa

In South Africa in December 2017 the leadership of the governing African National Congress (ANC) passed from Jacob Zuma to Cyril Ramaphosa, who thus became heir apparent to the presidency of the country. While there is no two-term limit for ANC presidents, Zuma had brought the ANC into discredit and Ramaphosa, despite having worked closely with Zuma as deputy president, was seen as the one who would curtail the corruption and “state capture”.

For now, Zuma remains president of the country until general elections due to be held by June 2019. The country waits to see whether, how and when Ramaphosa can arrange to take over as president of the country as well as of the ruling party.

A presidential challenge defeated

In Namibia, Hage Geingob had to meet a challenge to his continuing as leader of Swapo, the governing party, in November last year. He was, however, confirmed in his position and will therefore be Swapo’s presidential candidate for the election scheduled to take place in November 2019.

Geingob supporters now fill all the key posts in his government, enabling him to make policy as he wishes. This is very different from South Africa, where the new ANC leadership remains divided and where Ramaphosa, when he becomes president of the country, will find it difficult to adopt new policies.

Malawi and Zambia

Malawi must hold elections in 2019 and the contest for the presidency then has already begun. It is not known whether Joyce Banda, the former president and leader of one of the country’s leading political parties, will return from self-imposed exile abroad to stand again. In 2017 she was formally charged with having been involved in the massive “Cashgate’ corruption scandal” that was uncovered while she was president.

Zambian President Edgar Lungu.
Reuters//Siphiwe Sibeko

In Zambia, by contrast, where the next election is not due until 2021, the question is how Edgar Lungu, who took over the presidency after narrowly winning the presidential election in August 2016, will try to consolidate his power.

In 2017 Lungu became more authoritarian. Hakainde Hichilema, the leader of the main opposition United Party for National Development, was arrested on what were clearly trumped-up charges. These were only dropped in August after interventions by the Secretary-General of the Commonwealth and inside Zambia by the local Catholic Archbishop.

Lungu wants to serve a third term as president, and the country’s Constitutional Court has been asked to rule on the matter.

Regional perspective

Too often developments in one country are seen in isolation from similar ones elsewhere. Given that South Africa is the most important country in the region, how the Ramaphosa-Zuma poser is resolved will be significant for the region. Elsewhere, how presidents gain and lose, and try to consolidate their power, will help shape the continued stability of the region.

Will political tensions be managed internally, as in Zimbabwe in late 2017? Or will they require some kind of intervention by the Southern Africa Development Community, in the DRC and perhaps elsewhere, to prevent them from escalating? Throughout the region, contests for presidential power are likely to keep political passions on the boil.

Chris Saunders, Emeritus Professor, University of Cape Town

This article was originally published on The Conversation.

Afrikaner identity in post-apartheid South Africa remains stuck in whiteness

Statues like these - here Paul Kruger at Pretoria’s Church Square - are a reminder of a time when Afrikaners were the ruling class in South Africa.
Mike Hutchings/Reuters

Why is it that when the West was turning away from direct colonialism in the mid-20th century, South Africa shifted to apartheid, an intensified form of this heinous system?

One of the answers lies in the country’s history of colonisation by two contending settler classes. The Dutch, or Boer, settler class on the southern most point of Africa was displaced in the 19th century by the arrival of the British. The Afrikaners – as the descendants of the Boer settlers eventually became known – constructed their identity in opposition to, on the one hand, black identities, and on the other to Anglo whiteness.

The reverberations of the contest between these two settler groups continue even after apartheid, as I argue in my new book Sitting Pretty – White Afrikaans Women in Postapartheid South Africa.

During apartheid a great deal of work went into justifying the imposition of inequalities on the basis of human differences. In the end apartheid collapsed due to global opprobrium that was heaped on the Afrikaner government, with both material and symbolic consequences. It tipped Afrikaner identity into turmoil, not least because their sense of themselves as moral beings was radically challenged.

At stake was ordentlikheid, analysed in my book as an ethnicised respectability. Ordentlikheid is an Afrikaans word that is difficult to translate: apart from respectability, its meanings include presentability, good manners, decency, politeness and humility with a Calvinist tenor.

Today it works as a glue that holds the identity together at the intersections of specific versions of gender, sexuality, class and race. Ordentlikheid serves as a mode of identification that works as a panacea to Afrikaner woes as they struggle to cleanse themselves of the stain of apartheid and adapt to changing historical conditions.

Examining “Afrikaner” identity through the lens of ordentlikheid reveals it as a lesser whiteness in relation to white English-speaking South African identity, which in turn draws on global Anglo whiteness. Unpicking ordentlikheid reveals a double movement: ordentlikheid derives from and elaborates on white English-speaking respectability. But it is also, paradoxically, what sets Afrikaner whiteness apart from white English-speaking identity.

Slow-witted, simple, ignorant

These dynamics can be traced historically. By the late 1800s, the Boers were regarded as “an inferior or degraded class of colonist”, as historian Timothy Keegan writes. They were depicted by European visitors as indolent, slow-witted, simple, ignorant and even dirty.

Lord Kitchener concluded that the Boers were,

uncivilised Afrikaner savages with a thin white veneer.

As late as 1975, negative stereotypes about Afrikaners still abounded, for example in an essay written by priest and politics academic Nancy Charton. She summarises the “empirical evidence” of white English-speaking attitudes to “the Afrikaner”, listing positive stereotypes such as Afrikaners being simple and warm, and negative ones such as them being uncultured, superstitious and lacking in efficiency.

Pejorative terms for Afrikaners included “Dutchman”, “hairyback”, “rock spider”, “mealie muncher”, “takhaar” (long hair), “bywoner” (backyard dweller), “backvelder” and “plank”. These mocking terms show “the element of cultural and social superiority” of white English-speaking identity that Charton speaks approvingly of.

Afrikaner whiteness resisted white English-speaking domination. Afrikaners defied being subjected to the hegemonic white English-speaking culture through a counteracting discourse of Afrikaner “volkstrots” (people’s pride), noble suffering and Calvinist decency. Afrikaner nationalist histories written in the 1960s overhauled and relaunched Afrikaners as hospitable, brave and fair Christians.

An eighteenth century discourse of Boers-as-unspoilt-children-of-nature was recuperated as one of Afrikaner innocence, uncorrupted mentality and closeness to God.

My research shows that the competitive dynamic with white English-speaking identity persists even after the fall of official apartheid but with paradoxical manifestations. One example is that conceding to Anglo culture serves to elevate Afrikaner whiteness.

“That makes me angry”

White Afrikaans identity hovers between two poles symbolised by the Afrikaans language.

It’s premised on Afrikaans as the touchstone of Afrikaner nationalism. Yet, Afrikaans contains traces of its historical “association of being the language of the underprivileged”, as political scientist Louise Vincent writes.

Surprisingly, Afrikaans speakers abandon the language in certain social settings, even though it’s an intrinsic part of their identity.

To understand this complex relationship I interviewed a number of Afrikaner women in Johannesburg and Cape Town. One said that she was aware that she switched to English even when she was in the company of Afrikaans speaking people.

Leah (49) says:

When I look at Johannesburg where we live [an affluent, multiracial, centrally located suburb], 70% of the people [can] speak Afrikaans, but we all speak English.

Sandra (43) expresses her frustration:

I just get angry when people knowingly in a group [speak English when most are Afrikaans].

Pieta says:

I will speak to someone on the telephone and they will start in English and at some stage I’ll hear the person is Afrikaans and then I’d feel too bad switching to Afrikaans because I’m afraid they’ll think they speak bad English.

Nerina agrees:

That happens to me on a daily basis.

Respondents describe switching to English as part of a routine which is also experienced as a denial of white Afrikaans identity – and therefore as an injury. Social space is ceded to white English-speaking identity. Interestingly, however, this loss allows for the appropriation of an element of English whiteness: politeness.

The temporary abandonment of Afrikaans is covered over with an articulation of Afrikaans-ness with “politeness” and “accommodation”. It is resonant of “manners” as a key element of “Britishness”.

As Willemien (33) explains:

It is the effort we make with other people, not so? Yes, we are now going to speak English to you because you are English.

Pieta replies:

Because it is polite to do that.

In yielding to Anglo culture as a sign of “manners”, politeness becomes ordentlikheid. This manoeuvre shows that white Afrikaans-speakers remain trapped in a form of whiteness that competes with norm-setting white English-speaking whiteness, instead of seeking to transcend whiteness, and therefore race and racism, altogether.

This article is derived from Sitting Pretty. White Afrikaans Women in Postapartheid South Africa (UKZN Press)

Christi van der Westhuizen, Associate Professor, Sociology, University of Pretoria
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Is the net about to close on Zuma and his Gupta patronage network?

Cyril Ramaphosa, the deputy president of South Africa and new president of the governing ANC, faces a dilemma in rooting out corruption.
Reuters/Siphiwe Sibeko

It all started with a wedding. A 200 plus entourage of friends and family landed their private aircraft at the Waterkloof Air Force Base in April 2013.

What South African’s didn’t know was that the country had already entered a new era of corruption that was to have a myriad negative consequences. Now, after years of legal obfuscation, political manipulation of ‘captured’ state institutions and prosecutorial agencies, Cyril Ramaphosa’s victory to succeed Jacob Zuma as president of the ruling African National Congress has opened up the possibility that an age of impunity will be replaced with a new era of public accountability.

Since the Gupta’s extravagant family wedding at Sun City a slew of revelations have come out. These range from the “State of Capture report” of the former Public Protector Thuli Madonsela, to the damning Gupta-leaks uncovered by investigative journalists AmaBhungane. All helped South Africans come to understand the shocking extent of the systemic corruption inextricably linked to the Gupta name.

Despite all these revelations, the country’s prosecutorial bodies have remained silent. So when the Asset Forfeiture Unit of the National Prosecuting Authority (NPA) confirmed its intention to serve summons on members of the Gupta family and their cronies on January 15 this year ordering them to preserve assets to the tune of R1.6 billion, the first question that sprung to mind was “why now”?

The answer lies with Ramaphosa’s election on a “change” and “reform” ticket. His victory in December has shifted the balance of power against the Zuma faction.

A second factor is that the ANC is concerned about its electoral future, with the 2019 national election on the horizon. Zuma has cost the ANC almost 16% of its electoral majority – some 3 million votes. With opposition parties scrambling to form coalitions, and voting trends suggesting a further decline in the ANC’s share of the vote, there is now a very real prospect of the ANC being voted out of power in 2019. An ANC majority is no longer a foregone conclusion – unthinkable until recently.

It seems denial in the ANC has been replaced by a sense of fear. The party is trying to show the voting public that it can clear up the mess that it has made.

Chickens come home to roost

The NPA’s announcement suggests that the chickens seem finally to be on their way home to roost on the Gupta empire. The NPA’s Asset Forfeiture Unit has applied to the High Court for an order that the Gupta’s must “preserve” R1.6 billion worth of assets. This power is granted under Section 38 of the Prevention of Organised Crime Act. The provision empowers the NPA to make an ex parte application to the High Court to

prohibit any person… from dealing in any manner with any property.

The court must grant the order if there are reasonable grounds to believe that property is the “instrumentality of an offence” or “is the proceeds of unlawful activities”. This must be read in light of the rest of the Act which allows the state to confiscate property that is the proceeds of unlawful activities.

The rationale of the preservation order is, therefore, to prevent such a person or suspect from disposing of assets that are proceeds from unlawful activities which would render a confiscation order fruitless.

An analysis of the act makes it clear that, if a preservation order is requested, the intention of the NPA must be to arrest and charge the Guptas and their associates. A preservation order could only be made if a confiscation order is ultimately envisaged. In turn, a confiscation order can only be made after a criminal conviction.

The logical conclusion is that the NPA, assuming that they are acting in good faith, are intent on arresting and prosecuting the Guptas.

Dilemma facing Ramaphosa and the ANC

The problem for the ANC is this: if its intention is to make the Guptas the sole-scapegoats in the state-capture saga, they will be in a good deal of trouble. Of the published Gupta scandals, the evidence strongly suggests that they were not acting alone. The Guptas themselves may represent only the tip of the iceberg.

Top government officials are reported to have been involved in almost all instances.

For example, Mining Minister Mosebenzi Zwane, is heavily implicated in the Sun City wedding affair, while whistle-blowers Mcebisi Jonas and Vytjie Mentor implicate Zuma as a participant in the Guptas offering them (for undue reward) the positions of ministerial positions.

Zuma’s son, Duduzane, is also heavily implicated in corrupt activities related to the state power utility Eskom, as well as the finance minister debacle.

The NPA will struggle to prove its case against the Guptas, at least the full extent of it, without implicating those that drove or condoned their misdemeanours. It seems clear therefore that the ANC cannot restore its reputation while letting its leaders who looted the country’s resources drift off into the wilderness.

This presents Ramaphosa with an acute political dilemma given that he’s pledged to rebuild unity in the ANC.

Hence, we are likely to see a very high level and multifaceted blame game. But any attempt to restore its credibility will probably prove counter productive unless the party accepts that some of its biggest fish must be prosecuted too.

And it goes without saying that private sector players such as Trillian and KPMG who were willing enablers of the abuse of state procurement processes must also be held to account. If necessary they must pay the ultimate price of corporate collapse as Bell Pottinger did.

Just the beginning

The NPA’s announcement represents no more than a good start after years of prosecutorial negligence and incompetence – or dishonesty – and costly inaction.

In terms of accountability it’s indeed time to catch up and restore the legitimacy of important institutions. But the stakes are very high – for the implicated politicians and their business cronies, for Ramaphosa and the ANC’s electoral future, and for the credibility of South Africa as a trustworthy destination for much needed investment.

Richard Calland, Associate Professor in Public Law, University of Cape Town and Mike Law, Senior legal researcher in Public Law, University of Cape Town

This article was originally published on The Conversation.

Ramaphosa takes on ANC leadership role with alacrity: and clarity of intent

ANC President Cyril Ramaphosa celebrates the party’s 106th anniversary with its deputy general secretary Jesse Duarte and president of South Africa Jacob Zuma.
Reuters/Siphiwe Sibeko

Cyril Ramaphosa, the newly elected President of South Africa’s governing African National Congress, made his position clear when he delivered a much anticipated speech to mark the ANC’s 106th birthday over the weekend.

The statement has historically set the tone for government and informed the annual state of the nation address delivered by the president of the country at the opening of parliament in February. It also outlines the five-year mandate of the ANC’s decision making body, the National Executive Committee.

Ramaphosa’s speech had particular significance because even though he’s been elected as the new president of the ANC he won’t take over the reins of state until 2019 when President Jacob Zuma is due to step down after the next round of national elections. That’s if the normal pattern of succession unfolds. Rumours are rife that Zuma will be forced to step down before then.

Given the controversies swirling around Zuma and the legacy of his presidency, South Africans wanted to gauge, among other things, what the ANC considers to be the main challenges facing the country. And how it plans to face them.

Ramaphosa didn’t disappoint. It was clear – as well as remarkable – that the ANC’s members and its leaders have begun to unite behind a man they now affectionately call Silili - a derivative of the name Cyril. This was clear from the welcome he was given by ordinary people as he did a walkabout in the Eastern Cape town of East London as well as the reception he got from the tens of thousands of ANC supporters who came to hear him in the stadium. The hostility Zuma elicited from the crowd stood out in sharp contrast.

In addition, Ramaphosa is looking comfortable in his new role. It was evident from the speech he delivered that he feels confident enough to speak his mind on some of the big issues facing the country. Take this comment on state owned enterprises and corruption.

We need to act with urgency and purpose to restore state owned enterprises (SOEs) as drivers of economic growth and development. Several key SOEs are in financial distress, threatening not only their own operations, but the national fiscus. Many of these enterprises have experienced serious governance lapses and poor delivery of their mandate. These challenges have been exacerbated by state capture, through which billions of rands have been illegally diverted to individuals.

But there’s no gainsaying that Ramaphosa faces a tough year ahead as he navigates what is essentially a transitional period for the ANC, and for the country.

Ramaphosa’s trademark

Ramaphosa clearly meant to get off to a strong start. As he began his speech, he sounded like a disciplinarian busy extolling the virtues of starting on time. He pointed out that both the gala dinner the evening before and his speech ran to schedule. This was no mean feat – it’s not uncommon for ANC events to start hours later than scheduled.

There was another sign of the kind of leadership he intends to impose on the ANC: he regularly went off script to emphasise a rules-based approach to transforming the economy. So the dismantling of monopolies and oligopolies in the private sector will be done through the expanded mandate of the Competition Commission to create a more competitive economy.

Ramaphosa also appeared to be able to straddle difficult discussions with ease. He addressed hot topics, staying true to the policy decisions taken by the ANC conference.

Take the issue of the Reserve Bank and a decision by the ANC conference that its ownership structure should be changed from private to public ownership. Ramaphosa affirmed the independence of the bank but also called on government to ensure its full public ownership.

But it isn’t going to be an easy five years. These policy decisions, as well as others, will be difficult to implement. It will be interesting to see how Ramaphosa and his national executive committee navigate these waters.

Room for manoeuvre

The difficult work begins now.

Ramaphosa’s rules-based logic is likely to provide him with political mileage. In particular, it’s likely to earn him the confidence of a divided national executive committee.

The other thing that’s likely to give him room for manoeuvre is his emphasis on unity and party cohesion. This should help him counter perceptions that he’s cut from money rather than from the ANC’s culture and traditions given his cosy relationship with South Africa’s captains of industry as a result of his long stint in the private sector.

The time between now and the 2019 national elections is, in effect, a transitional period that needs to be characterised by strong backroom negotiations on a range of difficult issues. These include the removal of Zuma, as well as some of his problematic cabinet members, and the recapitalisation of state owned institutions.

There is a lot of confidence-building that the ANC leadership has to do. Zuma has weakened the ANC – as well as the government. And the South African economy has been haemorrhaging for the past 10 years. Confidence has been hit by the weakening of state owned enterprises such as South African Airways and the country’s energy utility Eskom, downgrades by international rating agencies, corruption in the private and public sectors, investigations into state capture and widespread incidences of racism.

If Ramaphosa fails to hold the party together while simultaneously digging the country out of the hole that it’s in, a big question mark will continue to loom over the ANC’s elective fortunes in 2019.

Thapelo Tselapedi, Politics lecturer, Rhodes University

This article was originally published on The Conversation.

Nationalising South Africa's central bank isn't bad per se: just what's done with it

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South Africa’s governing party, the African National Congress (ANC), recently adopted a resolution to nationalise the country’s central bank. The move comes on the back of calls for government to rein in the South African Reserve Bank, causing concerns that the bank’s independence will be lost. Sibonelo Radebe asked Jannie Rossouw to consider what’s at stake.

What do you make of the ANC’s resolution?

The ANC’s thinking around this resolution is a bit ambiguous and confusing. The resolution itself and subsequent comments by the new ANC President, Cyril Ramaphosa, say that the resolution should not affect the independence of the bank.

While upholding the resolution to nationalise, Ramaphosa added this qualification:

The Reserve Bank plays a critical role in the life of any nation with regard to monetary policy and safeguarding and promoting the value of its currency. The ANC once more reaffirms the role, mandate and independence of the Reserve Bank.

He clearly wants to protect the central bank from political interference. This should be welcomed because political interference would have an impact on the constitutional mandate of the central bank.

But those pushing for nationalisation are against it remaining independent from political interference. They want its independence curtailed. This view is aired by those on the left in the ANC, such as the Congress of South African Trade Unions and the South African Communist Party. They believe that the Reserve Bank is misguided on focusing on keeping inflation under control and that this compromises economic growth. Prominent ANC leaders have also backed this view.

On its own, a change of the bank’s ownership from private shareholders to the South African government wouldn’t affect the constitutional mandate of the central bank. Government ownership doesn’t automatically imply government control. This is evident in countries like the UK, Sweden and Denmark, where government ownership of central banks doesn’t affect their unwavering commitment to keep inflation under control.

How does this resolution fit into global trends?

Nationalisation would align the South African Reserve Bank’s ownership structure with the majority of central banks across the world. Other than in South Africa, central banks with private shareholders can be found in seven other countries. These are Belgium, Greece, Italy, Japan, San Marino, Switzerland and Turkey.

The number of central banks with private shareholders have declined over the years since the nationalisation of the Reserve Bank of Zealand. Many more countries followed. The most recent was the National Bank of Austria in 2010.

What influence and benefits do the shareholders of the bank have?

The South African Reserve Bank has 2 million issued shares, held by the general public, which includes individuals and juristic persons. No group of shareholders (referred to as associates) can hold more than 10 000 shares. This ensures that no shareholder can exercise undue influence over the activities of the bank.

Shareholders in the Reserve Bank have very limited powers. And being a shareholder isn’t very lucrative. They are entitled by law to annual dividends not exceeding 10c per share per annum, which amounts to 8c per share after tax.

Shareholders also have the right to attend the bank’s ordinary annual general meeting where they are able to approve the appointment of the external auditors of the bank and set their remuneration. They also elect six of the 13 board members. The other board members, including the Governor and the deputy governors, are appointed by the president of the country.

The board plays an oversight role on the governance of the bank – including being responsible for the bank’s annual financial statements. But its mandate does not extend to monetary policy decisions.

This structure of general meetings adds an additional layer of transparency to the activities of the central bank and improves its accountability. At general meetings (which are also attended by journalists), the Governor answers questions on the bank’s activities and on its financial performance. The whole process adds to the transparency and general understanding of the role and activities of the central bank.

What needs to happen to give effect to the ANC resolution?

The nationalisation of the bank will require an amendment to the South African Reserve Bank Act which stipulates the private shareholding. Amendments require a simple majority in parliament.

Nationalisation could therefore happen as soon as legislation is prepared and a bill is passed in parliament.

But the process could become far more complex if nationalisation trampled on some international interests that are anchored in international treaties. At the moment it’s not clear whether or not this is the case.

The other challenge might be around determining the buyout value of the bank’s shares. This is because the South African Reserve Bank Act makes provision for the liquidation of the central bank, but not for its nationalisation.

In the event of liquidation, the legislation prescribes that shareholders should be reimbursed for their shares in terms of a formula based on the trading value of these shares. The shares are traded on an over the counter share trading platform. The last traded price per share was R9,60.

A different approach could be to use the share price confirmed by the High Court in dealing with delinquent shareholders. The central bank had to approach the High Court to deal with shareholders who failed to adhere to legal prescriptions in respect of maximum of 10 000 shares held by associated shareholders. In this instance the High Court confirmed a price of R1,55 per share which was calculated by consultant firm KPMG on behalf of the central bank.

These two examples highlight the fact that valuation won’t be a simple matter. Adding to the complexity is the fact that parliament could decide on a completely different value of the shares.

Jannie Rossouw, Head of School of Economic & Business Sciences, University of the Witwatersrand

This article was originally published on The Conversation.

Is South Africa's ANC bent on radical policies? Here's why the answer is no

Delegates attending the 54th National Conference of the ruling African National Congress in South Africa.
Reuters/Siphiwe Sibeko

When media cover a political party conference decision, it is best to report on the entire resolution, not just the exciting bits. This may reduce the audience but will improve accuracy.

The point seems to have been forgotten in reporting on a resolution on land expropriation passed at the December conference of South Africa’s governing party, the African National Congress.

Media announced that the party endorsed changing the constitution to allow the government to expropriate land without compensation. This, with a resolution calling for the “nationalisation” of the South African Reserve Bank, and one urging the government to speedily implement an announcement by President Jacob Zuma that children of poor families would receive free higher education, were widely quoted as evidence that the ANC had embraced economic radicalism.

But a closer look at the details of land resolution and the context of the other two shows that the most radical decision adopted by the conference were not these but one that has been largely ignored – a proposal which would give greater power over land to rural people, not traditional leaders.

Caveats on land expropriation

Reporting on the land expropriation decision mentions only half the resolution. The ANC has endorsed the change, but, according to the chair of its economic transformation committee, Enoch Godongwana, only if two conditions are met. It must not threaten food security or impact on the rest of the economy.

This almost certainly means that the resolution means the opposite of what is reported– in effect, it rejected changing the constitution to allow expropriation without compensation.

Whether changing the constitution would damage food security is a matter of opinion. But, since there is no shortage of voices insisting that it would, the condition provides a handy escape hatch for a government which does not want to make the change.

The second condition is the clincher. It is impossible to allow for land expropriation without compensation without affecting the rest of the economy. A measure which alters property rights in one sector sends a message that others may be due for the same fate. Even if only some investors came to this conclusion – and the chances are that just about all will – the economy will be affected. So, to say the change will only be introduced if the economy is unaffected is to say it won’t happen.

Political realities explain why the resolution was phrased in this way. One ANC faction wanted the constitutional change, the other did not. But the sceptics knew of widespread anger inside the ANC (and outside it) at the slow pace of land reform. Insisting that there was no need for a change would not have been credible – it would mean being seen to agree that whites should hold on to most productive land.

The only way out for the opponents was to agree on the principle but to hedge it with conditions which can’t be seen to endorse white privilege. The fact that they succeeded in including the conditions suggests that they are strong enough to prevent the change.

Reserve Bank changes unlikely any time soon

Similar realities shaped the decision to endorse “nationalising” the central bank. This would not affect its mandate or independence. It would simply end a quirk – that South Africa’s central bank is owned by private shareholders. The change would be entirely symbolic.

In a climate in which there is widespread unhappiness with continued black economic exclusion, agreeing to a change which would change nothing was an obvious response. This is particularly so since the change is unlikely any time soon.

In private discussions, ANC economic policymakers note that the money needed to buy out the private shareholders of the South African Reserve Bank is not available. And so this may be one of many governing party resolutions – in all democracies – which are never implemented because they pose practical difficulties.

Free higher education

The tertiary education change may be implemented, at least for a year. It has proved hugely controversial and may create headaches for universities and colleges because it has not been carefully costed and planned. But it is no change to ANC or government policy.

Zuma’s announcement is repeatedly described as an agreement to free higher education but it isn’t. It doesn’t apply to all students – only to those who are “poor and working class” - anyone whose household income is below R350 000 a year.

That students who cannot afford higher education should not pay for it is already government and ANC policy, which is why the conference did not see a need to endorse the announcement – it simply urged that it be implemented quickly. It is also accepted by just about everyone concerned about fairness in education. It is very different to the demand that all higher education be free since those who can afford to pay will still be charged fees.

It is not clear whether practicalities will allow Zuma’s announcement to be implemented in full. But, even if it is, this is no shift to the left.

So the ANC has not emerged from the conference as a more “radical” party. Its economic policy resolutions remain within the framework which has governed its thinking for years.

This does not mean it will leave the economy untouched: there is agreement across the factions that change which includes more people is essential. But it does mean that change will be negotiated and will respect perceived realities in the marketplace.

A real radical resolution

What of the change virtually no-one noticed? Media coverage and debate remains dominated by the middle class and so the concerns of people at the grassroots are almost always ignored. This explains why a proposed change that would limit the power of traditional leaders over land passed largely unnoticed.

According to an ANC briefing at the conference, it decided that control over land should rest with communities, not chiefs. In principle, this should enable rural people to stop traditional leaders using land for their own purposes at their expense, which has brought “state capture"to the countryside and has triggered conflict.

The resolution may prove hard to implement because it may be difficult for rural people to hold traditional leaders to account. And, like all conference resolutions, it may never become law because traditional leaders may lobby against it.

But, if it did become law, it may make far more difference to far more people than the "radical” resolutions which have hogged print and broadcast headlines.

Steven Friedman, Professor of Political Studies, University of Johannesburg

This article was originally published on The Conversation.