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Combatting corruption in South Africa depends on three pillars, says experts on Henley and SABSA panel

Published 08 September 2020, Bizcommunity Combatting corruption in South Africa depends on three pillars: ending the bipolar myth of good private sector/bad public sector, the establishment of an unstoppable citizens’ movement and for directors to cross their own intellectual Rubicon and serve companies not shareholders. That’s the view of Daily Maverick associate editor Ferial Haffajee,…


Published 08 September 2020, Bizcommunity

Combatting corruption in South Africa depends on three pillars: ending the bipolar myth of good private sector/bad public sector, the establishment of an unstoppable citizens’ movement and for directors to cross their own intellectual Rubicon and serve companies not shareholders.

That’s the view of Daily Maverick associate editor Ferial Haffajee, Henley Business School dean and director Jon Foster-Pedley and corporate governance expert Mervyn King. The three were speaking on “How to keep your businesses clean and thriving” at the inaugural South African Business Schools Association (SABSA) Perspectives webinar series hosted by Henley Africa on Wednesday, 26 August, moderated by Rhodes University business school director Professor Owen Skae.

Enron’s CEO Jeffrey Skilling was jailed for 24 years for one of the most audacious global corporate frauds ever. When he appeared in court, he told the judge he was a good person, a religious person, someone who had never meant any harm, said Professor King, but the prosecutor had never asked if he would have behaved the way he did, had he been the guardian of an incapacitated child, sworn to look after its interests, rather than a company.

“Very few people understand this concept”, he said, “but a company has no mind, soul or conscience.”

The role of providing that falls to the directors and it is they who should always have the best interests of the company, he said. The problem is that over time, the interests of the company have become synonymous with the interests of the shareholders who in turn become part of the problem because they appoint the directors.

“When things go wrong, society turns on the company, but the company is always innocent in law because it has no capacity; it’s the corporate leaders, the directors who are the trustees, who should be held liable.”

Directors, he said, had to display the intellectual honesty to ensure they kept clear of the deadly corporate sins of greed, fear, sloth, pride and arrogance and instead take decisions that are always in the best interests of the company, not its shareholders and not themselves.

Intellectual honesty was a critical issue, King said, difficult to grasp, difficult to practice but vitally important when it comes to the trade offs that are endemic in ensuring that the interests of the company are paramount, because those trade offs mean that shareholders or group of shareholders might be prejudiced.

For Haffajee, the cost of state capture is visible every single day, but so is the truth that people fail to grasp. There was no universal truth of a good private sector and a bad public sector, she said, citing the collusion of the private sector firms like Regiments, McKinsey and Trillian in the destruction of South Africa’s rail network system or Nkonki and PWC who signed off the SAA books year after year in the Dudu Miyeni era.

“When we look at Eskom’s inability to deliver now, where were the corporates in all this then? What of directors like Christo Wiese during the Steinhoff saga? Where was his leadership?”

Corporate corruption and collusion predated the Zuma era, she said, pointing to the construction cartels and the price fixing and collusion in the construction of the soccer stadium in the run up to the 2010 World Cup.

Foster-Pedley, who is SABSA’s vice chair, said the saga had been a litany of Cs: “Corruption, Collusion, Capture. There’s no story about that. It’s virtual not visceral”, he said, “and as a result of that there’s no consequence.”

Telling the story properly, showing those consequences clearly would show the causality of wrongful actions, especially on those who bear the brunt of the corruption and collusion, and the unseen cost to their confidence.
“It’s about corporations”, he continued, “it’s about capitalism which is under siege.”

Companies, he said needed to move to prosperity rather than profit and for the entire country to develop a consciousness about the problem.

“(Covid-19) is an opportunity to break through the shades of grey and shine a light on the problem now, without stigmatising the poor. We’re all colluding but we can change this by speaking out and developing a new approach to framing what corruption actually is.”

Haffajee agreed, “the fundamental reason why we won’t go the way of Mali or Zimbabwe, is because we are intrinsically opposed to the bad.

“I can’t believe that corruption is intrinsic to the human condition. I believe in the power of good,” she said. The answer was in citizen activism: “I don’t believe in saviours any more or people moaning ‘if only Cyril would do this’, it’s about us. Get involved in your ward committees, make your voice heard.”

For Foster-Pedley it was critical that South Africans didn’t let go of their own agency, but rather held leaders to account by dropping their God-like expectations of them.

“Starting a movement is not about getting emotional, but getting deadly serious. It’s not a fight, we’re not ruthless enough, this is a war. The people are not being energised, they need to understand the critical importance of it, there needs to be an obsessive movement – then we will see change.”

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