South African business must own up to its part in the corruption scandals

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South Africa is reeling from a string of scandals involving state owned enterprises and the Guptas, a family with close ties to President Jacob Zuma. A trove of recently leaked Gupta emails exposed the involvement of prominent businesses in the extensive corruption networks. Sibonelo Radebe asked Mills Soko to explain the implications of the scandals.

What do you make of the situation?

If nothing else, the Gupta leaks have shown us how perilously close South Africa is to losing everything so many people fought so hard for. Not only does corruption divert capital allocated for public services away from the poor, it hollows out important state institutions and, ultimately, frays the social and economic fabric of the country. It threatens the hard won democracy and political stability.

The ongoing revelations around state capture and patronage are giving South Africans an unprecedented and frightening glimpse into the machinery of corruption. The most unnerving element of the emails is how many of the transactions appear blatant and almost casual. The absolute cynicism and lack of ethics revealed in this correspondence is breath taking.

What we do with this knowledge as a country is going to count for everything. As a business community we can look away and call these tales of corruption isolated incidents – or we can step up to ensure that our organisations hold themselves to a higher standard. Most critically the law must take its course.

What does it tell us about the role of business?

The emails remind us that in any corrupt interaction it takes two to tango. And while governments and public money are so often at the centre, the enablers of corruption are not in government but in the private sector.

With the Gupta’s at the centre of the rot, prominent international companies like accounting firm KPMG, consulting giant McKinsey, ICT player SAP, engineering company Liebherr and capital equipment manufacturer Shanghai Zhenhua Heavy Industries have been implicated in the mounting scandal. It’s worrying to see that companies of such calibre can be involved in such nefarious activity.

Corruption is, of course, not a new phenomenon – and nor is it unique to South Africa, as the Global Corruption Index shows. But certainly, the scale of what is going on in South Africa right now is unprecedented.

How do you rate the responses by the implicated businesses?

Companies have scrambled to distance themselves from the reputational firestorm that the Gupta leaks have unleashed. McKinsey acted promptly to suspend Vikas Sagar, a director in its South African office, to allow an internal investigation to proceed. For its part SAP, which originally denied the allegations, has similarly suspended South African staff while launching a full anti-corruption investigation , which is to be carried out by a multinational law firm and overseen by its executive board member Adaire Fox-Martin.

It’s convenient to blame these incidents on bad apples. But this doesn’t get below the surface of what is really going on. The scale of the corruption and the apparent ease with which it has been unfolding speaks to the fact that something is very wrong with the system. And it highlights an utter lack of business ethics and governance failures. This isn’t something the country can afford.

What should be done to root out the corruption?

While all of this may seem overwhelming, what is unfolding also presents the business community with an opportunity for some introspection. Calls have been made for greater purpose and responsibility on the part of South African leaders.

But how can we make sure these fine words and intentions are internalised? How do we make sure as a country that our business as well as our state institutions are committed to not allowing this to happen ever again?

Educational institutions, business schools in particular, are positioned as a first-line duty in making sure that graduates are equipped to recognise and reject corruption in any form. The country needs business leaders who are committed to building sustainable and profitable businesses but who are also mindful of their social and ethical obligations.

Citizens as workers and consumers also have a significant role to play. As individuals working in companies and purchasing goods and services from companies, they can condemn unethical behaviour from companies. This was partly reflected in how the general public put pressure on Bell Pottinger the UK based public relations firm which did work for the Gupta’s.

By rounding on Bell Pottinger, effectively causing the company to lock its Twitter account and issue a formal and unprecedented apology to the country (even though they also blamed the fiasco on bad apples rather than the system), South Africans have shown the power they can wield when united against wrongdoing.

But the country needs to go further. While government and business have not enjoyed the best relationship in recent times, they need to bury the hatchet and come together to fix the inequalities in this country. Deep divisions have laid South Africa open to the kind of racist exploitation that Bell Pottinger unleashed.

Until the country rights this situation, it will continue to remain vulnerable to these kinds of nefarious influences. South Africa needs to be united in the spirit of building a country that works for everyone – not just a select few. Things are broken, yes – but it’s not impossible to repair the damage.

Mills Soko, Associate Professor, Graduate School of Business, University of Cape Town

This article was originally published on The Conversation.

Why South Africans should resist an amnesty deal for Zuma

South African President Jacob Zuma. Granting him amnesty would send the wrong signal.
Peter Foley/EPA

As the roof of Jacob Zuma’s presidency begins to cave in, there is the suggestion that, to save South Africa and the continuing damage that his incumbency is doing to the economy, he should be given amnesty.

It would seem this is meant to give Zuma a cast iron assurance that the charges pertaining to his involvement in corrupt dealings around the arms deal be dropped. It would also serve as a guarantee that charges will never be reinstated.

With such assurances, it is suggested, he can be pensioned off as a former president to spend the rest of his days watching over his chickens and lazing around by his firepool in Nkandla. South Africa will then be able to get on with the job of restoring its brand and getting the economy going again.

At first sight, the idea is a tempting one. But probe just a little bit deeper and it becomes clear that it’s a very bad idea.

When amnesty is justified

Granting amnesty to dictators and warlords can be justified as a legitimate option if it serves to bring an end to brutal civil wars, halt killings and restore peace. If dictators identify their continued occupation of office as necessary to ensure their physical survival and guarantee their freedom from arrest, they are likely to do everything within their means to hang on to power. So the killings continue.

This sort of logic prevailed in the case of South Africa’s own transition. Provision was made for amnesty to be granted to those, on both sides of the conflict, who were guilty of crimes against human rights which could be proved to be politically motivated.

This process was never carried through very thoroughly, and there are still some very unpleasant people at large who have never been prosecuted for brutal crimes. This continues to make many South Africans very uncomfortable. Yet, over the long term, most would conclude that a somewhat unsatisfactory peace is better than the war that might have engulfed the country if the (often unsavoury) deals around the political transition had not been struck.

But considerations such as these should not persuade South Africans to think of letting Zuma off the hook.

Most political commentators agree that the Zuma presidency has done enormous damage to the quality and institutions of democracy in South Africa. Details were revealed in Thuli Madonsela’s final report as Public Protector, which dealt with state capture and was released on November 2 after a legal battle. The report addresses, among other issues, alleged corrupt deals involving the Gupta family and well as the removal and appointment of ministers. The report investigated whether this resulted in “improper and possibly corrupt” awarding of state contracts and benefits to the Gupta family businesses.

Along the way, “capture” of state institutions such as the South African Broadcasting Corporation, the National Prosecuting Authority, the state utility Eskom and South African Airways led to the corrupt diversion of resources towards individuals and companies related to the Guptas, at a major cost to the exchequer. It also led to many bad decisions being made. One notable case is Eskom’s attempt to commit the country to a nuclear future.

So why not step in now, wave Zuma goodbye, perhaps even give him a golden handshake, and stop the rot?

The simple answer is that it would not work.

The problem extends beyond the presidency

Getting rid of Zuma is only part, albeit a major part, of any solution which will seriously begin to tackle the scourge of corruption.

What about the Guptas? And what about Zuma’s extensive Gupta-connected patronage network? Are South Africans simply to concede amnesty to all, merely in the hope of better behaviour in the future by those who have so blatantly abused public office?

Or if South Africans were to demand a cleaning out of the Augean stables, would they be happy to prosecute merely the foot soldiers while their former generals were allowed to go free?

South Africa is a very violent society. But, thankfully, it is not a country in civil war. If it was, and getting rid of Zuma would lead to peace, there would be solid grounds for peacemakers striking a deal with him, however unpalatable. But South Africa is not at war and does not have to reach for extreme solutions.

Indeed, as a constitutional state, the country has the architecture and the instruments to prosecute wrongdoers at the highest level, and to justify the mantra that “everyone is equal before the law”.

Of course, for this to happen, there is the problem of getting the governing African National Congress to agree.

Zuma and the ANC

The momentum within the ruling party for a change at the top is growing day by day, and it seems increasingly unlikely that Zuma will be able to see out his term as president of the party, which ends in 2017. He is less and less able to guarantee the safety and security of his cronies as the wheels begin to come off his presidency.

As more and more prominent individuals within the party and its allied trade unions begin to call for his head, the weaker his control over the National Executive Committee of the ANC, and the more likely that he will be asked by its power-brokers to stand down. Yet he is likely to bargain hard, demanding amnesty for past and current crimes – and the ANC might be tempted to grant it to him.

After all, if Zuma were to face trial (indeed, he could face several), then the ANC’s dirty washing would be hung out to dry over a considerable period of time. So if the point of getting rid of him would simply be to secure the ANC’s re-election in 2019 – the scheduled date for national elections – this would be as politically costly as it would be embarrassing.

In short, the grant of amnesty to Zuma looms as a very real possibility. But civil society should not allow it to happen. And if those within the ANC who are calling for the party to reform itself are genuine in their demands, they should argue for the ANC to face the consequences. No pain, no gain. Unless there is a cost, there is the danger of replacing Zuma as a person and not as the head honcho of the system of wheeler-dealing and patronage that he has put in place.

Symbolism of a president in the dock

Prosecuting Zuma would send out the message loud and clear: that South Africa remains a constitutional democracy.

The symbolism of a president in the dock would be enormous. It would be enormously popular in the cities and towns of Africa, even though the serried ranks of African leaders would regard it with alarm and horror.

It would send out a warning to all those enjoying political office that corrupt dealings carry a high risk of costly consequences. It would restore faith among South Africans in a state whose reputation is at its lowest point since 1994. It would encourage ordinary people to pay their taxes, and restore their confidence that these will be well and honestly used.

It is not enough that Zuma should simply vacate office. He must face the music for his alleged crimes, for his misuse of office, for his assault on the constitution. Those who connived in all this must face the music alongside him too.

Roger Southall, Professor of Sociology, University of the Witwatersrand

This article was originally published on The Conversation.

Jacob Zuma likes to be cast as a man of the people – but is he?

President Jacob Zuma took over as leader of the ANC with a promise to reconnect the party with the people. His legacy suggests otherwise.
Reuters/Sumaya Hisham

The twilight of Jacob Zuma’s controversial leadership of the governing African National Congress (ANC) and the country finds both in a parlous state. The party is in decline and centered on Zuma’s personality, while his flawed leadership undermines its ability to govern competently. I explore these themes in Dominance and Decline: The ANC in the Time of Zuma. This is an edited extract from the book.

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President Jacob Zuma’s entrance ticket into his Polokwane 2007 election was “reconnection with the people”. He was “the man of the people”, close to those who, the Zuma camp argued, then-president Thabo Mbeki had alienated. The evidence of this having been achieved is ambiguous.

Judged by general citizen sentiment expressed at the grassroots, Zuma failed to bring the ANC closer to the people. My research has shown substantial alienation between the ANC and the communities:

• On general democracy issues citizens felt aggrieved that they frequently only saw their elected representatives at election times, and that ANC leaders care more for themselves than for the people. In election campaigns they are flooded with ANC visitors, leading to another round of “empty promises” and appeals for support for the “liberation movement”.
• In ANC structures and meetings there are two trends: the insiders that speak glowingly of the great work of the movement; and those who regard themselves as ANC supporters (and often are ANC members), but feel excluded, for example not welcomed into branch meetings.

Research decimates the Zuma camp’s argument that the people do not care about the Nkandla scandal, involving the use of public funds on his private residence, and similar issues. The people greatly care and deeply begrudge the new political elites and their president for greed and consumption of public resources. My research project showed hardly a word of pardon or praise for the president. Instead, there was a wall of condemnation and ridicule.

The research findings contrasted with ANC staff and workers on the 2014 campaign trail, for example, testifying how Zuma was welcomed with accolades and warmth when he went campaigning. Such images were also beamed across South Africa when Zuma’s community appearances were televised.

Zuma’s “people charm”, bolstered by the general pull of power, was his great redeeming factor in his relentless quest to get into and retain presidential power for all of his second term. The Jacob Zuma Legacy Special advertising campaign put together by the state-transporty company Prasa proclaimed that he has “mainly endeared himself to people through his personal charisma and magnetic charm”.

In an interview with Business in Africa in 2009 on the eve of becoming South Africa’s president, Zuma singled out Oliver Tambo as one of his role models in becoming “a man of the people”:

While Tambo was a great thinker, he was very simple. There is nothing
he did not do … When people came to him he attended to them. He would even attend to somebody who comes to raise the issue of the shoe that doesn’t have shoelaces, he would ensure that the shoelaces were found … I am not a great man. I am a man of the people. I believe in people and I think that the people are everything. Once there is disconnection with the people you have problems …

Wits University Press

Zuma’s connection with the people is partial. At least two major events, in Gauteng and in Limpopo (one was Nelson Mandela’s memorial service), saw Zuma being booed by large numbers in the audiences. ANC strategists, subsequently, carefully managed Zuma’s exposure to avoid public embarrassment.

Some “closeness to the people” was evident in the audiences Zuma has entertained at his residences in Pretoria and Nkandla. Across class, aspirant “tenderpreneurs”, (the name given to entrepreneurs who have created businesses from government tenders), and modest community members with pension and social grant issues rub shoulders while waiting for and then consulting with Zuma.

Many of the after-hours visitors are put in touch with relevant government departments. These meetings give insights into the Zuma presidency’s creation of personalised patronage networks, the other side of the formal government networks and operations. Aspects of the meetings also resemble traditional leadership community meetings.

In refutation of Zuma as the president of the people who understands their
culture, my research reveals popular ridicule of the president. When focus group
participants from across the demographic spectrum received the positive
prompt of “Zuma is a leader, a man who understands our culture”, there followed scorn, laughter and comments on polygamy and showering.

Further prompts encouraged participants to abandon this tone, to no avail. Both this project and others confirm that voters separate their opinions of the president from their willingness to vote ANC (at least at the time, in 2014).

Zuma has nevertheless carved a safe personal net with many South Africans, especially those also of Zulu origins. Little had the Mandela-Mbeki axis of the 1990s imagined that their deployment of Zuma to get peace in the war fields of KwaZulu-Natal (and bring the province into the national post-liberation ANC) would have the repercussions it did. They helped create the platform on which Zuma would rise into power.

The ANC KwaZulu-Natal as electoral giant awoke late, and then sustained the ANC when it started declining in other provinces. Without the KwaZulu-Natal performance in the national elections of 2009 and 2014 (largely facilitated by Zuma) the ANC would have looked pitiful even if still winning.

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Dominance and Decline: The ANC in the Time of Zuma is published by Wits University Press.

Susan Booysen, Professor in the Wits School of Governance, University of the Witwatersrand

This article was originally published on The Conversation.

Scopa takes aim at Hawks and NPA

“We want faster results. Society is waiting for consequences.”

By Sune Payne and Moira Levy
2 August 2017

Themba Godi, chairperson of the Standing Committee On Public Accounts (SCOPA), said Eskom, SABC and SAA are priorities for his committee this term. Archive photo: Ashraf Hendricks

Parliament’s Standing Committee on Public Accounts (Scopa) made it clear in a press briefing on Tuesday that the Hawks and the National Prosecuting Authority are not meeting its expectations and it wants to see improved results and “consequences” taken against those who abuse state funds.

With Parliament’s third term barely begun, Scopa chairperson Themba Godi called a press briefing to identify the Committee’s priorities for the upcoming quarter. These include Eskom, the SABC and South African Airways.

Another focus will be National Treasury, including its stalled Integrated Financial Management System to integrate human resource and financial management systems across government. The failed first phase of this project has already wasted expenditure of more than R1 billion.

Another target for Scopa will be the Department of Water and Sanitation, which it described as “in shambles, lacking leadership and literally bankrupt”.

Godi also expressed regret at the departure of former SASSA CEO Thokozani Magwaza and said SASSA “might not be moving in the right direction and at the right speed,” a matter he has raised in a letter to Chief Justice Mogoeng Mogoeng.

Godi stated that Magwaza’s departure has caused anxiety over whether SASSA would fufil its obligation towards the Constitutional Court’s ruling and public desire for the Post Office to handle the distribution of social grants.

Scopa supports harsher sentences for those who are found guilty of mishandling government funds. The Committee wants to engage with the Anti-Corruption Unit for harsher consequences, including amending the power of the Auditor General to create legally binding time frames on accountability.
Asked whether various ministers would be called to Parliament, Godi said, “it is unbecoming of any ministers not to heed the call of Parliament”. The ministers will have to appear before Scopa once dates for this term have been confirmed.

In a statement, Scopa said there are no holy cows and abuse of state funds must result in “investigation, charging and imprisonment, irrespective of which corner of the country they come from or their status in society.”

It said Scopa’s “unyielding focus” is the “fight against corruption and the protection of the public purse.”

Scopa sees itself as Parliament’s lead organ in the fight against corruption, guided by the Constitution, The Public Finance Management Act and the Rules of the National Assembly.

Committee member Dr Mnyamezeli Booi said “our relationship with the security agencies is to continuously emphasis to them that they must do their work.

“We have said to NPA and the Hawks we are expecting more than what you are doing. We want faster results. Society is waiting for consequences.”

He said Scopa’s work does not end with Committee hearings. It follows up and engages with security agencies that it believes are “not working hard enough”.

Godi described Scopa’s “escalating model” in which incidents of wasteful and fruitless expenditure will be escalated to the government minister and if necessary to the Head of Government Business. “If the Head of Government Business does not respond we must then report to Parliament that as a Committee we have no confidence in the minister”.

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Published originally on GroundUp .

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Why South Africa should gird itself for tumultuous times

South Africa’s nuclear deal with Russia is part of the backdrop to the current crisis.
Reuters/Alexei Nikolsky

South African President Jacob Zuma’s latest cabinet reshuffle in the Ministry of Finance is arguably the most controversial of all his executive decisions. It is the seventh cabinet reshuffle since he became president in 2009 and the third since 2014.

Presidents Nelson Mandela and Thabo Mbeki only reshuffled their cabinets after general elections. The Zuma era, on the other hand, has been characterised by a high turnover, not only of cabinet members, but also senior public officials and executives in state-owned enterprises.

Zuma’s latest decisions - initially to remove Finance Minister Nhlanhla Nene but then four days later to succumb to pressure and replace his new appointee David van Rooyen with Pravin Gordhan - has left everyone speculating as to the real reasons. Gordhan is a much more prudent appointment but a major political concession from Zuma.

What does it tell us about how decisions are being taken?

Some argue that it is indicative of Zuma’s uncontested power in the governing African National Congress (ANC); that he has developed an almost autocratic presidential style.

Another argument is that it is symptomatic of his predicament in the ANC. This line of thinking is informed by the fact that the ANC is weaker than it’s been since coming to power in 1994.

The ANC has been losing membership – more than 450,000 members on Zuma’s watch.

And a key player in the tripartite alliance, the trade union federation Cosatu, split earlier this year resulting in a drastic drop in membership. The split saw the metal workers’ union Numsa expelled over differences about the federation’s relationship with the ANC.

In addition, seasoned and senior party members have begun to voice their concerns about Zuma. Former president and ANC leader Kgalema Motlanthe’s recently made harsh criticism of his leadership. He also declared that the tripartite alliance was dead.

His comments followed those of another party stalwart, Rev Frank Chikane, who warned that the party faced the danger of losing future elections.

To add to Zuma’s woes, the contest for who takes over from him has begun. Current deputy president Cyril Ramaphosa has put his hat in the ring. And the trade union federation has implied it will support him as Zuma’s successor.

Paranoia

The growing factionalism in the ANC has left Zuma unsure who he can trust, even in his own province KwaZulu-Natal. The result has been signs of growing paranoia, particularly about possible critical or independent voices in the ANC. He considers all as threats to his position.

In the past, Zuma built a stronghold of support, through patronage, in the government’s security cluster – police, state security, military and prisons – which he staffed with his acolytes.

He did the same with the National Prosecuting Authority and some of the parastatals, using the appointments to secure support for himself.

The latest intervention against his minister of finance shows two things:

• how far he is prepared to go to protect his supporters in state-owned enterprises who serve his self interests. Nene had taken a hard line against a disastrous financial decision taken by South African Airways chairperson Dudu Myeni, who is close to Zuma; and
• how important state finances are to him as a tool to develop a personal style of diplomacy with leaders on the world stage. Here deal-making, whether for nuclear electricity or Chinese trade, is the key objective and source of pride for Zuma.

By applying a rational assessment of what the country could afford, Nene had become a “spoiler” for Zuma.

Zuma’s controversial statement that, in his eyes, the ANC comes before South Africa, set the tone. It is not unreasonable to extend this to mean that the ANC and the state provide him with a platform on which he can take decisions based on in his own interests, or those of his closest supporters.

Once a person believes that history is on his side he begins to believe that it legitimises his claim to the resources of the state. In Zuma’s case this became evident in his defence of the use of state resources to build his Nkandla homestead.

Any lack of co-operation by his ministers is regarded as opposition or even betrayal. Non-threatening ministers, such as the new finance minister, David van Rooyen and minerals minister Mosebenzi Zwane, are therefore logical choices.

The end is in sight

Zuma has lost control over who succeeds him as ANC president. This is evident from the fact that the union federation has passed a resolution backing Ramaphosa for the post. This has elevated someone who is outside the Zuma circle to the position of a real contender for power.

It means that the transition has already started and that Zuma could lose his hold on power by not having his favourite take charge.

A decline in ANC support in the local government elections next year will hasten that process. The ANC’s National Conference will follow in 2017, by which time it will be too late for him to turn the tide in his favour.

Ramaphosa’s increasing prominence will increase Zuma’s paranoia about who in his cabinet has already silently joined the Ramaphosa camp. A similar scenario unfolded ahead of the ANC’s Polokwane conference in 2007. That resulted in Zuma ousting Mbeki as ANC president, culminating in Mbeki being recalled as president of the country.

Speculation is rife that more ministers are in Zuma’s firing line. These include Trade and Industry Minister Rob Davies and Minister in the Presidency Jeff Radebe.

In effect, a silent rebellion is in the making. In the process most of the ANC’s internal democratic conventions, such as consultation, will be under pressure.

Nene’s dismissal heralds the beginning of a tumultuous period in the ANC.

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

This article was originally published on The Conversation.