“They have their own people they want to blame”
Instead corruption happens at the highest levels in organized cliques This was eloquently explained to me recently by an impressive young Durban businesswomen who had stopped going to the BEE meetings when she realized it was a waste of her time and a cost to her business. ‘Those guys have their own people – they always have their own people – and they get the contracts over and over, even in the same bid process. 30,000, 3 million, 300 million. I don’t know how they deliver on all those. And the same people who lose out, always lose out, over and over. It doesn’t matter about the quality of your bid. It’s the cliques’. Of course the truth is that the ‘winners’ don’t often deliver on all the contracts, and an ‘implementation gap’, or ‘unfunded promise’ emerges, with no obvious change in service delivery. However, management service fees, logistical and leasing fees, and inflated rents hemorrhage out from the public administration. The winners are eating, as the businesswomen explained, ‘for doing nothing’.
Now a liberal is already thinking, so these cliques are where, in the business world with a procurement officer on the pay roll? They are already looking for the theoretical liberal divide between the public and the private. But here is the problem – it isn’t there! A successful clique works in at least three social spaces, if not four – the private, the public administration, the political party and the social network of family and friends. Corruption is truly collectivized. It must have a privately incorporated business, ideally with at least one shell company, management service company, special purpose vehicle or trust, and again ideally in a tax haven. Here is where the public officials, politicians and their relatives and friends, and people in the private sector and political parties can all eat the feast together. Of course any individual is especially well placed in the clique if they are simultaneously a member of more than one of these institutions and so are their ‘comrades’.
My colleague Khadija Sharife coined the phrase ‘boomerang deals’ to mean that there is a form of corruption, a very common one, that works in a network, crosses the public/private boundary, and benefits both. The boomerang deal keeps circulating and repeating. It isn’t like a ‘javelin deal’ thrown just once to be caught when the ‘public official’ leaves public office and is employed by the ‘private’ firm that benefited from the contract she signed off. A boomerang is a corruption deal that continuously comes back and forth across the boundaries of the state, contained within the clique. The deal goes out, the food is shared, the ‘private’ sector furnishes the public officials and more importantly the politically connected facilitators and beneficiaries, so the boomerang returns, and is sent out again. The ‘gift that keeps on giving’, or ‘the tap that keeps on running’.
But at middle levels of the hierarchy within the clique there are distinct risks to signing off on such ‘boomerang’ deals – unless you have political connections and protection. If you are a front person for a BEE bid which essentially involves a non-conforming white firm you can get paid very little. And if you get too big for your boots and ask for more, bad things start to happen, either to your tax position, your stake, your job, or worse. Also if you are a public official there are particular risks of joining a clique and becoming one of somebody’s ‘people’. Your loyalty is at least temporarily sold to that clique and this will affect how decisions can be taken in your ‘normal’ job. If it all comes out into the open, and/or the power balance between competing cliques changes, you may end up on the other side, and you could ‘get burned’. In other words, the tab for the whole meal arrives next to your plate and you are the one accused of corruption and fired. “They charge people with corruption so that they can get rid of them, move them out, and then bring in their own people” said an honest public servant.
In other words, a group of people committed to benefiting from public fiscal resources is not a flat or horizontal network, but has definite features it needs to be successful. It needs a good accountant, or indeed a high profile nationally recognized (but not necessarily honest) accountancy company with the skills to negotiate the offshore economy. It needs a worker in the public sector in charge of signing off on a large budget, who can be bullied, bribed, threatened or enticed into joining the clique. If the person sitting on the target budget is ‘blocking’, then influence can be exerted to have them fired, so pressure can be placed on them to encourage participation. Even they still refuse to facilitate, and are blocking, a fake disciplinary case can be raised. At an industrial tribunal it could take many years for them to clear their name, by which time the scene has moved on, new cases of corruption breaking endlessly on the shore, and everyone has forgotten about the person and the case. When the person can be persuaded to align with the clique, then it’s all systems go, but the risks may still return, as the clique may not need them for long, and they become the obvious ‘fall guy’ later.
The most important ingredient of a successful clique is political connection. Viewed in terms of the electoral business cycle – which could also be called the corruption business cycle – this implies that the two years ahead in South Africa are particularly risky for two specific groups of people. First, those people in a current functioning clique are vulnerable to a loss of business, if their apex politician is likely to be reshuffled by their political party in the run up to the election. If he is voted out, again, business will suffer. A new person at the top will come and take business for the benefit of his or her own people. Remember, the people in the clique may all simultaneously be involved in politics, be in the private sector – own businesses, be CEOs, non-executive directors or simply sleeping directors in tax havens – hold administrative office, or be related, married or otherwise connected to any of the above. This is not a simple public/private transaction. Upcoming elections mean a reshuffling of all these relationships.
Second, people in public administration, who may themselves be uninvolved, are at risk if they are in charge of public records that provide evidence in respect to those eating. The new people will want to show they are clean once they move in. They will finger the previous people, and the records could be key to establishing control over their new territory. Three or four years down the line, corruption cases will emerge in the papers to exit a clique from a particular procurement or budget domain to make way for new people. Some of these corruption cases will be made up, in the sense that the incorrect people are implicated, to cover the tracks of a clique’s erstwhile members who have since changed allegiance. But the public record keeper will be dragged in, and if honest – and there are still very many honest people in South African public administration – is at risk of job loss or worse.
For those interested in the terrible effects of corruption on public finances and on the future wellbeing of South Africa’s poor, excluded and vulnerable, the unfortunate news is that while the faces will change, the problem is structural. This means that the problem is not contingent on any individual’s human agency and it can’t be solved by imploring people to be honest and ‘good’ as the liberals tend to do. And there is no rational-legal Weberian public protector to turn to – her office was disempowered. Instead, and within this power structure, an honest public servant caught in, or in the cross fire, of a clique has only the proverbial rock or hard place to turn to: join in and risk later prosecution, job loss or expendability (but sometimes with a pay out), or stick to the rules and get moved or removed, (often with a lesser payout). This decision is made worse because often there are no fixed rules or policies to turn to, and paperwork is deliberately frustrated or made scarce, so the ‘right’ thing to do is not clearly defined, which itself leads to problems of administrative stasis as people are afraid to make decisions in circumstances where their political leaders and connections are telling them to do things that they think may be intrinsically unethical. Sometimes, filing cabinets will be empty when they arrive in post so the history of projects they inherit cannot be proved.
Whichever way the public servant jumps – rock or hard place – the cliques emanating from those with political power are gaining space and spoils up to the election. This is because some are worried that the time for the meal is finite and they must grab as much as they can while they can. Some people in older cliques are already being removed to make space for the final feasting – “They have their own people to blame” – before the cards are reshuffled at election time.
All this means that the structure of political power both in the government and within and between political parties matters most to patterns of corruption and to their cost and scope in terms of the public at large. Even if the apex politician doesn’t get voted out she may be reshuffled. Rising stars have ‘their own people’, so everything changes and other people further down are moved out. The cleverest feeders move allegiance just in time or leave people in strategic posts to keep the tap running. These people are already plotting and hedging on their financial futures. But the poor are not invited to this meal and in this power structure they have either political or administrative accountability to exercise.