I have written a number of pieces recently on corruption – on the dangers of becoming ‘fatigued’ by the barrage of reports on government corruption, and also on the types of local government corruption that affect millions of South Africans every day.

Corruption is like a rampant virus that weakens every part of the state and ultimately prevents it from performing its core functions. Until we find a way of stamping out government corruption and holding the offenders to account, we will always be playing a game of catch up when it comes to rolling out services to the citizens of our country.

But there is a form of corruption that is equally insidious, and which often seems to slip beneath the radar. The perception is that this form of corruption evades the same level of media scrutiny, and that taxpayers are somehow more tolerant of it. I’m talking, of course, of corruption within the private sector.

Let me make it clear upfront: Private sector corruption is as damaging to society as any form of government corruption. Under a Democratic Alliance (DA) government it will not be tolerated and we will employ every measure possible to bring perpetrators to book. But this is not something we can do on our own. It will take leadership and partnerships in the private sector.

Corrupt practices in the private sector can take many forms. Some of these take place between two or more private companies, and examples of these include insider trading, collusion, price fixing and tax evasion. Whatever name we call it, it is still corruption.

Others are acts of public sector corruption that require willing partners in the private sector. In most instances this takes the form of some kind of tender fraud. Here, public sector and private sector corruption are two side of the same grubby coin. When state-awarded contracts go bad, it generally takes two to tango. And when these multimillion-rand government deals remain deliberately shrouded in secrecy, it’s not only the dirty government officials who get away with it.

For every arms deal, nuclear deal or Nkandla project, there are big companies – both here and abroad – who pay the inducements to secure contracts on inflated tenders. When our government went on its multibillion-rand spending spree on fighter jets, frigates, submarines and a host of other aircraft and training equipment, it involved global arms companies like British Aerospace, Daimler-Chrysler Aerospace, MAN Ferrostaal, Thales and Thomson-CFS, as well as banks in Germany, Italy, Sweden, Britain and France. Without the complicity of these private entities, this large-scale government corruption would not have been possible.

Many of these arms companies have since been investigated and fined for irregularities around the arms deal. Here at home, both Schabir Shaik and Tony Yengeni served jail sentences for their involvement.

One can also look at the purchase of a 25% shareholding in Hitachi Power Africa by the investment arm of the African National Congress (ANC), Chancellor House. Hitachi would go on to be awarded a R40-billion tender to supply boilers to the Medupi and Kusile power stations – a deal that netted the ANC a profit of around R50-million. The obvious question is: should Hitachi have allowed Chancellor House to buy this stake, given the clear conflict of interest and the scope for corruption?

To lay the blame and the responsibilty for these huge acts of corruption only at the feet of the state and the government officials involved would be a big mistake. If we are to eradicate this kind of corruption, it will require bold and decisive leadership from key players within the private sector. If the companies that do business with the state took a firm stand against corruption, it would be near impossible for public sector corruption to thrive.

But this corruption is not limited to big players in the energy, arms and construction industries. At local government level we often see suppliers of text books, medical equipment, catering services, cleaning services, security companies and construction companies on the receiving end of irregularly awarded contracts. The typical modus operandi is to inflate the tender price to cover both a healthy profit and a kickback to the official.

Every inflated tender – whether it’s for a multimillion-rand housing project or a department’s stationery order – means less money to spend on the community. It is theft, but with a fancy name.

Then there are the people who hide massive amounts of money from the South African Revenue Service to avoid being taxed. According to a report last year by international monitoring organisation Global Financial Integrity (GFI), almost R150-billion is lost to South Africa each year due to illicit financial outflows. Some estimates put this figure much higher.

A recent report by Thabo Mbeki to the African Union on illicit capital outflows from Africa paints a pretty grim picture. A conservative estimate of $50-billion – which excludes money lost to drug, firearm and human trafficking – leaves the continent illegally each year. The report states that these illegal cash flows have cost the continent R1-trillion over the past 50 years.

By stashing their cash in secret foreign accounts, the companies and individuals that do so are effectively stealing billions of rands that should have been spent on service delivery, infrastructure projects and social grants. Of the 151 countries covered in the GFI report, South Africa was ranked in 2012 as the ninth worst when it comes to money lost overseas.

The only way to combat this is to ensure that every anti-money laundering regulation is strictly enforced. We must also demand that all multinational companies are completely transparent in disclosing revenue, profits and taxes for the countries in which they operate.

Beating corruption in the private sector will come down to three things:

1. Leadership: Only when leading players across all industries take a firm, principled stance against corruption, will it be eliminated.
2. Transparency: In an environment where one person gets to decide behind closed doors, corruption will always thrive. Negotiations and bid processes must happen out in the open.
3. Accountability: Offenders guilty of corrupt activities must be named and shamed, penalties must be harsh enough to act as deterrents, and companies that defraud the state must be banned from doing business with them again

From bid-rigging in the Gauteng Freeway Improvement Project to price fixing in the bread industry to collusion between construction firms involved in the World Cup stadium builds, it is crucial that justice is not only done, but that it is also seen to be done.

This will require the strengthening of our white-collar crime and corruption busting institutions such as the Competition Commission and the Special Investigating Unit. It will also require us to act decisively against practices such as broad-based black economic empowerment fronting – where black people unwittingly become ‘directors’ of companies in order for the company to win lucrative state tenders.

In the coming months, I will set up a round table for business to take part in the sharing of ideas on combating corruption and tender price inflation. I hope the results of this round table will be helpful not only to the private sector, but also to leaders across all spheres of government, and across different political parties. Running a clean, transparent government is truly in everyone’s interest.

In the DA-run Western Cape, we place enormous value on clean audits in the auditor-general’s reports. This is not just for bragging rights and political point scoring. It is because we know how damaging irregular, wasteful and unauthorised expenditure is when it comes to fulfilling your mandate as government. Clean, unqualified audits translate directly into better service delivery.

Under a DA government, corruption in both the public and the private sector will be targeted and stamped out. Because the society we envisage, built on freedom, fairness and opportunity for all South Africans, is simply not compatible with a culture of corruption. DM