PETER HAIN: Wake up SA, and act against corruption

Blame for the infamous “Zupta” state capture decade has mainly focused on a corrupt president and his cronies. But SA and global businesses were culpable too. It took, and still takes, two to tango.

The SA Revenue Service wouldn’t have been disabled without Bain & Co infamously and unlawfully carrying out then president Jacob Zuma’s personal instructions at 17 one-to-one meetings. Nor could the Guptas have money laundered billions out of the country without global banks such as HSBC, Standard Chartered and Baroda enabling them to do so. And that sorry story continues to this day, with ministers and local councillors still wanting backhanders to dispense contracts or grant licences to companies eager for the work and willing to pay.

It is high time the business community owned up and ostracised anybody still playing this game, because if that happened corrupt politicians and officials would have their looting massively curbed. That’s why I hope the whole SA business community will take the lead. Exasperation with the president’s lack of decisiveness, or under-resourced and previously disabled prosecutors, frustration with useless or corrupted policing — all of these things are no excuse for business failing to step up.

They will not help build a successful economy, kick-start growth or attract foreign investment until they do so. Every business should say: “Never again” to collaboration with the corrupters.

Implementation of the Zondo state capture commission’s 2022 report is the task not only of the president and his cabinet, of parliament and law enforcement agencies, but also SA’s business community.

Zondo’s recommendations were many and varied, principally:

• An Independent Public Procurement Anti-Corruption Agency;
• A permanent Anti-State Capture and Corruption Commission;
• Improved and extended whistle-blower protection;
• Enhanced and improved parliamentary oversight;
• Amendments to the electoral system; and
• An end to “cadre deployment”.

Significantly, the reforms proposed are institutionalised and managed outside executive government and are independent of it: they would establish a constitutionally based, countervailing force against state corruption at all levels. But whether these reforms will be fully implemented remains to be seen.

Meanwhile, crime and corruption continues unabated, albeit in different forms to the infamous Zuma/Gupta decade. Examples of SA degenerating into a “mafia state” include illegal mining; sabotage at, among others, Eskom and Transnet; continued assassinations; organised criminal activity in the public and private sectors; extensive procurement corruption, including at ministerial level; organised disruption in the transport industry; insurrectionary outbreaks and threats; and attacks on the constitution and independent journalists by leading politicians in the ANC and EFF.

While the government of the day and state institutions bear primary responsibility for the restoration of a corruption-free and functioning state, it is not only up to them. The committed and energetic involvement of the private sector is essential — both to acknowledge its complicity in state capture and to prevent any recurrences or new outbreaks.

The private sector, including the professions, played an important, material role in state capture in many diverse ways. Professional actors, including firms of auditors, lawyers and management consultants, assisted and enabled state capture. Business, both local and international, bribed directly, paid “facilitation fees” in vast amounts, and were otherwise involved in corrupt procurement.

Whistleblowers were not encouraged or protected, indeed hounded or killed. Co-operation with law enforcement agencies was largely absent. Banks failed abysmally in their duty to prevent, detect and report financial irregularities and suspected financial crime, including money laundering on a vast scale that saw billions of looted rands flow through their digital pipelines to their international branches, especially in Dubai, Hong Kong and London.

It is no exaggeration to say that SA, including the private sector, even where it was not directly involved in state capture, slept through those years — and in some cases is still doing so. But more than passive obedience to the law is now required of the private sector if the continuing decline of the SA state and the very fabric of society is to be reversed. A positive programme of measures is necessary.

These should include, first, a universal and uncompromising refusal to pay backhanders for public procurement contracts: if every tendering business refuses, politicians and state officials will also have to behave ethically. Second, education within businesses and related institutions as to what constitutes corruption, how to identify corruption and what steps to take if it is encountered.

Third, dedicated executives or divisions within entities to ensure lawful and ethical compliance in all dealings. Fourth, encouragement and protection of whistle-blowers such as Cape Town’s own Athol Williams a former Bain & Co global partner who has been outrageously treated.

Fifth, an active alertness to new patterns of crime and corruption and co-operation with investigation and law enforcement agencies. Sixth, an end to silence where the state is failing or threatening to fail, including calling state functionaries to account. Seventh, a refusal by consultants or legal firms to sanctify wrongdoing in state-owned enterprises or government with “whitewashing” reports.

Eighth, relentless action by professional bodies to ensure lawful and ethical practice. Ninth, the necessity for Business Leadership SA, Business Unity SA, the JSE, SA Institute of Chartered Accountants and other business institutes, educational bodies, chambers, relevant business and trade bodies, to be proactive in ensuring there are red lines that must not be crossed. They must also provide training courses, endorse corruption prosecutions  and issue a code to protect anti-corruption whistle-blowers.

It is also important that privately owned companies that are neither service providers nor state-owned enterprises also own this agenda to ensure SA’s business reputation, which was consistently ranked in the world’s top five, is restored. All of this is essential to re-establish international investor confidence, which was high under the Mandela and Mbeki regimes. Foreign direct investment is vital to the country’s future economic success, growth and prosperity, as well as to eradicating poverty and unemployment, yet it is currently way below the minimum level required for economic recovery.

In short, there must be a universally adopted strategy to restore legal and ethical practice in the SA economy, with the business sector providing the kind of strong lead it has palpably failed to do. Peace, stability and the rule of law are the foundation of prosperity for all. But it does not come cheap.

SA will not emerge from its past and current morass of corruption, dysfunctional public services, cronyism, crime, poverty, low to negative economic growth and unemployment unless each and every one stands up to be counted, demands: “Never again”, and insists that the country is set back on a path towards a society of equal opportunity for all, with business, politicians, and all civil society institutions mobilising together in support of a programme of empowerment, transformation, development and integrity, in accordance with the constitution and rule of law.

Rightly a pariah under apartheid, SA is now cold-shouldered because of state capture. I urge you all to co-operate and fight to once again make SA a shining light to the world, as it once was under Nelson Mandela.

• Lord Hain is a former British anti-apartheid leader and Labour cabinet minister. This article is based on a lecture he delivered at the University of Cape Town at the weekend.