South Africa: we need sunlight to disinfect capital
History repeats itself.
The pillaging of public coffers in the last decade reminds me of the apartheid state corruption in the 1980s which included illicit arms procurement, sanctions-busting and round-tripping of the financial rand.
It was not possible to quantify the extent of it as the media was suppressed, the judiciary was not independent, there was no bill of rights or constitution and there was no public protector.
We will never know who, how many, or to what extent, unscrupulous people in the government and private sector enriched themselves during apartheid’s last decade.
With an independent judiciary in place, we will hopefully see some prosecutions and some money recovered from the latest wave of corruption, and when the Gupta brothers arrive at OR Tambo in leg-irons, I will be there to meet them.
The glory days of Nelson Mandela made us complacent and somewhat naive, but we have learned a lesson, and nowhere is this more evident than the mushrooming of a robust civil society which, coupled with a vigorous media sector, have never been more effective.
AmaBhungane, the Helen Suzman Foundation and Who Owns Whom have engaged with the Department of Trade and Industry for the last two years to update section 26a of the Companies Act to require disclosure of beneficial ownership of private companies, along with the list of directors at the Companies and Intellectual Properties Commission.
This would be a very powerful tool in uncovering corruption and a material deterrent against further corruption.
- Had this law been in place fifteen years ago, the Guptas would probably have gone elsewhere.
We should reject illegality, and hope that those responsible for the blatant delinquencies of Bosasa, Net1, Steinhoff and VBS be tried in court. At the same time, we should also reject the questionable morality of the private sector. Here are some examples:
- We have witnessed medical insurance companies imposing an insurance excess on their clients, calling it a ‘co-payment’, and then selling its trapped members a product to cover the shortfall that the companies created themselves.
- In the 1990s the life insurance industry invented defined contribution pension saving as opposed to the historical defined benefit, which deftly shifted the risk of poor investment decisions by fund managers from the industry to the pensioner. The 2018 Mercer Melbourne Global Pension Index, which measures the pension systems of 34 countries, reveals that less than 10% of South African retirement fund members can maintain their standard of living when they stop working.
These examples beg the big question of whether society should allow profits to be made from the insurance of people’s health and their lives.
The austerity measures imposed by the allied reparation payments on the Weimer Republic in Germany after the first world war gave rise to Hitler, and it can be argued that the 2008 financial crisis gave rise to Trump, Bolsonaro and Brexit.
- That crisis was created by the corporate fraud of immoral bankers assisted by the rating agencies who gave investment grade ratings to paper representing valueless investment products. Not a single person was prosecuted.
While politicians need to work hard to restore the public trust, the private sector has the same responsibility.
Business has five stakeholders – shareholders, employees, customers, suppliers and society (people and the environment) – that should be treated with equal importance as opposed to the practice of narrowly pursuing short-term returns to the benefit of shareholders and executives.
- A rampant practice in South Africa is to outsource the employer’s responsibility to its employees to labour brokers. This relieves the employer from having to provide employee benefits and allows companies to rapidly downsize to achieve short term returns (and subsequent bonuses) without incurring retrenchment costs.
Most civil servants take their position of public trust very seriously, as do most companies take good corporate citizenship, and many run or support initiatives to improve people’s lives in addition to meeting their tax obligations to the state. Many do not.
As Winston Churchill said of democracy, capitalism is an appalling system but it is the best we have and to sustain it business needs to temper its sharper edges. Business lobby groups Business Unity SA and Business Leadership SA should broaden their mandates to peer review questionable corporate practices.
This can easily be implemented by partnering with one of the many very effective civic action groups in South Africa.