Daily Maverick

People’s Tribunal for Economic Crimes: When ‘power seeps out of the Cabinet and into kitchen cabinets’

It was the private sector’s turn to get a battering at the People’s Tribunal for Economic Crimes at Constitutional Hill in Johannesburg on Tuesday. The penultimate day of the tribunal, which organisers say aims to “join the dots” between corruption in the apartheid era and democratic South Africa, probed State Capture – and traced where the rot began. By MARELISE VAN DER MERWE.

The most significant elements of Tuesday’s gathering of the People’s Tribunal for Economic Crimes depends on who you ask. The submissions, overall, were not the same as the bombs dropped by Witness X, a.k.a. Aja Sooklal, on Monday. But what did emerge were some clearer threads between “State Capture”, as it’s described today, and its predecessors under former administrations; as well as some clearer links between private and public-sector corruption.

We’ve joined the dots, so that you don’t have to.

  1. Private sector corruption slips through loopholes and grey areas – and it’s still very poorly understood

Activist, researcher and talk show host Khaya Sithole presented some of his research into why corruption “continues to thrive in spite of legislative mechanisms”, fingering companies such as Steinhoff, Trillian and MultiChoice. Open Secrets (fairly) described Sithole as “taking no prisoners” as he delivered some hefty whacks to the private sector, questioning the economic impact of corrupt or questionable behaviour.

Money laundering, the exploitation of tax laws, financial statement fraud and cartel conduct can often occur either within the bounds of the law, can be justified via legal loopholes, or can be hidden behind “grey areas”, he argued, meaning that rampant corruption in the private sector can go unchecked. Further, he said, whistle-blowing is limited where employees are forced to sign non-disclosure contracts.

This deprives countries of tax revenue but also impacts on ordinary citizens in far-reaching ways, he said, pointing out that the impact when corrupt companies go under is not only on investors and shareholders, but also on countries receiving revenue, on employees and on ordinary citizens.

He also slammed the “sanitised” language used to describe private sector corruption, for example “accounting irregularities”.

Why don’t we crystallise this as a form of corruption?” he asked. “The impact is essentially the same. If we crystallise the two forms of corruption [in the private and public sector] you will find that corruption is far more pervasive.”

Nonetheless, he argued, the impact was very difficult to quantify because “we have not even learnt to understand the crimes committed”.

There is also the impact of a multiplier effect,” he said.

The takeaway? For as long as there is room for obfuscation, obfuscation will take place. “Accessibility of information is important to be able to rally civil society against economic crimes,” Sithole said.

If we rely on the perpetrators to provide the information on the economic crimes that they have been implicated in, then we are fundamentally limited ourselves in terms of covering and exposing corruption.”

  1. State capture is a political project, designed to legitimise abuse of the Constitution

Professor Ivor Chipkin of the Public Affairs Research Institute (PARI) was up next, due to address elements of the Betrayal of the Promise report. He crossed the bridge between the often-polarised narratives of “State Capture” and “white monopoly capital”, saying it was necessary to acknowledge that there was a link.

He argued that the atmosphere for illicit trade and corruption was established in the 1980s in the apartheid state (an argument underlined by Right2Know’s Murray Hunter, who made a submission regarding the Arms Deal on Tuesday – but we’ll return to that.)

Two main insights came from Chipkin:

  1. State Capture goes beyond corruption and criminality, and to merely analyse it as such is to gloss over it as a political project.
  2. State Capture legitimises abuse of the Constitution.

Calling State Capture the “emergence of a shadow state”, he described the process as “political power seeping out of Cabinet” and “into kitchen cabinets”.

Overall, Chipkin heavily emphasised the need for allegiance to the Constitution – which drew some criticism during the broader discussion on Tuesday. He argued that South Africa needed to “reaffirm [its] commitment to the Constitution as a progressive document” rather than a vehicle for elites to perpetuate their privileged position. For this, he drew some criticism, especially from those who believe a progressive document should be open to critique and evolution.

Radical economic transformation,” Chipkin argued, had been “deeply damaging” to state institutions, not least because it did not always actually involve transformation. On Chipkin’s hit list: Brian Molefe, the Optimum Coal Mine and the Guptas’ Tegeta which, in his assessment, could have been economic transformation, if a little less illegal.

The issue, he argued, is that State Capture is underpinned by legitimisation of going against the Constitution. This, he believes, began to solidify from 2010 onwards.

  1. If all else fails, fix it with clarity and transparency

Another clear, stark link between the submissions: corruption thrives where there is a lack of clarity and transparency.

Asked what he believed was a key moment in Tuesday’s sessions, Right2Know’s Murray Hunter told Daily Maverick it was the exposure of the Seriti Commission of Inquiry’s failures, which highlighted breakdown in transparency, and its consequences.

Tuesday’s submissions, he said, delivered “further evidence of how the Arms Deal corrupted our politics, and how the Seriti Commission – which was established to uncover that corruption – essentially failed the public and robbed us of our right to know what actually happened… and what we could do to prevent it from happening again”.

The significance, he argued, was that it positioned the Arms Deal as a key point in the transition from “apartheid grand corruption… to this era of State Capture”. The Arms Deal, he added, “laid the groundwork for all the secrecy, corruption and political factionalism we are dealing with today”.

The tribunal is one channel aiming to reverse this lack of transparency. Which was necessary, Hunter explained, given that an inquiry could be established, could “sit for years” and fail to uncover the truth, leading to “a situation where the final draft of history has been whitewashed”.

R2K and Corruption Watch have launched a review and are challenging the commission’s findings.

The tribunal continues on Wednesday. It will resume its probe into State-owned Enterprises, and testimony will include a case study of Denel. DM

Photo: A young girl cries outside her family shack after a violent service delivery riot near Soweto, Johannesburg, South Africa, 11 September 2013. EPA/KIM LUDBROOK

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