Institute for Security Studies (Tshwane/Pretoria)

South Africa: When Do Close Ties Between Politicians and Business People Become Problematic?

analysis

The Public Protector, Thuli Madonsela, says her office will find out if public money was abused in the R206 million presidential residence upgrade ... ( Resource: Public Protector Launches Nkandla Probe

Recently, South African President Jacob Zuma was accused of blatantly promoting corruption in South Africa. In his words, 'We're not forcing people ... you can support and be a supporter, but if you go beyond that and become a member, [and] if you're a businessman, your business will multiply.

Everything you touch will multiply. I've always said that a wise businessperson will support the ANC ... because supporting the ANC means you're investing very well in your business.' This statement was made at a gala dinner celebrating the 101st anniversary of the African National Congress (ANC), attended by the political elite and some of the wealthiest and most powerful business people in South Africa.

Business leaders paid hundreds of thousands of rands for tables at the event, which also served as a fund-raising vehicle. In total, R21,4 million was raised for the ANC's coffers.

Although ANC spokesperson Jackson Mthembu tried, unsuccessfully, to spin this statement as simply an expression of African culture, the President's words raises a number of worrying questions. For example, how exactly does providing monetary support to the ANC result in a particular business 'multiplying'?

Why would investing in the ANC be a 'wise' business decision compared to for example, investing in skilled staff, better technology or additional marketing? At face value it sounds strange, but there are plenty of examples that provide context to President Zuma's statement.

The Mail and Guardian reported on 18 January 2013 that Edison Power, a company owned by Durban-based businessman Vivian Reddy, had been awarded a contract to the tune of R1,25 billion for the supply of smart meters to the City of Johannesburg.

The newspaper alleged that this company had won the contract irregularly because of evidence that Edison's bid was not the lowest, it had no experience in this type of business, it would not source any components of the electricity meters from local businesses, and a letter informed Edison that it had won the bid before the decision was made.

Interestingly, Reddy is a long-standing benefactor of President Zuma, having generously contributed to the costs of expanding his private homestead in Nkandla. Reddy also 'invests' heavily in the ANC and paid R450 000 for a seat at the same table as President Zuma at the recent gala.

A further example of how investing wisely in senior ANC officials can pay off handsomely was exposed in the City Press on 20 January 2013. The Gupta family, owners of the giant Sahara Computers company, have invested considerably in the Zuma family. They employ two of his children and his fourth wife, Bongi Ngema-Zuma.

Moreover, on 30 November 2012, the Mail and Guardian detailed how the Guptas were assisting Ngema-Zuma with paying off the loan on her luxury Waterkloof Ridge home to the tune of R80 000 a month. On 20 January 2013, the City Press detailed how the New Age newspaper, owned by the Guptas, had received sponsorship for its business breakfasts from various parastatals.

According to the report, Transnet paid R17,5 million for 18 sessions, Eskom reportedly paid R7,2 million for six sessions, and Telkom, which is partially owned by the state, paid R12 million for 12 sessions. Despite the costs of the breakfasts being covered by those who paid to attend, the New Age newspaper, a private commercial company, made R36,7 million from state-owned enterprises. The South African Broadcasting Corporation (SABC), which has faced a cash crunch in the past years, has been televising the breakfasts free of charge. It usually charges R18 000 for a 30-second slot.

All of this appears to be a continuation of President Zuma's approach to business as was revealed in substantial detail during the corruption trial of Shabir Shaik. Shaik gave money to the then Deputy President Zuma, who in turn used his official position in government and the ANC to promote and lobby for Shaik's businesses.

It was also found that Zuma also agreed to protect the French arms company Thomson-CSF/Thint from corruption investigations for an investment of R500 000 a year. It is not too surprising then that many wealthy business people have sought access to senior ANC leaders so as to obtain lucrative state tenders.

ANC Deputy President Kgalema Motlanthe himself has warned of those who were 'attracted to join the ANC as a bee is attracted to a pot of honey' and 'come with a view that they will use access to power for personal benefit'. Clearly this does not worry enough of those in the ruling elite as little is being done to address it. But what are the consequences for South Africa?

It means that the vast majority of South Africans who are not able to 'invest' in the ANC will not have the same influence over its decisions as those who can give generously. Essentially, the interests of the poor and marginalised will always play second fiddle to those of elites who can afford to give large amounts of money to the ANC and its officials.

Businesses that cannot compete fairly can opt to purchase influence, as the Shaik trial demonstrated. This undermines the extent to which innovative, honest businesses can compete and can lock honest business people out of state contracts. It is this state of affairs that starts to explain why South Africa fell 10 places to 64th on the Transparency International Corruption Perception Index of 2012, the country's lowest ranking since the index began in 1997.

President Zuma's remarks were attacked by many, including Advocate Paul Hoffman of the Institute of Accountability in South Africa, who stated that, 'This is no way to run a country ... it is unethical and unsustainable', and went on to say that President Zuma was essentially offering businesses a 'get-rich-quick kind of arrangement'.

Democratic Alliance parliamentary leader Lindiwe Mazibuko said that, 'With high levels of corruption already costing the economy billions of rand, hurting the poor and vulnerable the hardest, such a comment is deeply irresponsible', and she indicated she would ask President Zuma to retract the statement.

The president's statement certainly raises questions as to whether the political will exists to aggressively deal with corruption, which is at the heart of a number of governance-related challenges facing the country.

However, if South Africa continues on a path where corrupt behaviour in government and the private sector is condoned at worst or ignored at best, the country will lose much-needed resources and the poor will continue to suffer.

It will then be only a matter of time before it is increasingly realised that the ANC slogan of 'a better life for all' means very little to those in power.

Hamadziripi Tamukamoyo, Researcher, Governance, Crime and Justice Division, ISS Pretoria office

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