Opinionista Sisonke Msimang 27 June 2013

Corporate SA, the wolf in sheep’s clothing

Seldom are we provided a moment that allows us to reflect on our similarities. This week afforded us this opportunity. For those of us who have been fixated on public sector profligacy and on corruption within the largely black elite, this week offered an important reminder that the private and public sectors are more alike than they are different. It was an important reminder that the white-dominated private sector is just as dirty as the black-dominated public sector.

The investigation by the Competition Commission into the collusive practices of the construction industry provides an excellent example of how an oversight body can make a real difference when it comes to governance. While civil society NGOs like Corruption Watch play an important role in calling for and conducting investigations, it is only a state body that is well-resourced and appropriately funded that can manage investigations as sophisticated and technically sound as the one that has lead us to these revelations. The hundred of projects scrutinised, the calculations of the sums involved and the forensic analysis necessary to disentangle the web of lies that saw private sector companies over-bid, fix prices and commit fraud of the most pernicious kind – is commendable.

While the scale of the corruption is significant, what is more significant is that this is merely one sector, and indeed only a small slice of time – three years. There is no doubt that any number of other sectors have laundry that is just as smelly that has not yet been hung out to dry.

One of the most astounding things about post-Apartheid South Africa is the fact that the private sector has managed to remain virtually unchanged while appearing to be completely different from its old self. It is important to understand how this trick of pretending to be one thing, but really being another has been pulled off.

South African companies have invested massively in making themselves appear to be beacons of hope in an otherwise hopelessly mismanaged society. They have successfully projected this image through carefully constructed campaigns that paint a far rosier, less divided South Africa than the one in which real South Africans live. By creating ads that promote the myth of the rainbow nation, by inserting all colours happily prancing around in ad campaigns, South African companies have not had to undergo meaningful internal racial and gender transformative change. They can look like it by hiring models.

The figures bear out the reality of the lack of private sector transformation: white people represent three-quarters of senior jobs in the private sector while black people hold only 12% of these jobs.

Yet the investment in the creation of multi-racial brands that project an image of change, progress and diversity are in fact the opposite of what most private companies in South Africa look like on the inside. These companies have incredibly large budgets with which to do this, so its no wonder that they have been so successful in depicting themselves as drivers of positive change in this country.

In addition to seeming to champion a new and diverse South Africa, many of our private sector actors promote themselves as good corporate citizens. This good corporate citizen trope has taken many forms over the years. Most notably, a number of companies have managed to assume the moral high ground on policy matters.

A notable example of this has been Anglo American’s leadership on HIV and AIDS at a time when both the president and the minister of health were involved in a series of deadly delays related to the provision of treatment. There is no doubt about the importance of these initiatives, but it is also important to contextualise them: they take place against a backdrop of institutional resistance to structural change, and as the construction example illustrates, in a context in which there is much dubious corporate conduct.

Well-financed and shrewd, corporate South Africa has managed to portray itself as the little guy; the victim of BEE policies that skew towards corruption and incompetence, the dude who observes the rules and insists that merit matters. In the post-Apartheid era, ironically, government has become the bad guy and the private sector has become the sweet, hard-working honest guy who just does his job and tries to help others. Most importantly, the private sector has successfully sold itself as the place where corruption happens only in exceptional circumstances.

The sad truth is that it has been easy to buy this story because when it comes to matters of corruption and incompetence, the government has the market so cornered and is so woefully inadequate at selling itself and spending money on glitzy campaigns that the private sector comes out smelling like roses.

But it is not so simple after all. The financial crisis in the US was brought on by the reckless lending practices of financial institutions that pretended to be what they were not. The Enron scandal a few years before that laid bare the excesses of senior managers who believed that they were the smartest guys in the room – their arrogance and the endemic and widely accepted nature of their conduct eventually spelled their downfall.

Similarly, the construction scandal provides a small but important window into the arrogance, corruption and manipulation that is part of the institutional fabric of a powerful set of players in a critical industry. We would be fools to believe that these problems are confined only to the construction sector. Indeed the bread price scandal of a few years ago provided ample evidence that profit trumps morality for many companies.

At a time when trust in state institutions is low, and when corruption in the public sector is so flamboyantly displayed, this clear-cut evidence of corporate malfeasance confirms what we know but seldom foreground in this country; which is that corporate South Africa hasn’t changed much. The old boy’s network remains firmly in place (the clubbiness of school ties and historical networks that continues to characterise the senior management of most private enterprises in South Africa lends itself particularly well to collusion). Meetings were held at which competitors agreed on prices for multi-million rand projects intended to benefit poor people.

The consequences are profound. As Economic Development Minister Ebrahim Patel noted this week, the result is that there is less money for infrastructure projects, which means that government completes less programmes, which creates fewer job opportunities for South Africans desperately in need of jobs.

The question – as always – is what we are going to do about it. We should start with checking out the excellent investigation done by the Competition Commission, which includes the names of the companies and the lists of the projects probed. We should then demand that each government department that was ripped off by the corrupt colluders get the sum of over-inflated money back so that the regular folks who are the losers in this don’t continue to be shafted. Lastly, and most importantly, we should ask questions about where the R1.5 billion fines that the Commission will be collecting will go.

Perhaps contracts should be awarded to small land medium non-colluding contractors, to build shelters for survivors of violence, to build recreational faculties for young people, to buy more medicines for people living with HIV and TB?

Surely it is time to demand accountability not only from our elected officials, but also from those who have a responsibility to respect our laws, our citizens and those who consume their products and services. DM


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