Politics

Sat,24Feb2018

Politics

'The African Union should take care of itself': Moussa Faki Mahamat tries to remake the bloc

Michael Brochstein via Zuma WireIn an exclusive interview with The Africa Report, the new AU Commission chairman, Moussa Faki Mahamat, lays out his strategy to make the organisation more effective and relevant

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When the business of impunity meets the impunity of business

The apologias from multi­nationals embroiled in South Africa’s ever-expanding Guptagate scandal have a haunting familiarity. They mimic an earlier non-apology: the submission by former president F. W. de Klerk on behalf of the National Party to the Truth and Reconciliation Commission set up after South Africa’s first free elections in 1994.

In practised lawyer-speak, De Klerk asserted that “mistakes were made” during 50 years of apartheid, but that its leaders were “good and honourable men”. Unfortunately, said De Klerk, while trying to counter the “menace of international communism” a “context” was created in which “abuses by security personnel were not sufficiently discouraged”. Surveying the human costs of National Party rule – more than 21,000 killed in political violence – the commission rejected De Klerk’s formulation and concluded that apartheid was indeed a crime against humanity.

In London in September, De Klerk was asked for his view on the involvement of Bell Pottinger public relations company, KPMG auditors and McKinsey consultants in schemes that looted the South African state treasury and undermined honest officials. Ever the lawyer, De Klerk replied: “It is too early to tell.”

KPMG and McKinsey played apology poker. Starting with a low bid, they opened with a general statement of regret to no one in particular, coupled with a few early retirements, a suspension here, a sacking there. When people such as ex-finance minister Pravin Gordhan started talking about legal action, the parent companies paid attention. Partners from New York and London flew to Johannesburg, conveying personal regrets to Gordhan and other top officials.

Threats to these companies are multiplying. There are direct financial ones. How much did McKinsey’s and KPMG’s actions cost the treasury? State utility Eskom is asking McKinsey to refund the R1bn ($73m) it earned from a contract in partnership with Trillian, owned by a Gupta associate, Salim Essa. The status of that contract, judged illegal by several independent lawyers, is being tested in court. KPMG, according to one of South Africa’s top economists, Iraj Abedian, could be held liable for the loss of “tens of billions” of dollars caused by its damage to institutions and investor confidence.

Despite their apologias, both companies refuse to admit wrongdoing or legal liability, and South Africans’ anger towards them grows. KPMG International has been slow to launch an internal investigation into why its local company produced a politically charged critique, now withdrawn, of an anti-tax evasion unit that was troubling the Gupta brothers and President Jacob Zuma’s son Duduzane.

Guptagate could presage stronger demands for corporate and political accountability. It exposes more clearly the mechanics of grand corruption. Successive media reports conjure an image of predator politicians dragging reluctant multinational companies into a web of illegal and mispriced contracts from which mega-profits are laundered through tax havens. But Guptagate points to a different dynamic. Here, the company is the predator seeking out compliant and greedy politicians with whom to do business. What has developed in South Africa is a high-tension battle between independent regulators and courts on one hand taking on a criminal business-political condominium on the other.

But before anyone gets too smug about McKinsey’s and KPMG’s discomfiture, the revival of 783 charges against President Zuma reminds us of the origins of the current wave of grand corruption. In the mid-1990s, Western governments such as Britain, France, Sweden and the US – resolutely backing their national arms manufacturers – sold South Africa’s new government some $6bn of weaponry. Much of it was irrelevant to the country’s strategic needs, and almost all of it was at inflated prices, pumped up by third-party commission agents.

Politicians such as Zuma are accused of cutting themselves into the deal; some diverted cash into the coffers of the ANC to fund election campaigns. In fact, it was similar to corruption under apartheid rule. Then, politicians took their cut from the mining conglomerates and laundered their profits overseas. The main difference today is that journalists can report it without having security restrictions slapped on them. Mistakes were made, indeed.

This article came from the November 2017 print edition of The Africa Report magazine

 

'It's going to be a tough election': South Africa's ANC votes for a new leader

Dr Zweli Mkhize, Treasurer-General of the African National Congress (ANC), leading party of the Republic of South Africa, in his office at Luthuli House, the ANC headquarters - Credits: Miora Rajaonary for TAR
Amid speculation that he may emerge as a compromise candidate in the ANC leadership election, Mkhize tells The Africa Report what the party needs to fix to win back voters

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'The clock is ticking': Ghana's new president tries to kickstart urgent economic reforms

Nana Akufo-Addo - Credit: All rights reserved
Having run for office for nearly the past two decades, President Akufo-Addo now has the power to bring the changes he has long called for. The electorate is watching to see if he can turn around the economy, decentralise power and fight corruption

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Mo Ibrahim: 'There’s no renewal process for capitalism'

Mo Ibrahim, Founder, Mo Ibrahim Foundation - Credit: Bruno Amsellem/Divergence

The billionaire philanthropist talks to The Africa Report about inequality across the globe and the challenges leaders face when tackling the impacts of globalisation

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Winnie Madikizela-Mandela: 'It's time for change of leadership'

Winnie Madikizela-Mandela listens as South Africa's president Jacob Zuma, addresses party delegates in Johannesburg, South Africa, July 5, 2017. Photo: Themba Hadebe/AP/SIPAPresident Jacob Zuma has led the governing ANC party to the lowest point in its history due to corruption, and South Africa is reverting to the racist state, says the activist, former first lady and ANC stalwart, Winnie Madikizela-Mandela

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Spotlight on Winnie Kiiza, firebrand leader of Ugandan opposition

Twitter State House UgandaIn Uganda, the firebrand leader of the opposition in parliament is standing up to the government, which is using strong-arm tactics to change the constitution and allow Museveni to stay in power.

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