Opinionista Wayne Duvenage 6 March 2013

Does leadership in South Africa suffer from ‘corporate schizophrenia’?

The experience of chairing the Opposition to Urban Tolling Alliance’s (Outa) legal challenge on the e-Toll debacle has revealed troubling aspects on two main fronts: there is a serious lack of public-sector accountability for the uses to which taxes generated by society are put; and, more worrying, a corporate leadership that appears fearful of demanding that the public sector be held to account for squandering taxpayers’ money.

Apart from the fact that the eToll legal challenge has become far bigger, more costly and time-consuming than we ever imagined, the most disappointing revelation has been the reluctance of South Africa’s big business leaders to support challenges against the authorities on issues on which they may well be in agreement.

Throughout all sectors of our society, there has been overwhelming scepticism and criticism regarding government’s choice of e-Tolling as its “efficient” method of funding Gauteng’s freeway upgrade. The inefficiencies and numerous pitfalls of this plan are too glaring to be ignored:

  • The high cost of R1,5bn (at best) a year, just for toll collection.
  • High increase in the Gauteng Freeway Improvement Project (GFIP) construction costs, from R6,4bn in 2006 to R17,9bn by 2011.
  • Lack of public consultation in 2007, when the South African National Roads Agency (Sanral) placed a single advertisement (lacking necessary detail) in six newspapers and received a mere 28 responses from over 3,5 million Gauteng motorists, and were satisfied that they had engaged enough.
  • The lack of transparency throughout the process.
  • The burden placed on society to manage eToll accounts, disputesand other unintended consequences.
  • Lack of alternative routes, especially during peak periods.
  • Inadequacies of the public transport system as an alternative option.
  • Taxi’s being granted free passage while claiming that a user-pays principle applies.
  • A flawed user-pays argument when Gauteng contributes four times more to the national fiscus, than it receives in return and when the principle is applied inconsistently by bailing out SAA, the National Health Insurance proposals and other examples.
  • Simpler, efficient taxation and fuel-levy collection methods exist. Had a 10c increase in the fuel levy been applied in 2006 (when the freeway upgrade plan was under way) we would have already raised over R11bn toward the R17,9bn project. Combine this with last year’s R5,7 billion from Treasury and the capital costs for the GFIP would virtually be covered by now.

All research and public engagement sessions have sent a clear message to the authorities that society is frustrated and unwilling to accept the wasteful irrationality of the e-Toll plan.

Corporate schizophrenia

So why the ambivalent response from corporate leadership when asked to support Outa’s challenge against such an irrational plan? When questioned about their personal views on e-Tolling, most business leaders have expressed opinions that oppose the e-Toll decision. They clearly understand the absurdity, irrationality and high costs related to the inefficient e-Toll plan. However, when it comes to supporting Outa with donations toward mounting legal costs (despite the e-Toll interdict having saved many of them millions of rands), even under the assurance of anonymity, most big business leaders have displayed a paralysis to act, driven largely by a reluctance to oppose government for fear of possible retribution by authorities who have expressed disdain for their critics.

The dilemma is clearly prevalent in statements such as, “Personally, I agree with Outa’s cause, but in my corporate capacity, I simply can’t be seen or heard to do so.” This “schizophrenic” behaviour in business leadership has become quite commonplace in South Africa.  It is premised on fear, and it is crippling our long-term development.

Political pressure

Significantly, a few members of the SA Vehicle Renting and Leasing Association (Savrala) have recently resigned their membership, due to pressures linked to the association’s prominent role in Outa’s legal challenge. Digging deeper, the picture becomes clearer when one realises that many Savrala members do a fair amount of business with government at different levels. After decades of enjoying the benefits of membership with Savrala, one has to ask why they would resign from an industry association of which they were previously extremely supportive (including Savrala’s stance against e-Tolling)?

Evident, in our assessment, is an unnecessary pressure filtering down from the top ranks of holding companies, on whose boards often sit the politically-connected, or whose business interests could be impacted by government procurement. It’s a case of don’t rock the “government business” boat, despite the fact that overwhelming evidence and public sentiment clearly indicates that e-Tolling is not in the best interest of the South African public. 

A broader concern

Corporate schizophrenia is not limited to the e-Toll debacle. It is all around us. There are strong legal grounds to challenge the inefficiencies of the Eskom calamity. Input during the National Energy Regulator of South Africa’s (Nersa) recent hearings has exposed many issues of poor leadership and shocking operational inefficiencies by the management of Eskom over the past decade, which will lead to extreme and unnecessary high energy costs. Why does the business community, and in particular big business leadership, accept the fact that our new power plant at Medupi near Lephalale in Limpopo will cost society three to four (maybe five) times more than the original tender price, by the time it is completed? It is inconceivable that this shocking state of affairs will simply be swept aside as “lessons learned”, with little challenge or no accountability being demanded by big business. Clearly we suffer from a severe lack of civil courage when it comes to challenging the wasteful spending of our hard-earned taxes.

The current Eskom, e-Toll, SAA and education crises, the looming water crisis and numerous other debacles are a disgrace to our country and its citizens. Our future generations will be burdened with the these gross inefficiencies and exorbitant costs for decades to come. There are strong cases and grounds for successful civil action in all of these issues, to take the authorities to task over their gross neglect of their duty to protect the interests of society, not to mention the many glaring and questionable conflicted investments that occur with many contracts. Yet only a few courageous private-sector entities have displayed active corporate citizenship and taken up some of these challenges on behalf of their customers and the people of South Africa.

Leadership’s responsibilities

Society’s issues in this regard are not written into the employment contracts of corporate leaders. CEOs get no points from the investor community for taking up societal challenges of this nature; it is this year’s returns and share price that matters, not the unnecessary costs which society will have to bear over future decades. This after all will become someone else’s problem, at a future date.  Really? And yet most private sector leadership’s reaction to public-spending debacles is one of absolute disgust. So why the silence, the lameness? When will a big enough collective of powerful corporate leaders risk speaking out? When will business leadership stand up with a strong sense of moral purpose and civil courage, to condemn this behaviour? Who will lead the charge and take action to stop the rot? If past private sector business leadership inaction is anything to go by, my guess is that nothing much will happen. The few who stood up to be counted in the past and were “shot down”, were certainly not showered by overwhelming support from theircolleagues.

Several reasons have been offered for why corporate leaders can’t take action, but most of these excuses can be put down to what psychologists call “negative defence mechanisms”, reasons that justify their positions, no matter how glaringly wrong the issue is. And so it is that the silent plague of “corporate schizophrenia” and the contagion of “lame corporate syndrome” thrives and strangles the potential growth of our country.

The need to hold the public sector to account permeates through all levels, from national right down to local government. At a local level the traffic light situation, potholes, city billing disasters, traffic- fine corruption, water and sanitation… are all testament to our apathy. The list is endless and today, hundreds of thousands of citizens go to sleep at night worrying about the long-term sustainability of their businesses, their jobs (if they are lucky to have one), their pensions and lives in a society trapped in decline, knowing that it needn’t be that way, that they ought to be living as proud South Africans in a prosperous country. They simply do not want to anaesthetise their deeper ethical and moral sensitivities with blasé rationalisations such as “get used to it, this is Africa”.

According to leading economists, well over R100bn a year of South African taxpayers’ money is squandered through corruption, maladministration and poor procurement by the public service.  The private sector too, is not innocent of dancing to the tune of these corrupt practices, but the country’s economy, its policies and service delivery are in the hands of the public service and the private sector pays the taxes.Where I come from, the general rule is the demand for accountability must come from whence the paying is done.Holding your employees accountable for best practice and efficiency, but not your public servants? Simply more corporate schizophrenia at play.

Brave communities have paved the way

A small town in North West province called Sannieshof went through a microcosm of these exact same issues several years ago. The sheer ineptitude of the elected local council saw the town’s infrastructure begin to crumble. The sewage and water systems were compromised, potholes developed and street lights went out, to list a few of the problems of decay that set in. Eventually, the local ratepayers’ association had enough and challenged the council’s ability to manage the town’s affairs. The result: a successful court order to channel local rates and taxes into a trust account managed by the ratepayers themselves. Today, Sannieshof’s woes have been addressed and the town is functional again. Rustenburg ratepayers are contemplating similar action.

Sannieshof is no different to the bigger picture. Where is the civil courage that this country’s citizens require of their business leaders, to tackle the critical issues at a national level? This national decay has gone beyond waiting for the political election process to resolve it. Business leaders know all too well that the South African election process will not address these matters in time, and if they do nothing, the squandering and deterioration will not be rectified. Occasionally we see temporary signs of redress and relief, but we remainquite literally, a nation under siege by the ineptitude of our public service and a corporate sector too paralysed to take a stand.

Procrastination begets a soft stance

I guess as corporate leaders, we will spend another year of working hard on our shareholder returns, while becoming more punch drunk from the blows of our country’s downward spiral, as local and international investors take their money to other countries. It’s that, or we can influence change and growth. This is a call upon citizens who occupy positions of influence, whose personal and moral views conflict with bad public-sector governance, to unite with fellow colleagues of similar mind and stature and take up the baton of potential prosperity and citizen entitlement. The rewards for our country, our people and future generations are immense if we become the active citizens our nation requires us to be, or as Gandhi once put it, “to be the change we want to see.”

This is the time for civil courage. Corporate leaders must emerge from their short-term profit comfort zone and demand accountability for taxes paid. Our civil action groups are stretched, overburdened and cannot continue to play the challenging role on their own. They need business funding and support to be effective. Government has no option but to listen to business leadership in South Africa, if it stands tall and firm. It is time to demand the returns that this country’s potential so rightfully deserves. People like Martin Luther King and John F Kennedy used to great effect a quote attributed to Dante: “The hottest places in hell are reserved for those who, in times of great moral crisis maintain their neutrality.” DM

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