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Lindiwe Sisulu. Picture: THE TIMES
Lindiwe Sisulu. Picture: THE TIMES

In part 1 of his report on state capture, acting chief justice Raymond Zondo explains that his inquiry "was motivated by a desire to understand the weakness within the public sector that makes it vulnerable to state capture, corruption and fraud".

I have read the almost 900-page report, and the answer is plain to see: greed. But seeing this is the easy part; more difficult is figuring out what we do about it.

Corporate governance theory understands greed: directors and managers are considered self-interested actors who pursue economic or other gain. To offset the risk this can pose, a comprehensive system of governance law and practices has been developed.

But a growing body of research suggests that labelling all people in this way is an oversimplification. Some are motivated also by higher-order values such as altruism and meaningful work. On this count, consider the "resistors" in Zondo’s report — those who refused to be bystanders or followers of corrupt leaders.

What motivates them, given the risks involved?

Again, the field of behavioural economics is illuminating. There seems to be only a small percentage of people who are almost always ethical, or almost always unethical. Most sit on the fence, and they choose to do the right or the wrong thing as influenced by their social context — specifically their culture, the collective norms, laws and personal cost.

If King 4 had been followed, state capture may have proved more difficult

The law is central here, as it establishes the formal, structural arrangements by which we live. It is here that the Zondo commission focuses its recommendations, and rightly so. If, for instance, the recommendations of King 4 had been followed — ensuring formal and transparent processes in appointing the boards of state-owned entities (SOEs) — state capture may have proved more difficult.

But it’s a mistake to rely solely on regulation and its enforcement to fix what Zondo calls the "mixture of negligence, incompetence and deliberate corrupt intent". Consider, for example, these two cases:

  • The commission found that the former chair of SAA Technical, who also served on the board of SAA, did not understand or adhere to the requirements for avoiding and managing conflicts of interests. Yet the Companies Act, King 4 and the Public Finance Management Act (PFMA) address these extensively.
  • An incoming Eskom board ratified a R43m contract via round robin just a couple of months after the entity had been given R23bn in government support. The distribution of the ambiguously drafted resolution for ratification had not even been accompanied by a copy of the contract.

How does one legislate for due diligence other than by the Companies Act and PFMA, which stipulate that boards must act with "utmost care"? How would the introduction of more rules sway a director who believes board members can only be expected to know their full obligations under the PFMA after three or four years of service?

This all goes to show that the individual and collective mindsets and beliefs of those who apply the law matter — sometimes even more than the law itself.

Barking up the wrong tree

Tourism minister Lindiwe Sisulu, in a controversial opinion piece, recently asked: "Where is the African value system of this constitution and the rule of law?"

The problem is that Sisulu is asking the wrong question. The law is only given substance and animation through its application. As the US jurist Earl Warren once stated: "In civilised life, law floats in a sea of ethics."

If the law is applied in a social context (or "sea") that upholds the ethos of ubuntu and the rainbow nation, its purposes and more can be achieved. This is true, too, of our constitution.

If, however, the law (including the constitution) is applied within a culture of greed, it creates a vulnerability to the kind of corruption that’s so clear in the Zondo report.

So it’s obtuse in the extreme to censure the constitution for ongoing poverty rather than our leaders, who have been serving their own interests instead of those of the public.

It’s a point that highlights, again, the importance of appointing board members of a high calibre — those with ethical values and the relevant competencies — to lead our SOEs.

Please note, Mr President, that’s "calibre" — not "cadres".

*Ramalho is a professional nonexecutive director and chair of the King committee on corporate governance


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