Defend Truth


Twenty years on: When business played ‘left’ at the TRC

Ayabonga Cawe is an economist by training, and aside from a short stint as a researcher at a government agency, he has never been a disciple of market doctrine. He speaks and writes on history, political economy and public policy. A pan Africanist, he earns his keep in the development sector as a project manager, but is often found in watering holes of the city, camera in hand holding court with other restless youth of different persuasions.

A chorus of voices have called for an “economic Codesa”, and alongside these calls has been a coterie of voices calling for a review and undoing of many of the “deals” made in the political Codesa in the early 1990s.

The general sense is that the political process and its subsequent Truth and Reconciliation Commission (TRC) did not do enough to address the economic basis of apartheid. That the mother of Lenny Naidu in Chatsworth, or Charity Kondile (the mother of slain MK soldier Sipho Kondile) will never see their sons again is a reminder that the catharsis of public confession is often good for TV, but not always good for those whose stories are the mirror through which we hope to heal.

As the argument goes, without paying attention to the economic features of apartheid, post-apartheid society continues to have skewed economic patterns of ownership, accumulation and distribution. As Stellenbosch academic Professor Sampie Terreblanche noted at the TRC in 1997:

If one understands the structural nature of South Africa’s political and economical system correctly then it is clear that the one side of the South African structural coin impoverished the Africans while the other side of the same structural coin enriched the whites, especially during the first 70 years of this century.”

The hearing at which Terreblanche made these remarks was a session looking at the activities of the business community and their direct benefit from the apartheid regime. Interestingly, the session included Raymond Parsons (then Chamber of Business representative), Johann Rupert (Remgro), Mike Rosholt (Barlow Rand) and former Anglo American and Eskom executive Bobby Godsell. The hearing went a long way towards leaving the public with the impression that big business was always to the left of the apartheid regime and never really “supported” the system.

Much to the protestations of Jay Naidoo and Mbhazima Shilowa, the session, as the recording’s presenter Max du Preez noted, created an impression that exonerated the business community of complicity in the crime of apartheid:

In an historic moment the powerful men heading Anglo American, the richest and most powerful corporation in South Africa, took their place on the Truth Commission platform. But despite the many dark suits and striped shirts one could at times be forgiven for thinking this was a meeting of anti-apartheid movements, with many claiming to have always opposed apartheid.”

It is, after all, difficult to find anyone who supported, publicly or implictly, the apartheid regime. Retrospectively, no one wants to be found on the wrong side of history. The recording of the above session of the TRC reminds us that less than 20 years later many of the “late joiners” or “staffriders” of the Anti-Apartheid Movement from the business community have now adopted interesting positions.

For instance, it is interesting that the “businesspeople of conscience” who have been so concerned by the reputational risk of the Gupta family were silent on the reputational risk of being associated with Lonmin, after 34 Africans were killed by police, after the company’s refusal to engage with them. What of the bread cartel that made morsels of food near unattainable for the black poor?

Our people are resigned to a reality much like that depicted in the sorrowful book of Lamentations in the Bible which says “…we labour and have no rest…. we get our bread with the peril of our lives….” What amount of reputational risk is enough to act publicly? Let me not be misunderstood to imply that the Guptas’ actions are not deserving of the public’s scrutiny and rebuke for their alleged or even perceived influence on political processes. As I have argued before, they are not the first, nor will they be the last to pursue such “influence”.

It is important for the progressive forces in society to re-examine the nature of business, in particular the role of business in undoing the legacy of apartheid. At the TRC hearings in 1997 many of the business leaders were quick to concede that more could have been done on their part to end apartheid. The question for us today is, can business do more to end the “economic apartheid” that the black working poor and rural peasantry continue to live under in South Africa, and through what channels can this be achieved?

More important, can big business continue to acknowledge that they could’ve done more, or has the will to “do more” followed the “rainbow optimism” of the 1990s and died a natural death? If we are to look at the investment, tax and wage behaviour of large multinational and domestic corporations based in and working in South Africa, then the answer is quite revealing.

Under ideal conditions, the attack on the Guptas would be accompanied by a growing recognition that private influence from business is pervasive and that established white business is as much a part of that story as the barons of Saxonwold. Framed in this way, the discussion presents an opportunity to consolidate a peasant and urban worker offensive against not only state capture but also the wage, investment and tax avoidance of the corporate sector as a generally heterogenous whole.

What do I mean, and why is this not happening?

Allow me to first explain what I mean by wage, investment and tax avoidance. First, we have heard of the recent revelations in leaks from the Panama-based law firm, Mossack Fonseca, of many offshore accounts of different hues, belonging to members and organisations which constitute the global elite. As is often the case, such revelations reveal what we have always known. The increasing mobility of capital from the late 20th century has not been accompanied by equally strong regulatory response. As the high-level panel on illicit flows chaired by former President Thabo Mbeki informed us, more than $1-trillion in illicit capital flew from the shores of Africa over the past 50 years. This figure, we are told, doesn’t account for trade in services and intangibles, proceeds of bribery and the trafficking of narcotics, people and firearms.

An example of this “trade in services and intangibles” emerged in a 2014 AIDC report revealing that mining company Lonmin paid on average more than R200-million from its local subsidiary in “sales commissions” and “management fees” to a Lonmin subsidiary “structure” in Bermuda, between 2007 and 2012. This occurred despite the local subsidiary, Western Platinum, paying more than R1.7-billion internally between 2009 and 2012 (for the same “service”, I assume). It is rather troubling that such sophisticated arrangements, conducted with the support of the professional services industry, are often seen as legitimate “tax planning” initiatives. It cannot be that such “structures” should be beyond the scrutiny of the public, and one hopes that the revelations in the Panama Papers will remind us of, and exonerate the memory of, the more than 30 workers killed for demanding a “living wage” in the age-old distributional conflict between native labour and settler capital.

This distributional conflict, as is often understated, is not only confined to avoidance or “evasion” of obligations to the taxman, it also involves avoidance of shop-floor obligations between employer and employee. Avoidance, as one would expect in pursuit of profit, is not only restricted to the sophisticated mechanisms outlined above, but also to the opportunity cost of foregone wages. By illustration, the AIDC makes the following example in its report;

“…when profits are shifted from subsidiaries out of the country, the effect on wages is bigger than the effect on tax revenues. Schematically if the corporate income tax (rate) is 28%, a company has to move R100-million to a tax haven to avoid R28-million in taxation”.

Equally, it is not just the R28-million that is lost to the country’s fiscus that matters, but the remainder of the R100-million, which could have played a role in addressing the living conditions of workers among other uses.

Similarly, the living conditions of a contract worker like Thabiso Thelejane, who was killed in Marikana, offer us an insight into another form of wage avoidance; outsourcing. It occurs at every element of the value chain of almost every sector of our society, even in local government. As the Casualties of Cola report indicated, in the case of the ABI and SABMiller Drivers Black Economic Empowerment programme, what is at stake is not just the viability of the ill-fated scheme and the firm as a whole, but “the very concept of outsourcing and casualisation in a country with enormous and unsustainable divisions between the rich and the poor”.

It is little wonder that the student movement has championed the call to end outsourcing as part of its political programme. It is a timely reminder that the scars the TRC meant to heal are opened every day, in the lived reality of the women and men who labour in precarious work against the backdrop of plenty. From retail to cleaning services to farm work and illegal mining, the experiences have similar patterns of exploitation. “….we labour and have no rest…. we get our bread with the peril of our lives….”

Added to this is the challenge of low domestic investment in the South African economy, by the same cohort of progressive business folk of “conscience”. I gather that in a South Africa that is too much of a “political risk” to invest in the real economy, some of the deposit holdings of the corporate sector rose by R50.9-billion in the third quarter of 2015?

If the existence of this investment, tax and wage avoidance is established, why are progressive forces in society not embedding such an analysis alongside the vocal voices on state capture and political paralysis? One of the reasons is what Steven Friedman calls the influence of the “echo chamber” – the chorus of commentators, analysts and politicians singing off the same hymnal with no evidence to back many “allegations”, assertions and narrow innuendo that often pass as analysis or commentary.

Another related reason is that undoing the elite pacts of yesteryear may need more than an “economic Codesa” called for by many. Mixed in with the social crisis is a crisis of the ruling coalition and a constellation of surrounding “elites” across various strands of industry. Where the politics of persuasion fail, we know that both business and the state are ready to summon coercion and force. When our people are no longer able to believe the “politics of persuasion”, as ANC Women’s League President Bathabile Dlamini realised, their sense of betrayed expectation after years of struggle is clear for all to see.

When renowned poet Vangile Gantsho wrote her poem, I expect more from you, it may have been intended for the ANC, but it also resonated with the feelings of the poor (and to some extent the indebted lower middle classes) across the globe who are startled by allegations, once again, that the super wealthy continue to reproduce their exploitation in numerous ways:

Years later, neck high in bond and car instalments, struggling to buy groceries. Even after you took her husband then hijacked his funeral. Even when you rub your theft in her face, she prays for you. Gives to you. No longer expects from you”.

As we reflect on 20 years since the start of the TRC hearings, it is important to return to the hearing of the many crucial stakeholders of this process; big business as a direct beneficiary of the biggest crime against the South African people.

We are reminded that even how we discuss matters related to inequity, poverty and exploitation, we need to seek out the systemic causes. If we are unable to seek out the systemic markers, we may find ourselves sent by the wolves to catch the jackals. We would do well to remember this and avoid the amnesia that gripped the businesspeople who “never supported” apartheid, on three November mornings in 1997. DM


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