CORRUPTION IN SOUTH AFRICA: NEW BOOK LIFTS THE LID ON WHO PROFITS

Thu 05 January 2023:

The new book The Unaccountables: The Powerful Politicians and Corporations who Profit from Impunity is welcome for the way it contextualises corruption. It shows how politicians and bureaucrats could not implement corruption without their corporate and professional enablers – the accountants, auditors and advocates who make it all possible.

The book is the result of a decade of research by Open Secrets and other NGOs. It is edited by Michael Marchant, Mamello Mosiana, Ra’eesa Pather and Hennie van Vuuren (a blend of investigative journalists and activists) and has 11 named contributors. Analytically, it covers four overlapping issues:

crimes such as stealing public funds and evading tax
culpable negligence by professionals such as auditors
serial failure by regulatory authorities
moral and political issues such as inequality and corporate tax avoidance.

Corporate corruption

Readers who are diligent in taking in the daily media will remember most of the high profile cases summarised in this book. But not all. It reveals that the Life Esidemeni tragedy, in which 144 patients died after being placed in inadequate facilities run by NGOs in 2015, had one apartheid precedent. During the 1960s the National Party regime outsourced the psychiatric care of 11,000 patients (9,000 of them black) to the British company Intrinsic Investments: 207 died (p.50).

The book fills some gaps in media reports. These tend to focus on those who are despised by the plutocratic, wealthy establishment – the ruling African National Congress politicians and their cronies. The media are comparatively reluctant to cover crimes committed by fellow denizens of their plutocratic stratosphere, such as auditors, accountants and advocates. For example, global media coverage of Hong Kong focuses on Chinese repression of freedom of expression – but overlooks its role as a tax shelter and corporate secrecy hideout for front companies and money laundering:

a long-running failure to hold the powerful and wealthy to account for the crimes that they profit from. Economic crimes and corruption are committed by a small band of the powerful, but they pose fundamental threats to democracy and social justice. They result in the looting of public funds, the destruction of democratic institutions, and ultimately … the human rights of millions of people. (p.12)

Fear of those with money to bring defamation litigation, or who decide on corporate advertising spending in the media, aggravates this situation.

This book is structured around apartheid profiteers, war profiteers, state capture profiteers, welfare profiteers, failing auditors, conspiring consultants, and bad lawyers.

The authors note how over 500 global corporations negotiated, thanks to their tax accountants, with Luxembourg, a tax haven, paying only 1% tax on their profits (p.254). They seem to have missed the case of Ireland, where such tax is one thousandth of 1% on profits. Such tax shelters pervade the west, especially Commonwealth countries.

The book calls for action to end such tax avoidance. But it does not spell out what it would entail. It would require the South African government to negotiate an international coalition to campaign through the United Nations, the Organisation for Economic Cooperation and Development and the African Union, to find enough allies to mitigate such a global power structure – class power in its purest form.

US president Joe Biden’s proposal that globally, corporate tax should have a floor of 15% provides a good start for such campaigns.

Regulation failure

This book gives welcome attention to a long-neglected problem in South Africa. That is the serial failure of regulatory authorities to hold companies or professionals to account. One instance too recent for this book to cover is that the minerals and energy minister, Gwede Mantashe, has fired from the National Nuclear Regulator a civil society representative, on the grounds that he is anti-nuclear.

Since the minister’s portfolio and performance contract require him to promote nuclear power, it is a conflict of interests for him to interfere in the regulator of nuclear safety. The regulator should fall under the environmental affairs department, as in other countries. This is a topical example of the abuse of power, and defanging a regulatory authority.

The book underscores that the Independent Regulatory Board of Auditors (IRBA) refuses to name and shame. It abuses secrecy to protect the names and reputations of auditors guilty of conspiring with their corporate clients to conceal the truth (p.272):

the IRBA’s desire to protect its members overshadows its responsibility.

Since at least the first world war, pacifists have denounced the military-industrial complex as the merchants of death. The National Conventional Arms Control Committee is supposed to oversee South African exports of armaments and munitions. This is to ensure the country does not violate international treaties. It is not known to have refused any permits to export armaments to countries at war, even when they indiscriminately bomb civilians, as in Yemen.

The authors call for its statutory framework to be drastically toughened up.

Apartheid profiteers

The historical chapter of the book, on apartheid profiteers, holds no surprises. Of course, Sanlam, the insurance giant, and Naspers, the media behemoth, were always part of the Afrikaner nationalist movement, led by the secretive Broederbond. Of course, individual Afrikaner businessmen donated to the Nasionale Party, which formalised apartheid in 1948, as did the military-industrial complex. All those companies manufacturing armaments had only one monopoly buyer – the South African Defence Force:

a significant portion of the business elite kept the taps open to the party at the height of domestic repression and foreign wars (p.25).

The authors do a thorough job of exposing all the Swiss, Belgian and Luxembourg bankers who comprised the sanction-busting front companies. It exposes the late Mobutu Sese Seko of Zaire (now the Democratic Republic of Congo) for providing false end user certificates to enable Armscor, the apartheid-era state arms procurement company, to smuggle in weaponry (p.42).

The book revisits the controversial 1999 arms deal. It explains how bribes were described in corporate paperwork as consultancy fees. The arms deal was the first opportunity of the post-apartheid military to buy big-ticket weapons after a quarter-century of arms sanctions, which the post-apartheid military lacked the budget to maintain in service.

Since then, the amount wasted in the arms deal has been dwarfed by the billions spent by Transnet, the rail, ports and pipelines parastatal, on corrupt locomotive contracts. The same for Prasa, the passenger rail parastatal, and Eskom, the power utility, contracts.

Overall, it is a book that should be on the bookshelf of every thinking South African.

Updated to clear confusion created by the absence of an index in the advance proof sent to the author.

Keith Gottschalk

Political Scientist, University of the Western Cape

Keith Gottschalk served as Head of Department (2004-2006) when he also hosted the SA Association of Political Studies biennial conference. His forty scholarly publications are mostly on South African political dynamics. His current research and publications focus on the African Union family of organisations and African integration, and on space policy for developing countries. Keith has also published a poetry collection Emergency Poems plus over one hundred poems in literary journals. His latest poetry collection is Cosmonauts Do it in Heaven. Finally, Keith chairs New Contrast literary magazine, Off the Wall Poetry, and the Lansdowne Local Writers.

This article originally published in The Conversation Click here

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