State capture: In the quest to punish errant firms don’t forget the architects

2017-09-26 22:13

The anger that we are currently seeing directed at KPMG and Bell Pottinger is severe, but probably just the tip of the iceberg.

There is likely a lot more where that comes from, and it should be channelled in the right direction.

But how?

As a society, we have had to endure a significant amount of frustration at seeing a clearly corrupt cabal of individuals plunder state resources and break down our country’s accountability structures. We are angry, but we have nowhere to take that anger, as accountability remains elusive.

And now we find that there are some in the “legitimate” business community who are also implicated. In the case of KPMG, we are doubly disappointed: those who were supposed to protect us against the abuse of power, are shown to have facilitated it.

The difference is that we are seeing a response from these businesses (albeit reluctant). And as the anger grows, the response is growing.

We are seeing investigations, senior staff resigning, and other large corporates taking away their business. It remains to be seen whether KPMG will survive the fallout.

Meanwhile, about three kilometres down the road, on the other side of the M1 highway, the Guptas remain comfortably ensconced in Saxonwold. And no matter how many civil protests take place, President Jacob Zuma remains in power, innocent until proven guilty for his 783 counts of corruption.

What factors cause us to be able to hold KPMG and Bell Pottinger to account, but unable to deal with the bigger problem? There are two main factors.

Commercial vs political arenas

In the private sector, clients can take their business elsewhere; many have done so, and many more are likely to do so.

To have a shot at survival, the implicated companies need to come clean. They are facing something worse than legal sanction, and that is becoming a social pariah with whom no-one dares be associated.

There is nothing like having its sustainability threatened to make a company take note of its moral responsibilities to society.

In the political system, choice is a much slower wheel to turn. Political customers (citizens) only get every five years to decide whether they want to take their political business elsewhere.

And even then, political parties can count on deep loyalty from the electorate, with voters seemingly being more likely to change their sports team than their political affiliation.

In the shorter term, it is possible that parliamentarians could drive necessary change but, on the whole, they don’t. And that brings us to the second factor.

Power vs independence

Of the many who are calling for the implicated companies to fall, most have no vested interest and would not suffer from their destruction. They have the power to influence society and, in many cases, they are the decision-makers that can remove contracts.

The same cannot be said for Parliament. Those who have the power do not have the independence.

The ordinary parliamentarians might on paper have the power to hold the executive to account, but in practice they are the political juniors of those embroiled in corruption, and are dependent on them for their continued employment.

A cynical observer might say that this is the same lack of independence that sees KPMG International marking the homework of their affiliate, KPMG South Africa.

But, in reality, it is a lot worse. In reality it is closer to KPMG middle management being asked to investigate the KPMG executive.

This would clearly put them in an untenable position and society would not stand for it. And yet that is the only option that we have in Parliament.

What should we take from all of this?

As South Africans, we need to start thinking about how to build sufficient independence into our government to prevent us being held at ransom for years on end in future.

We also need to start thinking about how we influence the next batch of parliamentarians to bring about the necessary changes.

Finally, a word of caution that we should not let our hunger for any justice blind us in our quest for systemic justice.

We should remain firm but rational in our judgment of implicated companies, without giving up on the bigger prospect of finally witnessing the architects of state capture being brought to book. Save some appetite for the main course.

Kris Dobie is manager: organisational ethics development at The Ethics Institute.

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May 19 2019