South Africa

Analysis

Corruption can be beaten: Paymaster and recipient must be punished and publicly disgraced

The astonishing revelations of the Bosasa testimony, piled on top of the still-unravelling saga of the Gupta State Capture, and a still-growing list of other embarrassing, costly financial shenanigans in South Africa — as well as all the examples elsewhere in the world — makes us think about the slippery slope of corruption and how it undermines a nation as well as what it can do to the participants in such malfeasance and criminality.

Four decades ago, I was talking with a friend who had joined the foreign service a few years before I had, back while I was still in university. At that time, my friend had been assigned to the State Department’s inspector general’s office; the investigators who tracked down mismanagement and corruption within the department, and who then rooted out the malefactors — and if it was a criminal case — then helped bring them to justice.

During that period, back in the late 1970s, one of that office’s cases had involved breaking up an illicit visa-for-sale ring in a small Caribbean nation. At the time, that was in a country where an American visa was relatively hard to obtain but was a highly prized possession once issued. As a result, there was the ever-present temptation for certain sums of money to change hands.

The thing about this particular bit of corruption was that the investigators determined that one of the key people involved (and who had then been caught) had been receiving around $10,000 per visa issued. That individual had already been dismissed from the service after being caught selling a handful of visas — and criminal proceedings were already underway against him and his local co-conspirators. Was the visa officer being blackmailed in some way; had it been done for love; had he readily needed the money; or was he simply greedy?

That started me thinking. If one figured five fraudulent visas sold at $10,000 per visa (what I understood to be the price), a total of $50,000 had been paid over — to be divided up between the several people ultimately involved in the effort. Not that much, really, given what would be lost if the issuer were caught — as he was.

Of course, the take would have been larger if the scam had been running for longer, or was much more widespread. But for an individual involved in managing this bit of bureaucratic chicanery, the potential off-books revenue from the fraud had to be weighed against the loss of all future salary, retirement pension benefits, life insurance and health care benefits, not to mention the possibility of very long stay in a federal prison if one was caught before getting out of the country to some place that was both comfortable to live in and where that country had no treaty of extradition with the US. Could it possibly be worth it?

I started to do some maths, purely for research purposes, readers should understand. This was assuming you had to move to a country like Brazil (no treaty) and had managed to spirit one’s ill-gotten gains out of the clutches of the US authorities. How many more years of life would there be, per the actuarial tables; how much salary equivalent income was needed; whether one needed to hire a bodyguard and stand-by interpreter; how one would purchase a house with cash (no more credit, after all); the likely cost of gratuities to amenable police and immigration officials to stay safe; things like that.

Back in the late 1970s, I finally came to the conclusion one needed to clear at least $3.5 million in illicit wealth, or it simply would not be worth the trouble. Given government accounting procedures for the deposit of visa funds and periodic security clearance investigations that includes an evaluation of undeclared wealth, that number seemed to be an impossible hill to climb.

But that led to the obvious problem with such a project of corruption. How many visas would one have to sell to amass that much money? A bent official would have been doing nothing but issuing visas — more than 700 an hour — to those ineligible, for a very long time to assemble that amount of swag — well past the time it would have taken for any supervisor (or the individual’s subordinates) to sense there was something very rotten in that particular consular office. Unless, of course, absolutely everybody associated with that office was also in on the con.

And so the contradiction: Why would anybody fool around for a few tens of thousands of dollars if it meant the chance either for some serious jail time or permanent exile and a mandatory quick course in Portuguese? And yet, some people do such things anyway.

Another story. Many years ago, in South Africa, one of our African staffers was suddenly informed she and her husband were about to be endorsed out (internally exiled) from the Johannesburg area because of their violation of pass law documentation. Determined to keep her services for our office, we went together to the passbook office on Albert Street. There was a long table with a half dozen pass law administrators sitting behind the table, each with a rule book, a box of official stamps and an ink pad at the ready.

When we reached the person we needed to speak with, he listened carefully to our circumstances. (Our employee’s husband was trying to become a professional golfer and that was not one of the allowable jobs for urban Africans at that time, hence the pending endorsement to a distant “homeland” up north.) Our clerk looked at us and said, “R80.” R80. The metaphorical lightbulb above our heads went on and we dug through our respective pockets and wallets until we had assembled the sum in question. (Remember that back in 1975, and that amount would have been a good week’s wages for someone.)

We slid the money forward, he took our employee’s passbook and placed a “10 – 1 – A” stamp in it, after cancelling whatever had been there before. That particular stamp was the gold star of passbook endorsements, allowing the bearer to live in the township and rent one of the matchbox houses, without the constant threat of being “removed”, unless the individual’s job itself disappeared and they failed to find a new one.

Was what had just happened a processing fee, extortion, or, perhaps, a bribe? Had a crime happened or was it just the dutiful exercise of administrative discretion? And note, too, that pile of notes and coins went into a jacket pocket and no receipt was issued. And so, again with the math. If this clerk (and the others) did five or so of these interesting transactions per day, times five days a week — it was no wonder so many mid-level civil servants in apartheid-era South Africa managed to own vacation homes and motor or sailboats down at the Vaal Dam.

Let’s get academic for a moment. The late political scientist Samuel Huntington — long before his advocacy of “the clash of civilisations”, and even before his consulting with the South African government over the management of public order, shortly before the release of Nelson Mandela — back in 1968 had written a massive text, “Political Order in Changing Societies”. Controversial in some ways, not least for his conclusion that political and social order was more important than the expansion of democracy for growth, this book was required reading for students of political science, development economics, and related fields for decades.

One key — and similarly controversial — an argument about the competence of bureaucracies in developing nations was that, contrary to conventional wisdom, a modest bit of corruption actually helped keep things moving forward. Like grease in a door hinge, or oil in a motor. By contrast, too much stuffy, pecksniffian adherence to all the rules actually stifled growth and development. Think of the old “licence raj” in India. (Actually, that regimen often seemed to combine both rigorous enforcement of all those rules and the brown envelopes necessary to get anything requiring government approval accomplished.)

Huntington was not calling for indiscriminate “get out of jail free” cards handed out everywhere, and it is hard to say, precisely, what he would have said about our real example of the employee’s passbook, perhaps approving our actions on the grounds that removing those rules that artificially restricted a worker from seeking productive work or holding a job was a pro-development effort.

Huntington, however, most likely would have disapproved of that visa fraud because it gave unfair benefits to criminals. Similarly, he would have disapproved of that whole nasty Gupta-gate State Capture mess, or the now-unfolding allegations about Bosasa’s criminal enterprise of a wide swathe of bribery payments to win — and hold — government contracts.

Such behaviour unfairly distributed government benefits to those who could pay to play, and thus leading to the toxic result of inefficiently skewing government resources through backhanders to a select group of beneficiaries.

But is corruption inevitable and unstoppable; or is the problem simply one of failing to enforce the rules and fearlessly prosecuting violators? Or is there an irreducible element of human nature at play that encourages some people to take advantage of such opportunities?

With Bosasa, for example, the cash masters seemed to have figured out that the real trick to gaining continuing access to the cash cows of all those government contracts was not offering one whopping big, off-books payment. Rather, it was in making regular payments, habituating the recipients to the extra cash, thereby allowing the recipients to expect these cosy but illegal relationships would continue to the mutual benefit of the two parties, but to the detriment of the public footing the bill. Or, as William Magear “Boss” Tweed, the 19th century head of New York City’s machine politics is reputed to have said:

Once I buy someone, they’re supposed to stay bought!”

Perhaps the way forward, besides continuous, rigorous enforcement of anti-corruption laws, is to hope for some modest changes in the human heart. Carrying out this behavioural change need not follow the Chinese example of highly publicised executions of senior-level, corrupt officialdom, but by moving to space where corrupt behaviour — by recipient and paymaster — is punished for illegality, and is then rewarded with public ignominy for such behaviour.

That must be the goal, whether it is in China, the US, or South Africa — or anywhere else, and it will almost always pit the rich and well-connected against the rest of us. DM

Gallery

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