The myth that corruption has no victims is a dangerous fallacy. Corruption causes disastrously inefficient economic, social and political outcomes. This Policy Brief is an update of Policy Brief no. 4 ‘Combatting Corruption’. This Brief proposes concrete steps to fight corruption. It was prepared as a discussion paper for the Democracy Works and the Delegation of the European Union to South Africa dialogue on ‘Corruption and Human Rights, One or the Other,’ held on 16 March 2017.
Introduction
Corruption, generally defined as the ‘abuse of public office for private gain’, is becoming so widespread in South Africa, that unless it is decisively tackled, there is a real danger that it will become entrenched as a “normal” aspect of life in our country. Once it becomes normalised within our society, it will be almost impossible to uproot.
In many new democracies, corruption becomes “normal”, “acceptable” and part of the fabric of life. Corruption is institutionalised. The democracy theorist of Latin America, Guillermo O’Donnell describes how in some countries in that region, corruption are isolated incidents, but “long-standing and stable”, permanent and pervasive features of these countries’ systems[1].
Public officials not following the formal rules established by country constitutions, laws and statutes – becomes institutionalised. This means that it is the norm that the allocation of public money, appointments to public institutions and policy-making are largely done on clientalist, patronage and corrupt means. These corrupt “norms” are largely accepted as the ways things are done. South Africa is in a real danger of following the same pattern where corruption becomes institutionalised.
Forms of corruption:
‘Grand’ corruption
The first is the so-called ‘grand’ corruption in which public officials, elected representatives and leaders plunder the public resources on a large scale[2]. It is the capture of the state by an individual. Typically, these include many ‘leaders’ who treat state resources as if it is their personal assets.
“State capture”
It is when state institutions, legislatures and even governing parties are owned by a political faction, small elite, a small number of companies or businesspeople. The political group, faction or small elite or small numbers of companies systemically channel national public resources for their own self-enrichment.
They manipulate policies, laws and rules to their own advantage, namely for their private gain, in illicit ways. They are particularly prevalent in countries in transition, whether colonialism, authoritarianism or in South Africa’s case from apartheid[3]. In such countries the rules of the game are changing, contested, new, unclear or not yet settled; and the rule of law has not been universally embraced.
Often countries in transition are in the process of implementing new economic reforms which produce “market distortions”[4], whether laws favouring one group such as black economic empowerment; or state-owned companies privatised cheaply to well-connected politicians and business leaders. Select businessmen and women, politicians and companies preferentially sell their products to the state, the state provides them exclusively with business funding or the state exclusively protects the trading or mining licences of favoured companies, politicians and businessmen and women; or lift universal public rules such as environmental protections for them. In transitional societies political, economic and cultural power is often concentrated in the hands of a few – which makes state capture possible.
“Rent-seeking”
One form of corruption is “rent-seeking”[5] where the politically connected make easy money, get government, private sector contracts and mining rights and favourable policies just because of their closeness to the governing party, political leaders and government, without any merit, or without them having the ability or competence to perform. It also involves companies paying kick-backs to public officials to secure public contracts to provide public services, development projects or infrastructure projects, even if they do not have the capacity or the skills.
Public officials bend the rules to channel patronage to relatives, friends and cronies, or accept bribes. It also involves public representatives channelling public services, development and investments to their community, constituency and region, rather than to those in greater needed. But rent-seeking also involves lobbying for policies which enriches one group, company or political faction, rather than a whole society. Rent-seeking also includes appointing politically connected cadres to both the public and private sectors.
‘Quiet’ corruption
In ‘quiet’ corruption public servants deliberately neglect their duties to provide public services or goods. ‘Quiet’ corruption may not involve an exchange of money, but involves providers of public services such as teachers, nurses or other officials, bending the rules for their own private interests. This includes, for example, public servants, such as teachers or nurses not turning up for work when they should.
Everyday corruption
This form of corruption is experienced by ordinary people on a daily basis. It could be a traffic official demanding a bribe for not handing out a speeding ticket, a government official demanding a payment for providing a service they are paid for any case. It could also include local patronage: a local official appointing his or her family member or friend for a public position. It could also be a public official using public funds meant for local development to refurbish his or her private house.
Corruption in South Africa is becoming institutionalised
The rise of corruption in South Africa has registered on Transparency International’s Corruption Perceptions Index[6], an international survey of public corruption. According to the index, South Africa[7] ranked 54 out of 178 countries listed. South Africa is ranked the most corrupt in Africa by respondents in the Global Corruption Barometer on Africa, which is conducted by Transparency International in partnership with Afrobarometer[8]. The survey covered 43 143 respondents across 28 countries in Sub-Saharan Africa, who were asked about their experiences and perceptions of corruption in their countries.
A survey by PricewaterhouseCoopers found that South African companies experience more fraud and bribery than their counterparts elsewhere in the world[9]. There are higher incidents of every economic crime category, except mortgage fraud and property infringement. It states corruption and bribery were the fastest growing economic crime category in South Africa since 2011.
Former Congress of South African Trade Unions general secretary Zwelinzima Vavi recently stated that South Africa was in danger of becoming a “predator state” where a new tier of leaders believed it was their turn to “feed”. “There is an order in a predatory state – and I’m not saying that is what is happening – but in an ordinary predatory state, there is an order in the feeding trough. The first family must feed first, and then the Cabinet must come, and its family, and then the provincial leadership and council”[10], Vavi said.
Why has the cancer of corruption spread so quickly, and can anything be done about it?
How can we stop the pervasive culture of corruption?
Declare corruption a national emergency
Corruption should be declared a national emergency. This would mean also ending the dangerous defensiveness, and in some cases denialism, prevalent in some government and political circles over the high levels of corruption.
Clean up the ANC and demonstrate the power of setting an example
The ANC itself must legally, socially and politically punish the bad behaviour of its leaders and members and reward good behaviour. Senior party leaders, ministers and public servants who are corrupt, even if they are powerful in the party, must be sacked. Only if that is done publicly, will government restore the moral authority to deal credibly with transgressions from ordinary citizens and compel citizens to follow the rules. The ANC (and other political parties) must bring in more competent, more honest and more decent leadership at all levels. A system of merit must be brought into the internal party elections. Candidates must be judged on the basis of competence, moral character and genuine commitment to public service. The active encouragement of new leaders, with better value systems, rather than good struggle credentials may help develop a societal change in values.
Tackle corruption in business
Corruption in business is often not taken seriously by business leaders, globally or locally. For instance, collusion practices, where prices are fixed between companies to the detriment of poor consumers, are rarely seen by companies to comprise corruption. The global financial crisis was essentially caused by corrupt and greedy businessmen and women. However, many of these business leaders and companies now continue post-global financial crisis as if they were not responsible.
In 2016, South Africa’s Competition Commission indicted 16 banks for rigging foreign exchange transactions. It showed how traders at these banks, including ABSA, Investec and Standard, engaged in activities to manipulate the forex market at the end of April 2016. It emerged that many of those indicted were not new to such illegal trades[11].
Locally, sometimes business figures critical of corruption in government circles abet corruption by colluding in corrupt practices, whether by giving a kickback for securing a contract or by appointing a token black or black politician to a board or a senior position in order to secure access to government contracts. We have seen how private companies scramble to get the ‘right’ people with suitable connections to ANC leadership on their boards, in senior management or as their BEE partners.
We should compel companies trading on government contracts to adhere to a set of ‘integrity’ standards, in which they foreswear corrupt activities. Civil society could monitor whether such companies adhere to these standards.
Foster constitutional values that reject corruption
South Africans must actively cultivate a value system that rewards honesty and discourages dishonesty. Importantly, public and political leaders must be measured against such a value system. Civil society will have to play a role in shaming those leaders who demonstrate corrupt values and encouraging those who behave with integrity.
In the long term, the best antidote to corruption is to foster the values of the South African Constitution across society. Firstly, the Constitution must be widely accepted as the supreme governance framework for all laws, values and cultures. Cultural practices that undermine the core constitutional values cannot and should not be defended. This means that traditional law, justice and norms must be subject to the Constitution. There cannot be a parallel system of governance to that of the Constitution.
Days after the Constitutional Court judgement on Nkandla, President Jacob Zuma, responding to the debate in the National House of Traditional Leaders which sat in Pretoria (7 April 2016), asked: “what are the values” that drive us. He then responded to his own question saying “African problems should be solved in the African way”, rather than through the courts. “I would be very happy that we resolve the African problems in the African way. Because if we solve them only legally they become complicated. Law looks at one side only and doesn’t look at any other thing. It deals with cold facts and I was complaining about that but they are dealing with warm bodies – that’s a contradiction.”
Similarly, in Zuma’s representations to the National Prosecuting Authority (NPA) in 2009, he stated that corruption was a “Western paradigm”. Even though corruption is legally a crime in South Africa, he claimed wrongly that there are “no victims” of corruption. Such a statement not only directly implies that South Africa’s Constitution and the Constitutional Court are not the African way, but also perpetuates the idea that in African indigenous cultures the act of corruption is not wrong, which is of course patently untrue.
Introduce merit into the political system
Merit-based appointments to jobs in the public service and in politics will come a long way to reducing the patronage system of jobs for pals, which fosters corruption. It would be important to professionalise South Africa’s public service. Performance agreements across government must be enforced. More transparent methods for appointments should be introduced, including making outcomes of decisions publicly available. Those who are politically appointed must have the necessary qualifications and skills. The CV’s of those who have applied for key public positions but who have not been shortlisted, must be publicly made available, so that the public can see how those who appointed compared to those who were not – and so combat patronage appointments and the sidelining and marginalisation of competent, but critical voices to crucial public positions.
Improve the institutional capacity to fight corruption
This would mean strengthening the corruption-fighting capacity of existing institutions dealing with corruption. This would include improving coordination and integration of anti-corruption work across government. In 2004, the National Anti-Corruption Hotline was set up. However, the Public Service Commission[12] reported in October 2010, that the government has “no knowledge” of what has happened to at least two thirds of cases reported to the National Anti-Corruption Hotline.
One important law to combat corruption was the enactment of the Prevention and Combating of Corruption Activities Act of 2004. The passing of the Act strengthened the legislative base for fighting corruption. A set of guidelines on the implementation of the Act was subsequently published to simplify the content of the Act which had previously been rather complicated. Too few civil servants and members of the public are sufficiently informed about the Act. Furthermore, there appears to be little political will to enforce the Act.
Improve the enforcement of internal anti-corruption controls within the state
This would include managing conflicts of interests better, improved screening of personnel, better performance evaluation and making procurement systems more transparent. Sadly, enforcement and compliance in the public sector have often been low, thereby opening up the system to corruption.
In October 2010 the Public Service Commission reported that almost half of government department head of departments had not had their performance evaluated in the 2009/10 financial year, even though they oversee more than R1 trillion of taxpayers’ money annually. Auditor-General Kimi Makwetu said most corruption goes unpunished encouraging further corruption[13]. Similarly, Claudelle von Eck, the CEO of the Institute of Internal Auditors SA said there appear to be few consequences for corruption[14]. “Not enough was being done to bring the corrupt to account and those often charged with corruption are not the leaders. We have to get to the point where leaders are held responsible”[15].
Set up an independent institution that can follow up on reports of corruption
Although cases of corruption are exposed on a daily basis there is currently no mechanism in the constitutional architecture that compels the state to act against public corruption, particularly in cases where the perpetrators are protected by powerful political and business leaders. A case must be laid at a police station, or lodged with the Public Protector. Citizens should be encouraged to alert the Police, the Public Protector or the relevant public watchdog when they witness corruption.
However, South Africa needs an independent structure, either private or civil society led, which not only follows up whether or not corrupt officials have been brought to book but can also force police and public watchdogs to bring cases of corruption exposed in the media and by whistleblowers to book. Many of the Public Protector’s successful investigation into corruption are often not taken further by police and prosecuting authorities.
Bar corrupt officials and businesses
Corrupt officials and politicians should be prohibited from employment in the public sector. Corrupt businesses and individuals should also be barred from doing business with the public sector. Civil society, trade unions, social movements and NGOs should shame and put pressure on corrupt business so that they can feel the reputational effects of corrupt activities. It would be worthwhile for organised business in South Africa to spearhead a collective effort to force major companies to forego corrupt practices.
The importance of lifestyle audits
Lifestyle audits of all party leaders and public servants are absolutely crucial and would also serve to boost public confidence. Lifestyle audits should be compulsory for elected and public appointments and should be open to public scrutiny.
Increase transparency and access to information
The solution to corruption is increased transparency. “Open access to information provides a basis for government accountability and raises the barriers against capricious, self-serving intervention. Without accurate and detailed information it is difficult to assess company and board performance, set targets and allocate capital efficiently”[16].
Government departments, state-owned enterprises (SOEs) and other agencies need to make tender recipient information publicly available. Payments to elected representatives, public servants, political parties and government departments by private companies and SOEs should also be made public as in the US where an amendment to the Dodd-Frank Act, compels oil, gas and mining companies listed on an American stock exchange to disclose details of payments to governments[17].
The media, particularly investigative journalism, has a key role to play in the exposure of corruption and should not be curtailed. The proposal for a media tribunal and the Protection of Information Bill will prevent information about official corruption reaching the masses. The chairperson of the Public Service Commission, Ralph Mgijima, said as much when he released the State of the Public Service Report in October 2010. He said the proposed bill would pose challenges to monitoring government performance, compliance and public corruption. The challenge is how to bring the extent of corruption to the masses and how to explain on a mass-scale that impact of corruption on service delivery so that ordinary citizens can hold their elected leaders and public servants more vigorously accountable.
Protect whistle-blowers, witnesses and anti-corruption fighters
To be a whistle-blower, whether in the public or private sector, in South Africa is potentially life-threatening. Anti-corruption crusaders in South Africa and in other developing countries are vulnerable to attack from powerful corrupt politicians, business and criminals. At present, public perception is that whistle-blowers are more likely to be prosecuted than the corrupt individuals. It is imperative that this changes, even if this means enacting a whistleblower protection law. South Africa also needs to foster a better environment in which to report wrong-doing in which more official action is taken on the information of whistle-blowers and that whistle-blowers themselves are protected.
Increase citizen activism
Courageous people are needed within and outside of the ANC to support corruption fighters and become corruption fighters themselves if we are to prevent corruption from crippling the attainment of a better life for the majority of our people, and not just the elite.
One mechanism to encourage activism could be the establishment of citizen or community forums directly corresponding to government departments which monitor service delivery and the progress of complaints. In Kenya for example, the Muslims for Human Rights (Muhari), a community-based organisation, monitors the use of the budgets given to members of parliament to distribute as grants to their constituencies[18].
A grassroots campaign against corruption is necessary so that the masses come to know the extent of corruption, the impact it has on public service delivery, how to monitor and report it, and the importance of holding their elected leaders and public servants more vigorously accountable.
Deracialise the corruption debate
The debate on corruption is often racialised, thereby undermining the fight against it. On some occasions leading public figures, if black, have accused critics, if white, of being racists, if they point to wrong-doing. However, playing the racism card for self-enrichment at the expense of the public good, or to deflect attention from individual wrongdoing constitutes aiding corruption. Similarly, for some white South Africans to broadly view corruption or incompetence by individual leaders, if black, as a general failure of all blacks rather than seeing it in the context of a specific corrupt individual, whatever the colour, politics or class, is also wrong. What we should not do in our bid to debunk outrageous racial generalisations is defend individual incompetence, wrongdoing and even corruption, just because the person is black or white.
Public officials often dismiss international organisations’ corruption reports on South Africa, saying these reports are infused with Western bias, which overlooks corruption in Western countries and focuses only developing countries. While this is true to some extent it deserves a separate debate and should not downplay the serious issue of corruption at home. Former President Thabo Mbeki accused those who criticised corruption in South Africa’s controversial arms procurement deal as perpetuating a stereotype which paints African governments as corrupt. Mbeki is wrong: It is African governments and leaders who partake in corrupt practices who are perpetuating the stereotype, not courageous critics who expose corruption.
Stop blaming apartheid for current corruption
While apartheid left a corrupt legacy, it cannot be blamed for current corruption. Home Affairs Malusi Gigaba rightly argued that “apartheid cannot be blamed every time”[19] someone is involved in corruption. Blaming the legacy of apartheid – although certainly with us – has become an easy answer for not acting against corruption.
While the apartheid system was corrupt, in 1994 South Africa established a new democratic dispensation, which is supposed to hold public and elected representatives to higher standards, values and behaviour, not the same as those of apartheid.
Conclusion
The myth that corruption has no victims is a dangerous fallacy. Corruption causes disastrously inefficient economic, social and political outcomes. It diverts public resources from critical development projects to less productive, less job creation and less growth spurring ones.
It discourages long-term investment. It leads to ineffective policies. Either well-intentioned policies are manipulated to enrich the few, or reasons are concocted to come up with new policies – which the country does not need, but which are devised in order to create a tender. Ultimately, no one takes policy-making seriously.
In an economy where corruption is institutionalised, there are no long-term investments, every individual tries to “eat” as much as quickly as possible, to amass wealth before they are pushed from the trough by the next dominant group. Because it is so easy for the politically connected to live off “rents” they are unlikely to have the incentives to build brick and mortar companies.
Yet, if South Africa is to industrialise, the country needs new types of competitive productive sectors. In fact, corruption induces the deindustrialisation of the country. The economy does not expand its productive capacity, as rent-seekers milk the existing capacity, and kills off new productive capacity, by choking the not-so-politically connected innovators, entrepreneurs and new ideas, from getting a start-up, of finance, mining rights or trading licences.
Corruption “misallocates” scarce talent, resources and energy to rent-seeking activities. It undermines democracy: shattering trust in democratic institutions, ultimately leading to political instability.
Unpunished corruption at the top leadership of a country leads to “self-replicating behaviour” by ordinary citizens. Dominance of countries by corrupt leaders further fosters the acceptance of corruption as “normal”.
Corruption often generates more of the same until a corrosive culture of corruption is fostered. When no action is taken against those engaged in corruption, the more people will be attracted to such actions.
A network of institutions often arises out of the corrupt activities, which are profiting handsomely, whether lawyers advising on narrow BEE or on pork-barrel policies or public challenges to such policies.
South Africa is at a “tipping point” where corruption is in danger of becoming the accepted social norm. Making the democratic values of the constitution the accepted social norm at all levels of society is the only genuine antidote to pervasive corruption.
Selected Bibliography
William Gumede (2017) The Democracy Deficit of Africa’s Liberation Movements turned Governments. Politikon, 44 (1) (South African Journal of Political Studies), pp. 27-48
William Gumede (2016) Reject corruption as part of normal values. African Independent, July 1
(http://www.africanindy.com/outlook/reject-corruption-as-part-of-normal-values-5312160)
William Gumede (2016) Cleaning Up. Good Governance Africa Journal, August 22 (https://www.gga.org/cleaning-up-2/)
William Gumede (2015) Rent-seeking is gobbling up our economy. Mail & Guardian, September 10
(https://mg.co.za/article/2015-09-10-rent-seeking-is-gobbling-up-our-economy)
William Gumede (2012) Corruption Fighting Efforts in Africa Fail Because Root Causes are Poorly Understood. Foreign Policy Centre, London October
(http://fpc.org.uk/fsblob/1500.pdf)
William Gumede (2012) Why Fighting Corruption. South African Labour Bulletin, Volume 36, No 5, December 2012/January 2013
(http://www.southafricanlabourbulletin.org.za/tags/corruption)
William Gumede (2012) Restless Nation: Making Sense of Troubled Times, Tafelberg
William Gumede (2011) Tackling Corruption, Focus, Issue 60, Journal of the Helen Suzman Foundation, January, pp.15-23
William Gumede (2009) Courageous people needed to fight corruption. The Sowetan, October 29
William Gumede (2010) Morality and Ethics in Public Life. Keynote Address, Ethics in Public Life 2010 national conference, Public Service Commission (PSC), Town House Hotel, Cape Town, October 21
Joel Hellman and Daniel Kaufmann (2001) Confronting the Challenge of State Capture in Transition Economies. Finance & Development, Volumber 38 (3), September, IMF
Anne Lugon-Moulin (2010) Understanding State Capture. Freedom from Fear Magazine, UNICRI, Issue 6, Turin [http://f3magazine.unicri.it/?p=402]
Kevin M. Murphy, Andrei Shleifer and Robert W. Vishny (1993) Why Is Rent-Seeking So Costly to Growth? The American Economic Review, Vol. 83, No. 2, Papers and Proceedings of the Hundred and Fifth Annual Meeting of the American Economic Association (May, 1993), pp. 409-414
OECD (2014) The Rationale for Fighting Corruption. Background Brief. Paris: OECD
World Bank (1997) Helping Countries Combat Corruption: The Role of the World Bank. Washington: World Bank Publications, September 1997, p.8
[1] Guillermo O’Donnell. 1996. “Illusions about Consolidation”. Journal of Democracy, 7(2), pages 34-51
[2] OECD (2014) The Rationale for Fighting Corruption. Background Brief. Paris: OECD
[3] Joel Hellman and Daniel Kaufmann (2001) Confronting the Challenge of State Capture in Transition Economies. Finance & Development, Volume 38 (3), September, IMF; Anne Lugon-Moulin (2010) Understanding State Capture. Freedom from Fear Magazine, UNICRI, Issue 6, Turin [http://f3magazine.unicri.it/?p=402]
[4] Joel Hellman and Daniel Kaufmann (2001) Confronting the Challenge of State Capture in Transition Economies. Finance & Development, Volume 38 (3), September, IMF; Anne Lugon-Moulin (2010) Understanding State Capture. Freedom from Fear Magazine, UNICRI, Issue 6, Turin [http://f3magazine.unicri.it/?p=402]
[5] Kevin M. Murphy, Andrei Shleifer and Robert W. Vishny (1993) Why Is Rent-Seeking So Costly to Growth? The American Economic Review, Vol. 83, No. 2, Papers and Proceedings of the Hundred and Fifth Annual Meeting of the American Economic Association (May, 1993), pp. 409-414
[6] Transparency International. 2010. Corruption Perceptions Index 2010. New York: Transparency International. October
[7] The index’s survey of South Africa has its shortcomings. Its methodology is based on surveying business and experts on their perceptions of corruption. Civil society, community and ordinary citizens’ views are excluded in the index. Secondly, corruption takes many forms. However, the index only uses one tool: the perceptions of business. Thirdly, the index has also come under attack from developing countries because of perceptions that it singles out developing countries, and furthermore, it does not put the same emphasis on corruption from industrial country governments and companies as in developing countries [This is one of the reasons why Brazil’s former Transparency International chapter has withdrawn in 2007 and set up their own localised version]. Fourthly, the index methodology varies from country to country – it does make country comparisons difficult. Fifthly, it does not highlight which kind of corruption is more common or more serious. In South Africa, perceptions of corruption are also clouded by race. Furthermore, business views may not be the most representative. Nevertheless, it is still a useful barometer, since there is no national corruption survey, audit or public perceptions study of corruption in South Africa.
[8] Transparency International & Afrobarometer (2015) Global Corruption Barometer on Africa. Johannesburg, December 1
[9] PricewaterhouseCoopers. 2014. Global Economic Crime Survey 2014. New York
[10] Zwelinzima Vavi. 2010. Address to the political school of the National Union of Metalworkers of South Africa. August 16, Johannesburg
[11] Moyagabo Maake (2017) The rigging of the rand – how they did it. Business Day, February 17
[12] Public Service Commission. 2010. ‘State of the Public Service Report 2010. October, Government Printers: Pretoria
[13] Kimi Makwetu. 2014. Auditor-General Address to the Institute of Internal Auditors’ Forum. Johannesburg, February 10
[14] Claudelle von Eck. 2014. Address to the Institute of Internal Auditors’ Forum. Johannesburg, February 10
[15] Claudelle von Eck. 2014. Address to the Institute of Internal Auditors’ Forum. Johannesburg, February 10
[16] Simon C.Y. Wong. 2004. ‘Improving Corporate Governance in SOEs: An Integrated Approach. Corporate Governance International. Vol. 7. Issue 2. June, p. 10
[17] The Economist. 2010. ‘Naming and shaming: the fight against corruption’. International Section. P. 64
[18] See, The Economist. 2010. Naming and shaming: the fight against corruption. International Section. October 30, p. 65.
[19] Malusi Gigaba. 2010. “Stop blaming apartheid for corruption”. The Sunday Independent. February 21.
