Publications
Partners
Given the recent information that President Jacob Zuma allegedly failed to submit tax returns for the first five years of being in office, while allegedly earning an undeclared R1 million a month for at least the first four months of his presidency from a security company that does business with government, many commentators have made the link between our president and one of the world’s most famous gangsters. If these allegations are true, then – like Al Capone – he should go to jail.
In terms of his oath of office, Zuma has publicly affirmed to “promote all that will advance the republic and oppose all that may harm it”, and to “devote [himself] to the well-being of the republic and all of its people”.
At the moment, he is doing the exact opposite. In his Nkandla judgment from 2016, Chief Justice Mogoeng Mogoeng clearly stated that President Zuma “failed to uphold, defend and respect the Constitution as the supreme law of the land”.
In a way, the overwhelming evidence of corruption and state capture has become counter-productive. South Africans have become punch-drunk and numb to daily revelations. Instead of taking decisive action, we have been overwhelmed and drawn into a never-ending loop of claims that “this time it has gone too far”, only to be surprised by the next scandal before something can be done about the previous one. It has become impossible to provide an accurate estimate of the levels of corruption in South Africa.
South Africa has been paralysed by state capture. Billions (perhaps “trillians”) of rands have been siphoned off in transactions that involve corrupt politicians, corrupt business people and even organised crime. The amount of time it has taken to investigate, accuse, refute and deny has left little time for the government to do its job or for the opposition to monitor anything else.
The last time our president was in a position to make a truly strategic decision was when he decided to release finance minister Nhlanhla Nene to take up a top position at the Brics Development Bank – a decision that wiped R500 billion off the South African economy within hours, resulted in two new finance ministers within days and did not result in the actual appointment of Nene at the bank.
While the looting continues, our democracy is hurting. Rule of law seems to be under threat – in a recent court case involving the Gupta family and the Bank of Baroda, high court Judge Hans Fabricius lamented as follows: “when reading details of the various allegations … I could not help to wonder whether, unbeknown to me, democracy and the rule of law had somehow been suspended”.
Given the fact that the government – at least temporarily – seems to have been compromised at the very top, perhaps one should look towards the private sector for solutions. This might be a better approach, given South Africa’s international recognition for good corporate governance. However, similar to the shining veneer of our world-famous Constitution, the King Report on Corporate Governance for South Africa is perhaps better described as best theory than best practice.
“We believe that anything is possible.” This is the first of five stated corporate values of Oakbay Investments (Pty) Ltd. The company is probably the only one in the world that has “court cases” listed as one of the tabs on its public website, right there between “news” and “contact us”.
Another of the five values listed very transparently on the website: “We apply sense of family across all our businesses.”
Indeed, these days, it does seem as if anything is possible and nothing should surprise us. Like the following quote from the state of the nation address by Zuma on February 9 2017: “The fight against corruption continues.”
These are the hollow words written by a speech writer, read by a president who succeeded to have more than 700 corruption charges against him withdrawn, but whose lawyer recently conceded that the withdrawal of the charges were irrational. Someone who allowed his friends, the owners of Oakbay, to land a private plane with wedding guests at Waterkloof military air force base, the same base from where Sudan’s president, Omar al-Bashir, was allowed to leave South Africa in defiance of a court order that he must remain to face an international arrest warrant. Someone who fired three finance ministers in less than two years. And so the list continues. The fight against corruption seems to continue in the wrong direction.
We now know that the private wedding attended by the guests who landed illegally at Waterkloof, courtesy of #1, was approved as a legitimate tax-deductible business expense by KPMG South Africa. Clearly it must have been business-related, since the wedding was attended by four KPMG partners. It might be interesting to find out whether the firm charged the client an hourly fee for their attendance.
In a Q&A document prepared by Bell Pottinger, who was retained by Oakbay at a fee of £100 000 a month, the following pre-scripted response was provided to Oakbay in order to answer potential questions about tax payments:
“We are 100% transparent – all these numbers have been verified by KPMG, one of the world’s most respected accountancy firms.”
In the past, Bell Pottinger has also represented Syria’s first lady Asma al-Assad, and worked on a campaign to release Chile’s general Augusto Pinochet from prison. And Oakbay was not their first South African client. Ask Oscar Pistorius.
In 2015, McKinsey & Company published a commentary titled Confronting Corruption. The guest author describes a few real-life situations, including a demand for payments from a local political leader, and explains the intensifying risk as typical for companies with “greater exposure to growth opportunities in emerging markets with a history of corruption”.
Two years later, McKinsey & Company in South Africa is being investigated for R1.6 billion in fees earned from Eskom, and for partnering with Gupta-linked Trillian Capital.
The guest commentary was written by Ravi Venkatesan, author of the book Conquering the Chaos: Win in India, Win Everywhere. Venkatesan also happens to be the current chairperson of the Bank of Baroda.
In a statement, McKinsey denied involvement in bribery and corruption, but conceded that there were things “we wish we had done differently and will do differently in the future”.
In fact, their view is that the unfortunate relationship with Trillian Capital can be explained by a commitment to customer service and not related at all to the fees that could be earned: “In our eagerness to be responsive to the challenges Eskom faced, we mobilised our teams too quickly”.
In most democracies, this would be reason enough for a president to resign voluntarily, or certainly for impeachment proceedings to be initiated. But somehow this has not happened in South Africa. Simply adding to the list of misdemeanours all the time will add to the existing fatigue but reduce the probability of justice seen to be done. Hence the Al Capone option.
In the meantime, those who are committed to a fair and prosperous future for South Africa should continue with concrete plans to make a difference. It is clear that a “wait and see” attitude might be prudent over the next few weeks, but in the board rooms different scenarios should be explored and different responses should be planned. The concept of agile governance is getting increased traction globally. This is based on the accepted idea that there cannot be a one-size-fits-all solution for governance, but goes way beyond the traditional solution of country-specific codes of governance. Agile governance implies short-term solutions with long-term objectives, the willingness to experiment and the acknowledgement that we need quick cycles of implementation and assessment, followed by a decision to either discard or replicate.
In South Africa, the National Development Plan could provide the ideal framework for such initiatives. The work should begin, regardless of who wins in December. Anything is possible.
• Daniel Malan is an associate professor in ethics and governance and director of the Centre for Corporate Governance in Africa at the University of Stellenbosch Business School in South Africa. The views expressed are his own and do not reflect the official position of the University of Stellenbosch.
