Executive Education Finance Your Studies Events Research

How we can all resist state capture by Dean Jon Foster-Pedley

"This is not about good practice, but rather about better practice" says Jon Foster-Pedley about state capture and the need for corporate activism.

MUCH has been written in recent months about state capture; the all-pervasive crime that has been visited upon the people of this country. We still do not know the full extent of it, but the cost even at this has been immense and its impact far-reaching.

Thabo Mbeki was attacked during his presidency for the cost of his approach to those suffering from HIV/Aids and the hundreds of thousands that died during his watch.

The cost of state capture; the consequences of the theft of millions of rands meant for education or health care, the stripping of state owned businesses, the mismanagement of the economy, the effects on the poorest of the poor, the general cynicism and lack of faith in government and society on this generation and those beyond though is far greater than the scandal over antiretroviral drugs and beetroot diets.

The greatest issue though is that state capture has not just been government’s doing. It was the work of individuals aided and abetted by corporates – unconscious at best, unscrupulous at worst – colluding and corrupting until this almost became the new norm of doing business – with government and each other if we look at the scourge of price fixing – in South Africa.

We can blame until we are hoarse, but we have enough complaining voices on the fringes pointing fingers at those who cannot do their jobs. It’s vital to know what went wrong, forensically, but it’s more important to create new generations of corporate activists.

This is not about good practice, but rather about better practice. Bell Pottinger is a fantastic case in point; the irony of one of the world’s leading reputation management companies imploding its own reputation, the arrogance of chasing business for the sake of business, not thinking of the terrible consequences.

Forget Victoria Geoghegan or James Henderson who ran Bell Pottinger, think of the innocents involved, the staff, the investors, the effects on the public relations industry the world over. It’s the same for accountants KPMG who did the Eskom books. It’s this continuum between total ignorance and active corruption.

There’s ignorance segueing into turning a blind eye, turning a blind merging into tacit collusion, then there’s active collusion turning into taking initiatives that are actually corrupt. It’s a spectrum along which most people find themselves on.

What happened at KPMG was probably self-deception, denialism, maybe even tacit collusion but the consequences are the same as if they had been actively corrupt. The reputational damage to it and the industry has been immense and in particular to people who weren’t even involved.

That’s just one company. The effects of state capture though; the massive misappropriation of funds, turning businesses into nothing, stripping their assets, the nepotism denying capable people jobs, the stifling of opportunities and the growth of inefficiency. All of these effects feed into national budgets which aren’t spent or squandered. People become further enslaved by poverty until the only way out of it, as Herman Goering once famously uttered is to make a common enemy out of it; whether the enemy is the whites, the Jews, the Chinese, whoever, accusing people of treason when they don’t agree with you, because externalising the issue absolves the state capturers.

What we need instead is a different framework, one which allows us to understand how this state of affairs has been allowed to take root and then to uproot it, for good.

It’s easy to attack government. Not many people are pointing fingers at business though. Perhaps the problem intrinsically lies in the chasing of profits for profit’s sake, of implicitly or wilfully ignoring the consequences of their actions because of greed or a lack of social consciousness.

We need more transparency. When I was an airline pilot, the authorities introduced CHIRP, which stood for Confidential Human Incident Reporting Procedure, to encourage pilots, aircrew and managers to report incidents that had occurred in-flight. These reports were then collated and disseminated to the industry. Before long it was like the whole world of aviation was the most dangerous place in the world; reports of pilots falling asleep over the Atlantic, near misses on take-off or landing and non-adherence to flying rules by unscrupulous airline managers.

What it did was open everyone’s eyes to systemic issues – and if you see the problem early enough, you’ve got a better chance of correcting it. The aviation industry became tired of autocratic aircraft captains suppressing dissent from their juniors and killing passengers. It was the same with surgeons in the operating theatre.

Their solution was graded assertiveness or PACE – probe, alert, challenge, emergency. In other words, on take-off the co-pilot will read out the speed. If that speed is too slow, the captain will be alerted. If the captain doesn’t take action when he or she is challenged, the co-pilot will declare an emergency and take the controls.

We could have done with PACE at KPMG, McKinsey, SAP or, more recently, Steinhoff. Someone should have raised the alarm at KPMG, eventually escalating it to the international office by declaring an emergency – or blowing the whistle publicly. Instead, the company has basically crashed and burned and the entire world looks twice at the entire accounting profession.

We have to raise people’s consciousness; corruption and collusion destroy business practices, but they also destroy the country. Graded assertiveness means we’re all in this. There’s no stigmatisation. Mostly of the people involved in the mechanics of state capture are decent people, it’s their acts that are evil. It’s disingenuous to characterise them as bad because by doing that we’re saying they’re other than us and therefore we’re not responsible. What we should be doing is creating a culture where we can take control of the aircraft before the captain is allowed to crash it into the ground.

We need to change the dynamics of control and the consequences of what happens.

If we do, we will have better businesses, greater transparency, better spent budgets, more opportunities, less inefficiencies, no kleptocracies. There will be better education, better hospitals.

Business is not about profit but fundamentally to reinvest profit to create better value and through that a prosperous society. If we are colluding because business profit is our imperative then we are collusive in the creation of an elitist future for our children.

The better practice is to build an inclusive future for our children that we can proud of with our grandchildren.



(Published in The Star 12th March 2018)

Similar posts

Get notified on new Learning insights

Be the first to know about new  our latest newsletter insights