South Africa's race relations laid bare in Steinhoff corporate scandal

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South Africans are fond of debating whether public or private sector failings are the bigger problem. It does not take too long to realise that they are really talking about race.

This is evident as the country faces an unusual scandal – one involving a private company called Steinhoff. The multinational furniture company is in trouble after German investigators began looking into it, for allegedly doctoring financial information to mislead the markets.

This was not the first time fingers were pointed at a private company. Auditors KPMG have been accused of unethical practice on behalf of the Gupta family who are linked to President Jacob Zuma and are accused of using money to influence government appointments and policies. Media conglomerate Naspers is also facing corruption accusations. Its subsidiary MultiChoice is accused of paying large sums to the formerly Gupta-owned television channel ANN7 in the hope of influencing government decisions.

But Steinhoff stands out because it does most to shake the confidence of one side of the argument and to get the other claiming it is vindicated.
For much of the past few years, corruption has been seen almost exclusively as a public sector problem. Attention has focused on Zuma and his relationship with the Guptas. The private sector (Gupta-owned firms excepted) has, by default, been painted as a corruption-free zone.

The KPMG and Naspers cases may involve prominent private firms, but are seen by the national debate as yet another sign of the Guptas’ baleful influence. The villains remain the same and so does the problem: public sector corruption.

Steinhoff is a different matter entirely. The state plays no role at all and the company is a pillar of the private economy. Its leadership is overwhelmingly white and its attitude to the post-apartheid government seems to range from indifference to scepticism.

No wonder that its failings have been gleefully seized upon by people who insist that private sector corruption is as big a problem as its public equivalent. Or that many of the people who usually insist that public corruption is the problem have reacted to Steinhoff with shock.

On the surface, this sounds like the standard debate in most democracies over the past few decades in which one side favours letting business do as it pleases and the other wants it to be reined in by the state. But, in a country in which whites remain dominant in private business while blacks largely control the government, it is really about the country’s racial divides.

Colour of merit

Apartheid was underpinned by strong beliefs in white superiority – these don’t simply melt away because political rules change. People are used to seeing one racial group in skilled jobs, giving orders to the other: inevitably, this becomes seen as natural and so being white is associated with merit, being black with lacking it.

Since 1994, when policies promoting black advancement in business and the professions were adopted, this is often expressed in the view that black people in senior positions are there because they were given a free pass by the system, not because they deserve it.

This way of thinking also shapes attitudes to government and business. For those used to the racial pecking order of the past, government is run by people who hold posts because they are black, not because they are competent. Business continues to be run mainly by people who were judged to be competent in the past and who are therefore assumed now to be honest and to know what they are doing. Calls to assign more government functions to businesses or business people are often a way of saying that white people or black people approved by them should be running the country.

This attitude is particularly evident in how people in the suburbs react to private monopolies or dominant corporations.

Government departments are almost always associated with waiting in long lines for surly officials who have no idea what they are doing. In most cases, this is a caricature; in some, the Department of Home Affairs passport office for example, it is flat wrong. But similar long waits, indifference to customers and incompetence at the dominant digital television corporation or one of the mobile phone companies is accepted cheerfully as normal business practice.

Delighted black voices

Black people are perfectly well aware of these attitudes. This is why those who insist that the private sector is as bad if not worse than its public equivalent are almost always black. And why many black voices are delighted at what has happened at Steinhoff because it shows that a pillar of white business can behave at least as badly as black government.

It also explains why many white people have reacted to Steinhoff with such shock – and why Steinhoff happened in the first place.

The editor of the country’s leading business daily, Tim Cohen, has pointed out that Steinhoff’s failings should not have been a surprise since several market analysts warned a while ago that something was amiss and were ignored. He offered some explanations but, given the realities described here, the most likely answer is that no-one believed the specialist nay-sayers because they assumed that a major white-owned company must know what it is doing and that the critics must have an axe to grind.

Cohen also ran into trouble on social media for suggesting that reduced capacity at state regulators allowed Steinhoff to happen. Predictably, black people felt (wrongly in his view) that they were being blamed for white business failings.

There is another explanation for the regulators’ inaction. It is that they were not eager to look into a large white-owned company because they feared that this would be seen as yet another case in which incompetent black people wanted to bully competent whites. It is standard in the South African debate that any attempt by government, however mild, to intervene in business is branded a threat to the market economy so it would hardly be surprising if regulators feared this.

Correcting wrong perceptions

The Steinhoff scandal would do South Africa a huge service if it made the point that corruption and mismanagement have nothing to do with race. It would also help if it alerted everyone in the marketplace to watch as carefully over private companies as they do over government departments.

But, given how entrenched racial attitudes are, it is more likely that it will be dismissed as a once-off freak by those who assume that white led business is always competent and as further evidence of white prejudice by black people reacting to the label often stuck to them. If that happens, some private businesses will continue to get away with behaviour which would never be tolerated in government.

Steven Friedman, Professor of Political Studies, University of Johannesburg

This article was originally published on The Conversation.

South Africa needs electoral reform, but president's powers need watching

Jacob Zuma, president of South Africa. There are renewed calls for citizens to directly elect their president and other representatives.
Reuters/Sumaya Hisham

Within a short time, the 4000 odd delegates to South Africa’s governing African National Congress’s 54th National Conference will elect a new party leader. In turn – save death, disaster or unlikely electoral defeat – a parliament stuffed with an ANC majority will at some point elect that leader as the new President of South Africa. The expectation is that this will be Nkosazana Dlamini-Zuma or Cyril Ramaphosa. But, if the ANC elects a pig, the ANC parliamentary majority will vote for the pig.

Although it is by no means unusual for parliaments to elect countries’ political leaders, there is widespread complaint in South Africa that it is the small ANC elite which attends the conference that effectively selects the next president of the country. This, it is said by many, is undemocratic.

Two main reasons are cited. First, ANC electoral procedures are deeply corrupted by money changing hands, personal ambition and factionalism. Second, it should be the people, not the party, which should be charged with electing the country’s leader.

It is therefore of considerable interest that, rather than emanating from civil society or another political party, the proposal has been made by the ANC’s Gauteng provincial conference that consideration should be given to ordinary voters voting directly for presidents, premiers and mayors. This is of particular interest given that Gauteng is one of the ANC’s most powerful provinces, and at the same time, one which is often at odds with the party’s current leadership.

The proposal that the state president, provincial premiers and mayors be directly elected is a most welcome one, as there is much need to consider the quality of South Africa’s democracy, and to encourage public participation in decision-making. However, direct election of such offices simultaneously holds its risks.

The electoral reform debate

The debate about electoral reform in post-1994 South Africa has largely focused on the system used to elect MPs and their counterparts in the country’s nine provinces. The standard argument for a change was captured succinctly by ANC dissident and Umkhonto we Sizwe veteran Omry Makgoale:

When will we wake up and reform our crooked electoral system?

The argument is that the list proportional representation system results in the election of MPs who are accountable to party bosses rather than voters. Such an outcome is rendered more certain by the fact that South Africa’s constitution lays down that MPs or provincial legislature representatives who leave or are ejected from their parties lose their seat in the relevant legislature, plus the handy salary that goes with it. To continue with the animalistic referencing, parties’ elected representatives become sheep, devoid of any capacity for independence.

Presidential hopeful Nkosazana Dlamini-ZumaChairperson.
Reuters/Francois Lenoir

Such critiques often suggest (very sensibly) that the electoral system should become a mixed one which combines proportionality of outcomes with the direct election of representatives from constituencies. This was recommended in 2002 by the Van Zyl Slabbert Commission on electoral reform. But there has been relatively little debate about whether the President and premiers should be directly elected.

The survey conducted on behalf of the Van Zyl Slabbert Commission indicated that 63% of respondents would have liked to vote for the president directly. This level of preference was pretty much the same across all racial groups. Given the disastrous nature of the Zuma presidency, it is very possible that the preference for direct election would be considerably higher if the issue was put to survey respondents today.

Virtue of direction election

The virtue of the direct election of key political leaders is said to be that it renders them directly accountable to voters rather than to their political parties. On the face of it, it is an attractive argument, and it is one which could usefully introduce more diversity into the South African political system.

If they wanted to maximise their vote, parties would have to look at the qualities of their candidates, and ask themselves whether they would appeal to the electorate as a whole. (On this reckoning, it is a dead cert that Cyril Ramaphosa would streak home and dry, rather than, as under the ANC’s present system, running neck and neck with his chief rival, whose popular appeal is that of a wet fish). This would mean that candidates would end up openly campaigning for the leadership, dispensing with the ANC’s absurd pretence that individuals should not demonstrate political ambition.

There is also the possibility that voters would elect a president from a party other than the one which enjoys a majority in the National Assembly.

Would direct election of the president, premiers and mayors be a good idea? And, if so, what system should be adopted?

The second question is easily answered. To avoid the election of a president who gains less than 50% of a popular vote but more than any other candidate, provision would wisely be made for a second round of a presidential election in which the top two candidates engage in a run off.

A good idea?

So would direction elections be a good idea?

Parliamentary systems work well because they devolve the election of prime ministers to the legislature. On the continent, countries that inherited a parliamentary system from Britain subsequently opted for elective presidencies.

The results are not unambiguously encouraging.

South African Deputy President Cyril Ramaphosa.
GCIS

In Kenya and Zambia, for instance, the direct election of presidents may have weakened the link between legislatures and executives. This has allowed executives to trample over legislatures, and for leaders to claim a legitimacy separate from that of their party. Presidents from Daniel Arap Moi through to Uhuru Kenyatta in Kenya and from Frederick Chiluba through to Edgar Lungu in Zambia have all proved exceedingly authoritarian.

It follows that changing the South African system to allow for direct election would require the country to look carefully at how a directly elected president should be rendered accountable to parliament. Would the change enhance the accountability of the government by empowering MPs, or would it render them increasingly irrelevant?

Dangers of an all-powerful president

It is also worth recalling that there is now much greater awareness about how much power is concentrated in the Presidency, in a way, it would seem, that the makers of the country’s constitution did not intend. Under Zuma, the presidency has a direct say in far too much, such as the right to appoint the head of a National Prosecuting Authority which might have the responsibility of calling him to legal account.

South Africans need to be wary of any change in the system which ends up making the President less – rather than more – accountable.

In any case, while there can be very good reasons for reforming an electoral system, this will not automatically result in better governance. Form can rarely trump substance. Robert Mugabe only “won” the Zimbabwean presidency in 2008 through his army and police terrorising the opposition and effectively forcing his rival, Morgan Tsvangirai, to withdraw.

It will take more than a piecemeal change to South Africa’s constitution to improve it’s democracy. South Africans should be careful what they wish for, as they can never be quite sure what they will get.

Roger Southall, Professor of Sociology, University of the Witwatersrand

This article was originally published on The Conversation.

Why changes to South Africa's labour laws are an assault on workers' rights

South African public sector workers march for higher pay.
Reuters/Mike Hutchings

The biggest changes to South Africa’s labour laws since 1995, shortly after the country’s first democratic elections, are currently being considered by parliament. If passed into law, they will significantly limit the hard won rights of workers to strike. In addition, details about the country’s much-heralded national minimum wage set out in the enabling legislation show that, in practice, it may be unenforceable.

The three bills include amendments to the Labour Relations Act and the Basic Conditions of Employment Act, as well as the new National Minimum Wage Bill.

If these proposed amendments become law it will be a significant defeat for workers. Taken together the legislation would roll back the hard won gains of the labour movement in South Africa and curtail the most powerful tool available to workers to improve their earnings.

The end result is likely to deepen South Africa’s vast inequalities.

The right to strike

Two of the proposed changes will affect workers’ right to strike, which is protected under South Africa’s Constitution.

First, the proposed amendments to the Labour Relations Act would introduce measures which, although designed to minimise violent strikes, would, in fact, discourage strikes in general. For example, the amendments would require trade unions to hold secret ballots to decide on strikes. By individualising the decision to strike, the secret ballot fundamentally undermines the collective nature of a strike.

Second, the proposed Labour Relations Act amendments will introduce a mechanism where strikes could be resolved through an advisory arbitration panel, which would be led by a senior commissioner of the Commission for Conciliation, Mediation and Arbitration (CCMA).

The problems with this are that the circumstances under which an advisory arbitration panel can be convened are very broad and, crucially, employers will have the right to request it. Meaning employers will have an easy way to resolve strikes without necessarily having to engage their workers directly or agree to any of their demands. The decision of the advisory arbitration, unless appealed, will be binding on all parties.

On top of this, trade unions can be interdicted at any time during what would be a more onerous procedure.

If passed, the amendments would make protracted strikes, such as the 2014 platinum strike, highly unlikely.

Show us the money

Details of the bill reveal a different picture of the country’s much heralded national minimum wage of R3,500 (USD$256). There will be no monthly minimum wage, only an hourly minimum wage of R20 p/h. Those that work flexible hours or part time will be unlikely to earn the R3,500, if they work under 40 hours a week. For domestic and farm workers the news is worse: farm workers will earn R18 p/h, while domestic workers will receive only R15 p/h. Only in 2020 will these workers receive the full minimum wage.

Two problems loom large in the implementation of the national minimum wage. One is compliance, the other redress.

Some sectors, including domestic work and farm work, already have minimum wages prescribed in the sectoral determination. But, non-compliance can be as high as 50%, as is the case in the agricultural sector. Based on current experience, there is no reason to think that compliance with the national minimum wage will be any different.

But, the ability of workers to get justice will become significantly more difficult.

Under the proposed amendments, the enforcement of the national minimum wage will move from the Department of Labour to the CCMA. This will make the process of seeking redress more arduous.

If a worker is being underpaid, she will have to refer her case to the CCMA. The average time for a case to reach arbitration is 60 days, but in the experience of the Casual Workers Advice Office it can take many more months.

Even if a worker eventually receives an arbitration award, many employers can simply ignore it. The next step is for the worker to have the award certified by the CCMA. If the employer still refuses to abide by the award the worker has to get a writ of execution, which is then served by a sheriff but often only after the demand for a deposit has been met. In 2016/2017, the CCMA had to assist 4,000 low-paid workers in getting a writ of execution. Many more workers often give up hope and never see through the enforcement of their arbitration award. Many more are not even aware of the CCMA remedy.

By making the CCMA the primary enforcer of the national minimum wage, the process is likely to become fraught with legal and practical difficulties, making the whole process unworkable.

What’s worse is that, to accommodate the national minimum wage, the amended Basic Conditions of Employment Act will actually roll back important rights for some workers.

Sectoral determinations do not only prescribe minimum wages but provide important protections for workers, such as provident funds. Amendments to the act will mean that the sectoral determinations will be phased out and replaced with the national minimum wage law. This could mean that workers could lose out on both the wage front as well as some important rights. This is particularly the case for farm workers who stand to lose important rights to housing.

How did it come to this?

You would have expected trade unions to have objected loudly to these fundamental changes to worker rights. Not so. The country’s leading trade union federations, including Cosatu, Fedusa and Nactu have all been involved in negotiations on the changes.

What this reflects is the balance of class forces in South Africa today. Trade union membership has been declining and now only about a quarter of the workforce is unionised. Of those that are unionised, the overwhelming majority are likely to be in full time, permanent, professional or skilled employment.

The simple truth is that unions largely do not organise workers who will benefit from the national minimum wage and are therefore indifferent to its practicalities.

What is less clear is why the major trade union federations have been involved in a process that has negotiated away important protections around the right to strike.

Carin Runciman, Senior Reseacher, Centre for Social Change, University of Johannesburg

This article was originally published on The Conversation.

South Africa's communist party strips the ANC of its multi-class ruling party status

There is a fallout between alliance partners the South African Communist Party and the governing ANC.
EPA/Kim Ludbrook

The South African Communist Party (SACP) has broken with history and challenged the governing African National Congress (ANC) in an election. The SACP’s decision to go it alone in the Metsimaholo municipality by-election marks a new low in relations within the tripartite alliance forged during the struggle against apartheid. The other alliance partner is the trade union federation Cosatu. The contest ended in a hung council, with the ANC taking 16 seats, the Democratic Alliance 11, the Economic Freedom Fighters eight and the SACP three. Politics and Society Editor Thabo Leshilo asked political scientist Professor Dirk Kotze about the development.

What is the significance of this development?

The decision to contest an election on its own clearly represents a watershed event for the SACP. It is the first tangible step towards implementation of a resolution taken by the SACP in 2007. Then, unhappy with the ANC’s policies in government, the communists raised the issue of contesting elections themselves. It proposed doing this either within a “reconfigured alliance” or having its own candidates contest elections, after which it would come to an agreement with the ANC on how to cooperate in government.

The SACP’s decision to go it alone is the culmination of a fallout dating back to 1996. Then, the ANC government under President Thabo Mbeki announced a macro economic framework, known as Growth, Employment and Redistribution (Gear), without substantial consultations with the SACP and Cosatu. Both slammed the policy as being anti-communist and serving the interests of business at the expense of the poor working class.

The SACP, and Cosatu, thought that their fortunes had turned when, with their support, Jacob Zuma was elected president of the ANC in Polokwane in 2007. But it wasn’t to be. Both groups have subsequently fallen out with Zuma. The relationship has deteriorated so badly that SACP members in KwaZulu-Natal are being assassinated over municipal council positions.

Why is this so unusual?

The Tripartite Alliance can be traced back to the late 1940s and the Communist Party’s subsequent underground involvement in the ANC-led Congress of the People in 1955. The Congress Alliance adopted the Freedom Charter as its blueprint for a democratic and prosperous South Africa.

In the 1960s the formation of Umkhonto we Sizwe, the armed wing formed by ANC and SACP members, was arguably the most concrete articulation of the ANC-SACP alliance.

In the decades that followed the SACP played a key role in facilitating the support of the Soviet Union and Eastern Bloc for the ANC and South African Congress of Trade Unions. The communists also shaped the ANC’s philosophy around national liberation as the “national democratic revolution” and view of apartheid as “colonialism of a special type”.

This influence on the ANC was personified by the likes of leading communists Moses Kotane, Moses Mabhida and Dr Yusuf Dadoo. The SACP viewed the alliance as a popular front uniting the working class and progressive forces in the struggle for freedom.

The SACP is unique in Africa because very few communist parties survived after independence. Most of them were either banned or integrated into nationalist liberation movement governments.

The party’s independent participation in the Metsimaholo by-election takes it back to the period before 1950 when communists such as Brian Bunting and Sam Kahn represented the then Communist Party of South Africa in Parliament.

But after that, and after the party was banned, the SACP’s revolutionary theory of armed struggle and insurrection excluded an electoral approach.

Once the first inclusive elections were planned in South Africa, the SACP deferred to the ANC as the leader of the national democratic revolution to pursue an electoral approach.

What is the significance for South Africa?

Firstly, no one can continue to argue that the Tripartite Alliance is still a coherent political front bringing together a working class union movement (Cosatu), working class party (SACP) and a multi-class governing party (ANC).

What this means is that the ANC’s social democratic character in terms of a partnership with working class organisations has come to an end. The ANC will now have to reconfigure its own identity as a social democratic party, similar to former UK Prime Minister Tony Blair’s reconfiguration of “New Labour”.

Secondly, the SACP’s decision serves as an official recording of the radical changes the ANC’s identity has undergone in terms of how it defines its own interests or constituencies. It’s finally stating that its core interests and those of the ANC’s are in the process of parting ways. In socialist parlance, the ANC’s and SACP’s class interests have reached a crossroads.

This follows on the earlier decision by Cosatu’s largest affiliate the National Union of Metalworkers of South Africa to part ways with the federation and to establish the United Front as its own political vehicle. It’s still unclear whether this this will result in a new left political movement. But, all the socio-economic conditions - such as high inequality, unemployment, poverty and social discontent - provide fertile ground for just such a movement.

What are the electoral prospects of the SACP?

The SACP is not in a position to mobilise substantial support in the near future. The left is contested terrain and prone to fragmentation. This is partly the result of personality clashes and ideological hair-splitting.

It could possibly join forces with the National Union of Metalworkers of South Africa which, for the last 30 years, has debated the ideal of a workers’ party. This would only be viable if the SACP combined its party programme with the social democratic (social welfare) needs of a rural, non-socialist populace. This would imply making ideological compromises, which is not uncommon for the SACP. It would also require it to establish a real party political infrastructure.

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

This article was originally published on The Conversation.

Snags that could cast doubt on ANC's choice of new leaders

South Africa’s governing African National Congress has begun the process of choosing its leaders.
EPA-EFE/Kim Ludrick

South Africa’s governing African National Congress (ANC) holds its highly contested national elective conference for its top six leaders, between December 16 – 20. The conference will, among other things, mark the end of Jacob Zuma’s controversial decade-long tenure as party president. It will also bring to an end a bruising contest to replace him. The top two contenders are Cyril Ramaphosa and Nkosazana Dlamini-Zuma. The Conversation Africa’s Politics and Society Editor, Thabo Leshilo, asked Keith Gottschalk about the process.

Why does the conference matter?

The elective conference is important for the party as well as the country. This is because the person chosen to lead the party has, since 1994, gone on to become president of the country – an outcome dictated by the fact that the parliament elects the next president and the ANC has a large majority in parliament. The outcome is therefore watched very closely by both South Africans who support the ANC and those who don’t.

How does the ANC choose its top leaders?

The ANC’s election process is full of extraordinary contradictions. It has built into it some of the most stringent checks and balances of any party in the world. On paper, the process could not be more fair. In practice either incompetence or manipulation causes much anger.

The party holds an elective conference every five years. According to the ANC rules, 90% of the delegates to the conference must be from party branches. Each branch in good standing is entitled to send one delegate, and if a branch has more than 250 delegates it is allowed to send one extra delegate per 250 extra members.

The additional 10% of delegates is made up of representatives from each provincial executive, delegates representing the women, youth and veterans leagues as well as members of the party’s National Executive Committee who attend in an ex officio capacity.

Before the conference ANC members are required to take part in a specially convened annual general meeting of their branch. There are over 2 000 branches in good standing. To be able to vote at this special AGM members have to have their ANC membership card as well as their South African national identity document.

What checks and balances are in place to make sure the process is fair?

Voting at the branch AGMs is monitored by trusted veterans chosen by the Provincial Executive Committee who are deployed to monitor the process.

Voting usually takes place by show of hands, but may be done by secret ballot. The team monitoring the process must take a picture of results of voting recorded on paper using their cellphones and send the image to the party’s national headquarters at Luthuli House, in Johannesburg. This is to prevent ballot results being tampered with.

What are the flaws in the system?

I believe the process is fair. But it would be fairer if there was a direct one-member-one-vote system instead of branch totals.

The flaws in the system relate to the extent to which rigging can take place. This can happen by wealthy politicians setting up ghost branches. Provincial executive committees also sometimes try to manipulate the outcome of the branch AGMs. This can happen through manipulating who gets chosen to represent the branch as a delegate to the national conference.

But the biggest opening to possible fraud is through using the issuing of ANC membership cards to “gatekeep” – stopping people from being able to vote in branches, or even from attending the conference. Membership cards, and being included on the membership list compiled by Luthuli House, national HQ (as opposed to lists kept by one’s own branch and provincial office) matter because they give individuals the right to vote at their branches, as well as at the conference if they’re chosen to go as a delegate.

During the last few conferences there were accusations that the Zuma faction of the ANC deliberately used the fact that renewals and new cards can take a very long time to issue to keep certain people from attending (and voting).

The issuing of cards is a mess. New members complain bitterly about waiting inordinately long periods - sometimes up to 21 months - to get their membership cards. Renewals can also take forever. The renewal of the late ANC former cabinet minister Kader Asmal’s membership card reached his widow five years after he died.

Sometimes, some members in good standing suddenly discover that their names have been removed from the membership register. The most high profile of these cases was Zweli Mkhize, the party’s treasurer and one of its top six leaders.

Five years ago an example of gatekeeping hit one branch’s delegate when he arrived at the national conference at Mangaung. He was told he was not a member in good standing. He was in fact an ANC Member of the Provincial Legislature. Only after votes were cast which saw Jacob Zuma re-emerge as party president was it conceded that he was actually a member in good standing.

Another potential flaw is that delegates who are mandated by their branch to vote for one particular candidate are persuaded – for example by being bribed when they get to the conference – to vote for someone else.

Voting at the conference is by secret ballot. The assumption is that branch delegates will behave with integrity and vote for the person their branch mandated them to vote for.

But even if they do accept a bribe, those reportedly offering the bribe have no way of knowing if the delegate actually did change his or her vote.

South Africans, especially ANC voters, will be watching closely for any signs of rigging, bribing branch delegates to switch their votes, and other manipulations. If all is free and fair the process certainly equals, for example, the degree of democracy in UK and US parties choosing their leaders.

Keith Gottschalk, Political Scientist, University of the Western Cape

This article was originally published on The Conversation.