It has been an exhilarating week for South Africa’s democracy. On Wednesday the 2nd of November, the country was glued to proceedings in the High Court, where the President was seeking to prevent the release of a report by the country’s Public Protector. Ultimately, with the odds stacked against him, the President withdrew his application at the last moment, and the court ordered the release of the report. Within hours, South African’s were scouring the report titled ‘State of Capture’.
The title echoes what has become almost a catch phrase in the South African political consciousness – ‘state capture’. It refers to the growing concern that public officials with significant power have been ‘captured’ by private individuals with narrow interests, and that public decisions are increasingly made in the interests of those relationships, rather than in the broader public interest. Central to these concerns has been the relationship between President Jacob Zuma and a wealthy family with a sprawling business empire, the Guptas.
The Public Protector is an institution created and empowered by the South African Constitution to investigate any improper conduct within the state or any sphere of government, and to take appropriate remedial action. It is an important institution that acts as a check on the power of public officials. In this case, opposition parties requested that the office of the Public Protector investigate the increasingly frequent allegations of ‘state capture’, specifically as they related to the President and his relationship with the Guptas.
The release of the report was much anticipated, heightened by the Presidents attempt to prevent it. Reading it, the report does not provide a great deal of new information to the South African public. However, it’s importance cannot be underestimated for two reasons:
It acts as official recognition, by a Constitutional body, of several allegations of serious misconduct and abuse of public power by very senior officials.
It recommends remedial action through a swift judicial enquiry, led by a Judge appointed by the Chief Justice of South Africa, to fully investigate all allegations regarding this misconduct.
In terms of the first point, the report finds that there is considerable evidence that the Gupta family has enjoyed extensive and disturbing influence in important decisions of state. This includes the allegations by a Treasury official that he was personally offered a senior position in the country’s cabinet by the Gupta family at their home in an upmarket suburb of Johannesburg. He alleges that a bag of cash was offered to him as a down payment for a multi-million rand payment to follow, in exchange for his favour later on, once in a powerful position.
Perhaps more damning is the report’s findings regarding the fiasco in December 2015 where South Africa had three Ministers of Finance in just four days. President Jacob Zuma, with no forewarning, dismissed finance Minister Nhlanhla Nene and announced his replacement as the little known Minister Des van Rooyen. Lacking experience in economic governance, he was a likely pliable pawn in the plan to remove obstacles at the National Treasury that stood in the way of the president’s planned means of accumulation for both him and his close associates. The Public Protector’s report now confirms that the Gupta family appeared to have known about the decision before the public, and it is alleged that Des van Rooyen had visited the Gupta home on at least seven occasions, including on the day he was announced as Minister.
This instance of apparent influence by a wealthy family will likely create the most anger among the South African public. The dramatic announcement led to an outflow of foreign investment and a sharp decline in the Rand that cost the Public Investment Corporation (PIC) – the organization responsible for millions of South African’s pensions – over R100 billion. While this hurt the countries markets, the real cost was carried by the countries poor, much further downstream, who carried the rising cost of oil and foodstuffs.
The Public Protector’s report also includes serious allegations that the President and Gupta family have colluded so as to award the family’s businesses lucrative contracts through State-Owned Enterprises, including electricity provider Eskom, and South Africa’s arms manufacturer Denel. These allegations include that the boards of these enterprises were shaped in favour of this network, and then awarded contracts to Gupta-owned or affiliated companies to the tune of hundreds of millions of dollars, in many cases without the required open tender process. These instances reveal a deep problem with the way in which South Africa’s state-owned enterprises are run, draining vast resources from the fiscus, desperately needed by the vulnerable in the society, and often being used to dispense patronage.
In terms of the second reason for the report’s importance, it is crucial that the remedial action demanded by the Public Protector is an independent judicial inquiry that will require all those who stand accused of wrongdoing, including the President, to testify publicly. There will be little wriggle room for the President in this regard, given that earlier this year, the Constitutional Court found that he had “failed to uphold‚ defend and respect the Constitution as the supreme law of the land” due to his refusal to comply with the findings of the Public Protector in regard to another corruption scandal, the public funds spent to upgrade his personal home. The President is already under significant pressure to resign, even from within his party’s (the ANC) own ranks, and this inquiry will no doubt increase this pressure.
The report thus captures a fundamental tension in South Africa’s fledgling democracy. It reveals extensive abuse of power, and reveals that several prominent people in public office and business have been undermining democratic processes to enrich themselves. However, the fact that an independent state body has made such a report, largely on the back of work by investigative journalists in South Africa, and that a judicial inquiry will likely follow, shows that there are important democratic principles and institutions that remain robust in South Africa. It is the battle over these institutions, and the powers that wish to erode them, that will likely define South Africa’s future.
The one important risk that is attached to the report is the focus on the President and the Gupta family. As much as this particular story revolves around these characters, tackling corruption in South Africa requires a focus on systemic and institutional weaknesses rather than weeding out individuals. It also requires proper accountability for those found guilty of wrong-doing. A final character to note from the report is Fana Hlongwane, who is alleged to have facilitated many of the Gupta dealings dealt with above. Hlongwane is a familiar name to South Africans, as although never found guilty of a crime, he was alleged to have been a crucial middleman in the payment of bribes in South Africa’s 1999 Arms Deal, the deal with regard to which President Zuma may still have to face 783 charges of corruption. South Africa’s failure to have effective investigation of the corruption in this deal has undermined its efforts to tackle corruption up to today.
South Africa cannot afford the same mistake today. An effective inquiry followed by prosecutions where appropriate will be required to truly challenge ‘state capture’ and corruption.
Michael Marchant, Institute for Justice and Reconciliation (IJR)