tag:theconversation.com,2011:/fr/topics/state-capture-report-33610/articlesState capture report – The Conversation2022-08-16T13:26:24Ztag:theconversation.com,2011:article/1878912022-08-16T13:26:24Z2022-08-16T13:26:24ZState Capture eroded institutions in South Africa. How the revenue service is rebuilding itself<figure><img src="https://images.theconversation.com/files/477698/original/file-20220804-16-peih1k.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p><em>South Africa’s Revenue Service is one of many state institutions in South Africa that have been fingered in the <a href="https://www.gov.za/sites/default/files/gcis_document/202201/judicial-commission-inquiry-state-capture-reportpart-1.pdf">Judicial Commission of Inquiry into State Capture</a>. In addition, a special commission established to investigate internal governance at the agency found massive <a href="https://www.thepresidency.gov.za/sites/default/files/SARS%20Commission%20Final%20Report.pdf">failures of governance</a>. Professor Mills Soko spoke to Commissioner Edward Kieswetter about the turnaround at the state institution.</em></p>
<p><strong>Mills Soko: You worked as a power station manager at the state utility Eskom which is currently in so much trouble. What was your experience working there? And what comes to mind when you observe the utility today?</strong></p>
<p><strong>Edward Kieswetter:</strong> I was a young 33-year-old when I was appointed to run a small power station. We had a highly scaffolded environment, surrounded by people who were steeped in practical experience and institutional memory. </p>
<p>In the decade I was privileged to be there, we transformed Eskom from an average performing utility into a globally admired one. By 2000 it was constantly performing at a plant availability of above 90%, a breakdown rate of 3% or less, and the planned maintenance of 7%.</p>
<p>I am fortunate that I’ve been invited now to serve on the technical committee that the presidency has called together to try and fix the challenges facing electricity supply. </p>
<p>During the period of state capture institutions such as Eskom – as well as the South African Revenue Service, the National Prosecuting Authority and many others – were hollowed out deliberately and consciously so that they could serve a corrupt purpose. </p>
<p>I can tell you from my own experience that the damage exacted on these institutions is deep and painful, and it will take very persistent effort and focus for us to restore and to build for the future. </p>
<p>That’s the challenge of our country. The capability of the state has been significantly weakened by the period of state capture. But we also have to be honest enough to say there has been a steady decline over a number of years that has brought us to a point where we are largely a state that doesn’t have the capacity it needs to serve the country. </p>
<p><strong>Mills Soko: You were appointed as Commissioner to the South African Revenue Service in May 2019. What have you learnt? Achieved?</strong></p>
<p><strong>Edward Kieswetter:</strong> I have to tell you that the actual damage at the South African Revenue Service is significantly deeper than what any commission of inquiry could ever report. </p>
<p>One of the things we were able to do is institute a very focused modernisation programme that makes the tax filing obligation for most taxpayers a non-event. We believe the best service is no service. We don’t want to be better at queue management, we want to address the root causes so we don’t have queues. </p>
<p>And so we’ve introduced a value proposition for over 3 million taxpayers called auto assessment. We use data and artificial intelligence to select taxpayers for further auditing or investigation. But we’ll also use data and technology to provide a seamless experience for most taxpayers. </p>
<p><strong>Mills Soko: How were you received by employees?</strong></p>
<p><strong>Edward Kieswetter:</strong> The sad reality of state capture and the political dynamic of South Africa at an institutional level is that it forces you to pick a side. And when people pick sides, they lose objectivity. </p>
<p>When you come into an organisation that has been deliberately divided with a corrupt intent, you have employees who have picked sides. The South African Revenue Service is no different. We still have people who haven’t given up on the affiliation with a particular side or faction. </p>
<p>So a very clear message from me to all our leaders and our staff is we are not politicians: we do our work without fear, favour and prejudice. </p>
<p><strong>Mills Soko: Do we think organisations have been rid of state capture?</strong> </p>
<p><strong>Edward Kieswetter:</strong> The answer is no. I don’t think there are any institutions in South Africa that have been cured completely of state capture. The political dynamic in the country today, the contestation for power – within a political party or across political parties – is a very active attempt to keep alive the endowment that people derived from state capture. </p>
<p>South Africa is still inflicted by the residue of state capture and the 10-year period of the former administration. It has spilled over into this administration. We only have to look at the level of corruption that manifested during the procurement phase of the COVID response. We have a long way to go to cure ourselves from the ills of state capture. </p>
<p><strong>Mills Soko: How much progress has been made in terms of undoing state capture at the South African Revenue Service?</strong></p>
<p><strong>Edward Kieswetter:</strong> The Nugent report made about 27 recommendations. The first was to look at the leadership of the organisation, to evaluate EXCO. And we have substantively dealt with that. We reached agreement with a number of senior leaders and we have parted ways.</p>
<p>After years of being deprived of filling critical vacancies because of financial constraints, last year we began to start recruiting people and providing some inward mobility for people into more meaningful roles. </p>
<p>We established a listening campaign where staff could call in and talk, and report certain things that needed to be addressed. </p>
<p>We introduced an employee rights charter that we are socialising through change management.</p>
<p>We also introduced an internal reparations process. We have just over 30 individuals who felt that they were personally compromised. We are in the final stages of an external reparation process. </p>
<p>We appointed an advisory committee using eminent jurists independent of the South African Revenue Service to take representation from those we have settled with. </p>
<p>We have meetings underway to recoup wasteful and fruitless expenditure from a number of executives caught up in this, specifically in relation to the global management consultancy firm, Bain & Company. We have instituted a process of recovering the money plus interest that they paid. And we have handed over the files to the Hawks, the South African Police Services’ Directorate for Priority Crime Investigation, and the National Prosecuting Authority for further investigation. When the prosecution authority is ready to start prosecution, we will be drawn into this to provide evidence and to support that process. </p>
<p>We’ve also worked with our counterparts in the US about the misdemeanours at Bain to try and ensure that Bain is brought to book. We think there’s a strong enough case for them to be seriously investigated, to see if there are criminal cases to answer for.</p>
<p><strong>Mills Soko: During the difficult years the South African Revenue Service lost a lot of good people. Have you been able to woo some back?</strong></p>
<p><strong>Edward Kieswetter</strong> One of the things that we are entertaining is to build a pool of so-called grey beards (and female equivalents). We want them to be part of a resource from which younger, more or less experienced people can draw from. </p>
<p>We are also introducing new graduates, young people into the organisation so that we keep the generational mix. We’ve established a junior board so that we can institutionalise the voice of people below 35 years old.</p>
<p>*This is an excerpt of the Wits Business School Leadership Dialogue. The full interview is <a href="https://www.youtube.com/watch?v=-dVnVVSrYYI">available here</a>.</p><img src="https://counter.theconversation.com/content/187891/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mills Soko does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The South African Revenue Service is on a path to rebuild itself.Mills Soko, Professor: International Business & Strategy, Wits Business School, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1828982022-05-13T10:55:38Z2022-05-13T10:55:38ZSouth Africa’s state capture commission nears its end after four years. Was it worth it?<figure><img src="https://images.theconversation.com/files/462516/original/file-20220511-25-iv52kg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">President Cyril Ramaphosa testified at the Zondo commission. </span> <span class="attribution"><span class="source">EFE-EPA/Sumaya Hisham/Pool</span></span></figcaption></figure><p>South Africa’s judicial commission into state capture, known as the <a href="https://www.statecapture.org.za/">Zondo Commission</a>, recently handed over the <a href="https://www.gov.za/speeches/presidency-receives-part-four-state-capture-commission-report-29-apr-2022-0000">fourth part</a> of its voluminous and scathing findings to President Cyril Ramaphosa. As a fact-finding commission, it had to determine if there were facts that were relevant for prosecutorial purposes related to “state capture” and corruption during the reign of former president Jacob Zuma. </p>
<p>The commission was recommended by the former Public Protector <a href="https://worldjusticeproject.org/world-justice-forum-vi/thuli-madonsela">Thuli Madonsela</a> <a href="https://www.timeslive.co.za/politics/2017-10-24-zuma-challenges-public-protectors-recommendation-on-state-capture-report/">in November 2016</a> to complete her <a href="http://www.saflii.org/images/329756472-State-of-Capture.pdf">“State of Capture” report</a>. Now at the end of its four-year long investigation, how can the commission be assessed?</p>
<p>For years many of the leading figures in “state capture” <a href="https://www.youtube.com/watch?v=5EfxgkLZdWw">tried to vilify investigative journalists</a>, <a href="https://www.markswilling.co.za/wp-content/uploads/2018/12/SASSA-State-Capture-_2018-07_-A4-report.pdf">NGOs and researchers</a> who exposed their actions. It was, therefore, a contested terrain. The Zondo Commission, however, followed procedures of formal investigations, leading evidence, interrogating the almost 300 witnesses and allowing for responses by the those implicated.</p>
<p>Cross-examination was used to test the evidence. All of this was done under the authority of then <a href="https://www.concourt.org.za/index.php/13-current-judges/72-deputy-chief-justice-ray-zondo">Deputy Chief Justice Raymond Zondo </a>. Though not a court of law, it is difficult to challenge the credibility of the commission’s procedures and its outcome.</p>
<p>Following the work of the commission, South Africans can no longer claim not to know what happened during former President Jacob Zuma’s <a href="https://pari.org.za/betrayal-promise-report/">ruinous reign</a>, (<a href="https://www.gov.za/about-government/contact-directory/jacob-gedleyihlekisa-zuma-mr">May 2009-February 2018</a>). The financial price paid for it, the decay within state institutions and demise of ethical public service are all products of this era.<br>
Those implicated can’t credibly claim that state capture was merely an imagination or a concocted political campaign against them.</p>
<p>The commission has indeed discovered and exposed the truth about corruption in South Africa. Whether or not the implicated persons are prosecuted and sentenced, the commission ensured that morally they will be held responsible for it. Corruption’s devastating effects are now in the open. Hopefully, it is early enough to prevent irreversible disintegration.</p>
<p>Similar to the earlier <a href="https://www.justice.gov.za/trc/">Truth and Reconciliation Commission (TRC)</a>, which investigated the violence and human rights abuses during apartheid, many South Africans will continue to be sceptical about whether it can make a difference. <a href="https://www.collegesoflaw.edu/blog/2019/01/08/trc-south-africa-study-abroad/">Like the TRC</a>, this commission will probably receive more accolades from outside than inside the country.</p>
<p>The public nature of its processes and daily broadcasts for almost four years <a href="https://www.da.org.za/2018/09/da-requests-sabc-to-broadcast-zondo-commission-of-inquiry-on-terrestrial-platforms">on national television</a>, contributed much to the public now having a much clearer understanding of the nature of corruption in the country.</p>
<h2>Clarifying ‘state capture’</h2>
<p>During <a href="https://www.amazon.com/Zuma-Years-South-Africas-Changing/dp/1770220887">the Zuma years</a>, “state capture” as a concept was <a href="https://www.dw.com/en/south-africas-anc-split-over-state-capture-probe/a-57386213">often discredited</a> by Zuma and his supporters. More recently, Zuma dismissed it as a <a href="https://www.news24.com/news24/southafrica/news/zuma-says-state-capture-inquiry-is-a-political-project-against-him-20201217">political campaign against him</a>. It is, therefore, important that the commission’s <a href="https://www.justice.gov.za/legislation/notices/2018/20180713-gg41772_gen396-SCAPcomms-Rules.pdf">terms of reference</a> included in-depth investigations to reveal the nature and scope of “state capture”.</p>
<p>“State capture”, the commission in the end conceptualised, was not only corruption in the public sector or the relationship between <a href="https://mg.co.za/article/2018-09-14-00-definition-of-state-capture/">Zuma’s family and the Guptas</a>, Zuma’s friends behind the capture of the state. It was also about infiltration of the governing African National Congress (ANC) politicians into state institutions and state-owned enterprises. </p>
<p>It was about how the politicians used their positions in these institutions to develop a corrupt relationship <a href="https://www.gov.za/documents/judicial-commission-inquiry-state-capture-report-part-3-viii-1-mar-2022-0000">with the private sector </a> - both local and international - and share the material gains. They included Bosasa, KPMG, McKinsey, Trillian Capital, Bell Pottinger and several South African banks. The commission also exposed how these politicians appointed supporters to key criminal justice, <a href="https://www.statecapture.org.za/site/files/announcements/654/State_Capture_Commission_Report_Part_IV_Vol_I.pdf">revenue service</a> and intelligence institutions.</p>
<p>These operatives, police and investigators would protect the politicians against investigations and also be used to discredit Zuma’s opponents in the ANC. Corruption became, therefore, a means towards the political end of state capture. Without the Zondo Commission’s prolonged public hearings, the South African public would not have understood what the capture of their state entailed.</p>
<h2>ANC factions and state capture</h2>
<p>Though the commission did not investigate it intentionally, the evidence it heard confirmed a symbiotic relationship between state capture and the <a href="https://www.biznews.com/thought-leaders/2021/04/16/ramaphosa-anc-faction">factions in the ANC</a>. Zuma emerged as the main protagonist. When he was subpoenaed to appear before the commission, his refusal to comply became the rallying point of his <a href="https://www.iol.co.za/dailynews/news/kwazulu-natal/radical-economic-transformation-group-rejects-raymond-zondos-state-capture-commission-report-as-a-gimmick-1df604e9-a842-44d1-a56b-ec4fcb87a9ac">“radical economic transformation” faction</a> in the ANC.</p>
<figure class="align-center ">
<img alt="A seated, bespectacled man wearning a tie shows a disdainful face" src="https://images.theconversation.com/files/462517/original/file-20220511-14-koej4w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/462517/original/file-20220511-14-koej4w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=433&fit=crop&dpr=1 600w, https://images.theconversation.com/files/462517/original/file-20220511-14-koej4w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=433&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/462517/original/file-20220511-14-koej4w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=433&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/462517/original/file-20220511-14-koej4w.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=544&fit=crop&dpr=1 754w, https://images.theconversation.com/files/462517/original/file-20220511-14-koej4w.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=544&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/462517/original/file-20220511-14-koej4w.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=544&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Former president Jacob Zuma walked out of the commission.</span>
<span class="attribution"><span class="source">EFE-EPA/Kim Ludbrook</span></span>
</figcaption>
</figure>
<p>It underscored his efforts to politicise the judiciary and claim that it was under the influence of President Cyril Ramaphosa <a href="https://www.iol.co.za/news/politics/jacob-zumas-political-campaign-against-judiciary-and-state-capture-inquiry-laid-bare-292a7de2-ac13-4b67-b316-a0fe38606130">against him</a>. </p>
<p>Zuma used his incarceration by the Constitutional Court for contempt of court, after his <a href="https://collections.concourt.org.za/handle/20.500.12144/36786?show=full">refusal to appear before the commission</a>, to present himself as the <a href="https://www.citizen.co.za/news/south-africa/politics/2629180/zuma-says-hes-come-full-circle-as-a-political-prisoner/">sacrificial political prisoner</a>. It might become evident in future that without the commission’s determination, it would have been unlikely for Zuma to be imprisoned at any time.</p>
<p>The legacy of this state capture history is a deeply divided ANC. The <a href="https://www.statecapture.org.za/">Zondo reports</a> present vivid pictures how it evolved, whether in the form of <a href="https://theconversation.com/zumas-cabinet-reshuffle-opens-the-door-for-nuclear-deal-in-south-africa-75553">cabinet reshuffles</a>, emasculating the <a href="https://www.thepresidency.gov.za/sites/default/files/SARS%20Commission%20Final%20Report.pdf">South African Revenue Service</a>, or using the media (such as the <a href="https://ewn.co.za/2018/10/14/sunday-times-apologises-for-tainted-scoops">Sunday Times</a>, <a href="https://www.dailymaverick.co.za/article/2016-03-22-trainspotter-how-the-new-age-ann7-and-the-guptas-have-spun-state-capture/">New Age and ANN7</a>) to discredit political opponents in the ANC.</p>
<h2>Erosion of state capacity</h2>
<p>The commission not only highlighted the key actors in the state capture drama. The daily display on live TV showed how parastatals were systematically infiltrated and milked of their budgets and resources. Critically important infrastructural enterprises like <a href="https://www.statecapture.org.za/site/files/announcements/657/State_Capture_Commission_Report_Part_IV_Vol_IV.pdf">Eskom</a>, the power utility, the transport entities <a href="https://www.gov.za/sites/default/files/gcis_document/202202/part-2vol-1transnetstate-capture-commission-1l.pdf">Transnet, Prasa</a> and <a href="https://www.gov.za/sites/default/files/gcis_document/202201/judicial-commission-inquiry-state-capture-reportpart-1.pdf">SA Airways (SAA)</a> were eroded of their capacity.</p>
<p>Institutional decay in the form of loss of experienced human capital, decline in services such as passenger and freight rail-transport, unreliable electricity and water supply, erratic revenue collection and the decline of local governments, all meant not only that the state worked for other interests, but also very ineffectively.</p>
<figure class="align-center ">
<img alt="A bald man wearing a tie and suit walks into a room." src="https://images.theconversation.com/files/462518/original/file-20220511-15-hj25bh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/462518/original/file-20220511-15-hj25bh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=433&fit=crop&dpr=1 600w, https://images.theconversation.com/files/462518/original/file-20220511-15-hj25bh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=433&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/462518/original/file-20220511-15-hj25bh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=433&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/462518/original/file-20220511-15-hj25bh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=544&fit=crop&dpr=1 754w, https://images.theconversation.com/files/462518/original/file-20220511-15-hj25bh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=544&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/462518/original/file-20220511-15-hj25bh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=544&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Deputy Chief Justice Raymond Zondo, chair of the commission.</span>
</figcaption>
</figure>
<p>In future it might become clear whether this process and how the Zondo commission exposed it in public, contributed towards a paradigm shift in the <a href="https://www.gov.za/sites/default/files/gcis_document/201409/acceleratedagendarestructuringsoe0.pdf">ANC government’s economic philosophy</a>. More recently, South African Airways has become <a href="https://www.ch-aviation.com/portal/news/112955-govt-concludes-51-sale-of-south-african-airways">partly “privatised”</a>. Eskom is unbundling into three companies and power generation in future will include a <a href="https://pmg.org.za/committee-meeting/33068/">substantial private component</a>. Transnet will soon allow for private passenger and <a href="https://www.businesslive.co.za/bd/national/2022-05-09-mbalulas-high-hopes-for-policy-geared-at-getting-sa-rail-on-track/">freight railway services</a>. Without the public outrage and pressure encouraged by the commission’s hearings, it might have taken longer to reach this point.</p>
<h2>The commission’s remedy</h2>
<p>Part 5 of the commission’s report is still pending. In the first four parts a number of recommendations were made. In the <a href="https://www.gov.za/sites/default/files/gcis_document/202201/judicial-commission-inquiry-state-capture-reportpart-1.pdf">first one</a>, procurement procedures in the public sector were addressed and a new dispensation proposed. The result is that government procurement services are now set to become more professional. </p>
<p>Regarding state owned enterprises, the appointment procedures and individual requirements of their board members and senior executives will also be addressed. Numerous recommendations about further investigations or prosecutions of implicated individuals and <a href="https://theconversation.com/state-capture-in-south-africa-how-the-rot-set-in-and-how-the-project-was-rumbled-176481">private business entities are also included</a>.</p>
<p>But is this enough?</p>
<p>South Africans want guarantees to prevent a repetition of state capture or extensive corruption in future. Ideally, the commission ought to present policy and institutional designs as such guarantees. The <a href="https://www.pinsentmasons.com/out-law/analysis/south-africa-anti-corruption-charter-first-step-towards-meaningful-change">proposed national charter against corruption</a> is one such recommendation, but more comprehensive designs are unlikely.</p>
<p>Early-warning systems to detect a possible recurrence, and deterrence to make the risks and cost of corruption too much, could be the starting point.</p>
<p>The Zondo commission has done its work. Was it worthwhile? For an answer, ask if it is possible to imagine a rehabilitated South Africa without the commission. My answer is “no”.</p><img src="https://counter.theconversation.com/content/182898/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dirk Kotze does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Rebuilding South Africa after the devastation of state capture would not be possible without the work of the Zondo commission.Dirk Kotze, Professor in Political Science, University of South AfricaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1201942019-07-12T09:14:27Z2019-07-12T09:14:27ZSouth African probe into corruption features star witness – Jacob Zuma<figure><img src="https://images.theconversation.com/files/283728/original/file-20190711-173376-17huf0x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Former South African President Jacob Zuma.</span> <span class="attribution"><span class="source">GCIS</span></span></figcaption></figure><p>It’s been almost a year since the Commission of Inquiry into allegations of <a href="https://www.sastatecapture.org.za/">state capture </a> in South Africa began to hear testimony. Also known as the Zondo Commission, it is headed by Deputy Chief Justice Raymond Zondo, <a href="https://www.sastatecapture.org.za/site/hearings">who has listened</a> to 130 days of live testimony from more than 80 people. It is probing allegations that the government was captured by private business interests for their own benefit. </p>
<p>During it all, echoes of former South African President Jacob Zuma’s alleged involvement have become deafening. Through various testimony, Zuma has been directly implicated by current and former senior government officials and ministers. They have alleged, among other things, that Zuma leaned on them to <a href="https://www.timeslive.co.za/sunday-times/news/2018-08-29-zuma-told-me-to-help-guptas-themba-maseko/">help the Guptas</a> – Zuma’s friends who are accused of having captured the state – and to fast-track a nuclear deal with Russia that would have <a href="https://www.news24.com/SouthAfrica/News/statecaptureinquiry-5-revelations-from-nenes-testimony-20181003">bankrupted South Africa</a>. Also, the governance failures that have resulted in the <a href="https://www.iol.co.za/news/politics/pravin-gordhan-vows-to-recapture-soes-14990941">looting of parastatals</a>, have been blamed squarely on state capture.</p>
<p>Zuma’s turn to give evidence has arrived. Not only does he deny that <a href="https://www.scribd.com/document/329757088/State-of-Capture-Public-Protector-Report#from_embed">state capture</a> exists – he’s called it a fake political tool – he’s also cast himself as a hapless victim. </p>
<p>Refusing to engage the concept, he <a href="https://www.timeslive.co.za/news/south-africa/2018-09-12-there-is-no-state-that-was-captured-zuma/">said</a>:</p>
<blockquote>
<p>There are people who did things to others in one form or the other‚ and you can call it in any other name‚ not this big name “state capture”.</p>
</blockquote>
<p>The allegations against him are that he orchestrated a network of corruption that hijacked South Africa’s developmental project. </p>
<p>The importance of Zuma testifying before the commission should not be underestimated. It will set a precedent that will either show that those that abuse power will be held to account or that the cycle of impunity will continue, reinforcing the unjust systems that enable state capture. </p>
<h2>Understanding state capture</h2>
<p>Originally, the theoretical concept of state capture referred to a form of <a href="http://www.gsb.uct.ac.za/files/Godinho_Hermanus_2018_ReconceptualisingStateCapture_Eskom.pdf">grand corruption</a>. In the case of South Africa, it can be defined as the formation of a shadow state, directed by a <a href="https://pari.org.za/betrayal-promise-report/">power elite</a>. This shadow state operates within – and parallel to – the constitutional state in formal and informal ways. Its objective is to re-purpose state governance, aligning it with the power elites’ narrow financial or political interests, for their benefit. </p>
<p>State capture rests on a strategy to align arms of state and public institutions and business to support <a href="https://www.econlib.org/library/Enc/RentSeeking.html">rent-seeking</a>. </p>
<p>In the events being scrutinised by the commission, the testimony shows that actors made sure that all the conditions were created and processes lined up to extract more money than the actual goods and services cost as a way to enrich themselves. </p>
<p>This reveals the systemic nature of state capture. To be successful, it requires the deep cooperation and complicity of the highest office in the land to secure rents, hollow out accountability and maintain legitimacy. </p>
<p>The graphic below, by Robyn Foley, a senior researcher at the <a href="http://www0.sun.ac.za/cst/">Centre for Complex Systems in Transition</a> at Stellenbosch University, outlines the alleged strategy of capturing state-owned enterprises, installing compliant officials, undermining the functional operation of government institutions and discrediting critical voices.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/283687/original/file-20190711-173355-as8619.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/283687/original/file-20190711-173355-as8619.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=447&fit=crop&dpr=1 600w, https://images.theconversation.com/files/283687/original/file-20190711-173355-as8619.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=447&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/283687/original/file-20190711-173355-as8619.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=447&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/283687/original/file-20190711-173355-as8619.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=562&fit=crop&dpr=1 754w, https://images.theconversation.com/files/283687/original/file-20190711-173355-as8619.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=562&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/283687/original/file-20190711-173355-as8619.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=562&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
</figcaption>
</figure>
<p>The graphic points to a presidency where state capture became syndicated within the state and rent-seeking. Capture is a radical departure from the norms and values upon which a democratic <a href="https://theconversation.com/will-the-anc-turn-south-africa-into-a-developmental-welfare-state-64919">developmental state</a> depends. Like most liberal democracies, South Africa’s constitution provides for checks and balances that are supposed to limit such abuses of power. When these checks are undermined, and the balancing forces are biased, the system becomes a reinforcing loop of bad behaviour, spiralling towards an oligarchic authoritarian state.</p>
<p>In other words, a silent coup.</p>
<h2>How did we get here?</h2>
<p>Zuma set his presidency on the ticket of state-sponsored development. This entailed using state-owned enterprise procurement, tighter state control and <a href="https://www.thedti.gov.za/economic_empowerment/bee_sector_charters.jsp">Black Economic Empowerment</a> to realise what has been termed <a href="https://www.fin24.com/Economy/radical-economic-transformation-zuma-vs-ramaphosa-20170502">radical economic transformation</a>. </p>
<p>But it was precisely within this agenda, and the governance arrangements that supported it, that seeds for state capture were sown. Tighter state control meant that the flows of information were controlled by only a few, while state-owned enterprises used the biggest share of procurement rands.</p>
<p>There was already billions moving through these state owned enterprises and radical economic transformation was the perfect ideology to bring it all together. </p>
<p>But black business hardly benefited at all from the profits of state capture. If radical economic transformation were to be effected through the constitutional state, it would be enacted through economic policy that supported livelihoods and employment creation. In addition, state capture has hollowed out the very institutions that would have been able to realise radical economic transformation through the constitutional state.</p>
<h2>The unravelling</h2>
<p>Numerous events over the past decade point to a slowburn abuse of key state resources. One of the first was the irregular <a href="https://theconversation.com/is-the-net-about-to-close-on-zuma-and-his-gupta-patronage-network-90395">landing of a civilian plane</a> at Waterkloof Military Air Base in 2013. The plane was carrying foreign guests to a family wedding hosted by Zuma’s friends, the Gupta family. </p>
<p>Two years later evidence emerged that millions of rands of public funds had been used illegally for upgrades to the then president’s Nkandla homestead. This spending was outlined in a <a href="https://cdn.24.co.za/files/Cms/General/d/2718/00b91b2841d64510b9c99ef9b9faa597.pdf">report</a> prepared by the former Public Protector Thuli Madonsela. </p>
<p>The turning point came only months after the release of the Public Protector’s State of Capture report, when Zuma fired then Finance Minister Pravin Gordhan and his deputy Mcebisi Jonas <a href="https://theconversation.com/firing-of-south-africas-finance-minister-puts-the-public-purse-in-zumas-hands-75525">in March 2017</a>. The events sent a shock wave through South Africa, triggering mass protests and mobilised public outrage, forcing Zuma to initiate the robust inquiry into state capture. </p>
<p>Our unpublished research shows that, to date, there have been 28 public state capture investigations, inquiries and commissions. There are also 118 <a href="https://www.timeslive.co.za/sunday-times/news/2019-06-23-batohi-puts-the-heat-on-corruptions-cold-cases/">outstanding cases of corruption</a> involving government officials and politicians in the intray of the newly appointed head of the country’s National Prosecuting Authority, Shamila Batohi.</p>
<p>The true cost of the damage cost by state capture, including the destruction of institutions and lives, is unquantifiable.</p>
<p>South Africans may well be seduced by the prospect of Zuma taking the stand at the Zondo commission. But he was not alone in driving the state capture project. And, the network of actors and influencers is extensive and still very much active. This much has been laid bare in testimony before the commission.</p>
<p><em>Nina Callaghan, Robyn Foley, senior researchers at the <a href="http://www0.sun.ac.za/cst/">Centre for Complex Systems in Transition</a> at Stellenbosch University, contributed to the article.</em></p><img src="https://counter.theconversation.com/content/120194/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark Swilling receives funding from the National Research Foundation.</span></em></p>South Africans may well be seduced by the prospect of Zuma appearing at the Zondo commission, but he was not alone in driving the state capture project.Mark Swilling, Distinguished Professor of Sustainable Development, Stellenbosch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/903952018-01-21T06:39:26Z2018-01-21T06:39:26ZIs the net about to close on Zuma and his Gupta patronage network?<figure><img src="https://images.theconversation.com/files/202574/original/file-20180119-80171-70vnck.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Cyril Ramaphosa, the deputy president of South Africa and new president of the governing ANC, faces a dilemma in rooting out corruption. </span> <span class="attribution"><span class="source">Reuters/Siphiwe Sibeko</span></span></figcaption></figure><p>It all started with a wedding. A 200 plus entourage of friends and family landed their private aircraft at the <a href="http://www.telegraph.co.uk/news/worldnews/africaandindianocean/southafrica/10030626/200-Indian-wedding-guests-allowed-to-land-at-South-Africas-main-military-air-base.html">Waterkloof Air Force Base</a> in April 2013. </p>
<p>What South Africans didn’t know was that the country had already entered a new era of corruption that was to have a myriad negative consequences. Now, after years of legal obfuscation, political manipulation of ‘captured’ state institutions and prosecutorial agencies, Cyril Ramaphosa’s victory to succeed Jacob Zuma as president of the ruling African National Congress has opened up the possibility that an age of impunity <a href="https://www.timeslive.co.za/politics/2018-01-18-ramaphosa-piles-pressure-on-zuma-with-anti-corruption-call/">will be replaced</a> with a new era of public accountability.</p>
<p>Since the <a href="http://www.bbc.com/news/world-africa-22513410">Gupta’s</a> extravagant family wedding at Sun City a slew of revelations have come out. These range from the <a href="https://citizen.co.za/news/south-africa/1333758/10-key-findings-explosive-state-capture-report/">“State of Capture report”</a> of the former Public Protector Thuli Madonsela, to the damning <a href="http://www.gupta-leaks.com/">Gupta-leaks</a> uncovered by investigative journalists AmaBhungane. All helped South Africans come to understand the shocking extent of the systemic corruption inextricably linked to the Gupta name.</p>
<p>Despite all these revelations, the country’s prosecutorial bodies have remained silent. So when the Asset Forfeiture Unit of the National Prosecuting Authority (NPA) confirmed its <a href="https://protect-za.mimecast.com/s/itfIC1jp84SE0XYOiO4_KT">intention to serve summons</a> on members of the Gupta family and their cronies on January 15 this year ordering them to preserve assets to the tune of R1.6 billion, the first question that sprung to mind was “why now”?</p>
<p>The answer lies with Ramaphosa’s election on a <a href="https://www.biznews.com/thought-leaders/2017/11/14/ramaphosa-new-deal-for-sa/">“change” and “reform” ticket</a>. His victory in December has shifted the balance of power against the Zuma faction. </p>
<p>A second factor is that the ANC is concerned about its electoral future, with the 2019 national election on the horizon. Zuma has cost the ANC <a href="https://www.news24.com/elections/news/election-wrap-a-bruised-anc-a-galvanised-da-20160807">almost 16% of its electoral</a> majority – some 3 million votes. With opposition parties scrambling to <a href="https://www.sapeople.com/2017/12/06/sas-future-coalition-anc-2019-say-opposition-leaders/">form coalitions</a>, and voting trends suggesting a further decline in the ANC’s share of the vote, there is now a very real prospect of the ANC being voted out of power in 2019. An ANC majority is no longer a foregone conclusion – unthinkable until recently.</p>
<p>It seems denial in the ANC has been replaced by a sense of fear. The party is trying to show the voting public that it can clear up the mess that it has made.</p>
<h2>Chickens come home to roost</h2>
<p>The NPA’s announcement suggests that the chickens seem finally to be on their way home to roost on the <a href="https://www.iol.co.za/business-report/swift-sale-of-gupta-family-empire-in-south-africa-raises-eyebrows-10955847">Gupta empire</a>. The NPA’s Asset Forfeiture Unit has applied to the High Court for an order that the Gupta’s must “preserve” R1.6 billion worth of assets. This power is granted under Section 38 of the <a href="https://www.gov.za/sites/www.gov.za/files/a121-98.pdf">Prevention of Organised Crime Act</a>. The provision empowers the NPA to make an ex parte application to the High Court to</p>
<blockquote>
<p>prohibit any person… from dealing in any manner with any property.</p>
</blockquote>
<p>The court must grant the order if there are reasonable grounds to believe that property is the “instrumentality of an offence” or “is the proceeds of unlawful activities”. This must be read in light of the rest of the Act which allows the state to confiscate property that is the proceeds of unlawful activities. </p>
<p>The rationale of the preservation order is, therefore, to prevent such a person or suspect from disposing of assets that are proceeds from unlawful activities which would render a confiscation order fruitless. </p>
<p>An analysis of the act makes it clear that, if a preservation order is requested, the intention of the NPA must be to arrest and charge the Guptas and their associates. A preservation order could only be made if a confiscation order is ultimately envisaged. In turn, a confiscation order can only be made after a criminal conviction. </p>
<p>The logical conclusion is that the NPA, assuming that they are acting in good faith, are intent on arresting and prosecuting the Guptas.</p>
<h2>Dilemma facing Ramaphosa and the ANC</h2>
<p>The problem for the ANC is this: if its intention is to make the Guptas the sole-scapegoats in the state-capture saga, they will be in a good deal of trouble. Of the published Gupta scandals, the evidence strongly suggests that they were not acting alone. The Guptas themselves may represent only the tip of the iceberg.</p>
<p>Top government officials are reported to have been involved in almost all instances. </p>
<p>For example, Mining Minister Mosebenzi Zwane, is heavily implicated in the <a href="https://www.dailymaverick.co.za/opinionista/2017-07-18-estina-dairy-farm-a-corruption-crime-scene-in-vrede/#.WmCWaaiWbIU">Sun City wedding affair</a>, while whistle-blowers <a href="https://businesstech.co.za/news/government/117104/guptas-did-offer-me-the-job-of-finance-minister-jonas/">Mcebisi Jonas</a> and <a href="https://www.enca.com/south-africa/guptas-offered-me-ministerial-role-vytjie-mentor">Vytjie Mentor</a> implicate Zuma as a participant in the Guptas offering them (for undue reward) the positions of ministerial positions.</p>
<p>Zuma’s son, Duduzane, is also heavily implicated in <a href="https://www.timeslive.co.za/politics/2017-08-29-since-you-asked-heres-the-case-against-duduzane-zuma/">corrupt activities</a> related to the state power utility Eskom, as well as the finance minister debacle.</p>
<p>The NPA will struggle to prove its case against the Guptas, at least the full extent of it, without implicating those that drove or condoned their misdemeanours. It seems clear therefore that the ANC cannot restore its reputation while letting its leaders who looted the country’s resources drift off into the wilderness. </p>
<p>This presents Ramaphosa with an acute political dilemma given that he’s pledged to <a href="https://www.dailymaverick.co.za/article/2018-01-09-ancs-106th-ramaphosas-push-for-unity-continues/#.WmG_Dq6WbIU">rebuild unity</a> in the ANC.</p>
<p>Hence, we are likely to see a very high level and multifaceted blame game. But any attempt to restore its credibility will probably prove counter productive unless the party accepts that some of its biggest fish must be prosecuted too.</p>
<p>And it goes without saying that private sector players such as <a href="https://www.moneyweb.co.za/news/south-africa/mckinsey-warned-eskom-of-risks-at-gupta-linked-trillian-capital/">Trillian</a> and <a href="https://www.ft.com/content/71c6f115-0c5c-33ed-bc00-812263f39d2f">KPMG</a> who were willing enablers of the abuse of state procurement processes must also be held to account. If necessary they must pay the ultimate price of corporate collapse as <a href="https://www.fin24.com/Companies/Advertising/breaking-bell-pottinger-expelled-from-pr-body-for-gupta-work-20170904">Bell Pottinger</a> did.</p>
<h2>Just the beginning</h2>
<p>The NPA’s announcement represents no more than a good start after years of prosecutorial negligence and incompetence – or dishonesty – and costly inaction. </p>
<p>In terms of accountability it’s indeed time to catch up and restore the legitimacy of important institutions. But the stakes are very high – for the implicated politicians and their business cronies, for Ramaphosa and the ANC’s electoral future, and for the credibility of South Africa as a trustworthy destination for much needed investment.</p><img src="https://counter.theconversation.com/content/90395/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Richard Calland is a Founding Partner of the Paternoster Group: African Political Insight, a Member of the Advisory Council of the Council for the Advancement of the South African Constitution (CASAC) and a member of the Board of the Open Democracy Advice Centre. </span></em></p><p class="fine-print"><em><span>Mike Law receives funding from UCT is affiliated with UCT and CASAC </span></em></p>After doing nothing for a long time to bring the Gupta family to book in South Africa, the country’s prosecuting authority has finally started to act.Richard Calland, Associate Professor in Public Law, University of Cape TownMike Law, Senior legal researcher in Public Law, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/836472017-09-11T19:58:26Z2017-09-11T19:58:26ZExposés about South Africa’s deputy president point to ulterior motives<figure><img src="https://images.theconversation.com/files/185266/original/file-20170908-25998-112bc66.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">South Africa's Deputy President Cyril Ramaphosa says his emails were hacked. </span> <span class="attribution"><span class="source">GCIS</span></span></figcaption></figure><p>The recent media <a href="https://www.wmcleaks.com/cyril-ramaphosa-cheater-womanizer-corrupt-politician/?gclid=Cj0KCQjwub7NBRDJARIsAP7wlT8WBGbg2yYwikFuIE7uho6gW7105SyUJOck27c08sfQg3fKRMVDkHsaAoRZEALw_wcB">“revelations”</a> about South Africa’s Deputy President Cyril Ramaphosa’s several alleged extramarital affairs are the classic approach to creating doubt about a prominent person’s integrity. </p>
<p>They also call into question his claim to be a <a href="http://www.news24.com/SouthAfrica/News/ramaphosa-launches-campaign-with-attack-on-zuma-guptas-20170423">suitable moral or ethical alternative</a> to President Jacob Zuma’s corrupt administration. The latest accusations are meant to attack the very foundation of his campaign to lead both the ANC and the country. Ramaphosa <a href="https://www.timeslive.co.za/sunday-times/news/2017-09-02-ramaphosa-speaks-out-im-not-a-blesser-but-i-did-have-an-affair/">admitted</a> to having had an affair a decade ago.</p>
<p>This is not the first time that prominent ANC personalities have been placed in a situation similar to Ramaphosa’s. In the past accusations were made against <a href="https://www.iol.co.za/news/politics/motlanthes-affairs-a-secret-432345">Kgalema Motlanthe</a>, a former ANC secretary-general and deputy president, and against <a href="https://citizen.co.za/lifestyle/your-life-technology/1312181/picture-naked-nzimande-with-his-student-girlfriend-on-a-bed/">Blade Nzimande</a>, general-secretary of the South African Communist Party (SACP) and Minister of Higher Education. The SACP is in a governing <a href="http://www.anc.org.za/kids/tripartite-alliance">tri-partite alliance</a> with the ANC and labour federation Cosatu.</p>
<p>More specific reports of alleged infidelity have appeared against Police Minister <a href="http://www.sundayworld.co.za/shwashwi/2016/11/16/fikile-mbalula-on-sex-scandal-this-thing-was-a-one-night-stand">Fikile Mbalula</a> and <a href="http://www.heraldlive.co.za/news/2017/05/22/radebe-apologises-sex-text-saga/">Jeff Radebe</a>, minister in the Presidency. <a href="http://www.news24.com/SouthAfrica/News/anc-suspends-marius-fransman-for-5-years-20161110">Marius Fransman</a>, the ANC’s Western Cape leader, has been suspended for five years for sexual misconduct.</p>
<p>It would be inappropriate to generalise about all of them. And, with the available information, the Ramaphosa case appears to be an example of the tried-and-tested trick of spreading rumours about or exposing infidelity. </p>
<p>It is noteworthy that Ramaphosa’s defence mentions this directly, and that state institutions are being used (by the pro-Zuma group) to <a href="http://www.news24.com/SouthAfrica/News/latest-episode-an-escalation-of-a-dirty-war-ramaphosa-responds-to-smear-campaign-20170902">neutralise his election campaign</a>:</p>
<blockquote>
<p>It represents an escalation of a dirty war against those who are working to restore the values, principles and integrity of the African National Congress and society.</p>
</blockquote>
<p>Ramaphosa is considered a <a href="https://www.timeslive.co.za/sunday-times/news/2017-07-22-poll-has-ramaphosa-beating-dlamini-zuma/">frontrunner</a> among the contenders to replace Zuma - ahead of the president’s preferred successor, <a href="https://www.enca.com/south-africa/dlamini-zuma-indicates-she-is-ready-for-presidency">Nkosazana Dlamini-Zuma</a>. </p>
<h2>Gunning for Ramaphosa</h2>
<p>The campaign to discredit Ramaphosa has gone through several stages: </p>
<ul>
<li><p>first, an attempt was made to compromise him by placing blame for the <a href="https://citizen.co.za/opinion/opinion-columns/1613696/marikana-continues-to-haunt-ramaphosa/">Marikana massacre</a> on him. </p></li>
<li><p>Then he was discredited as a puppet of business who is being manipulated by <a href="http://www.whitemonopolycapital.com/tag/cyril-ramaphosa/">“white monopoly capital”</a>. </p></li>
<li><p>These were followed by the claim that he was being manipulated by a “white clique” that manage his election campaign and that he was, therefore, not <a href="https://mg.co.za/article/2017-08-02-cr17-team-claims-that-the-campaign-is-run-by-whites-are-inherently-racist">genuinely “black”</a>. </p></li>
<li><p>He was also accused of having beaten his ex-wife. But, she <a href="https://www.enca.com/south-africa/malema">refuted</a> the allegation.</p></li>
</ul>
<p>The latest line of attack seeks to advance the view that his moral outrage against Zuma’s corruption and unethical leadership is compromised by his own immoral extramarital relations. Importantly, he admitted to having <a href="https://www.timeslive.co.za/sunday-times/news/2017-09-02-ramaphosa-speaks-out-im-not-a-blesser-but-i-did-have-an-affair/">had an affair</a> a decade ago. </p>
<p>But, the campaign to discredit Ramaphosa appears to not be getting the desired effect. The general sentiment among <a href="https://www.timeslive.co.za/politics/2017-09-04-were-not-electing-a-pope-cosatu-anc-chief-whip-back-ramaphosa/">ANC spokespersons</a> and those of <a href="http://www.news24.com/SouthAfrica/News/ramaphosas-alleged-extramarital-affairs-is-a-silly-non-scandal-cosatu-20170904">Cosatu</a> is one of dismay. <a href="https://citizen.co.za/news/south-africa/1637687/i-support-and-love-him-says-ramaphosas-wife-tshepo-motsepe-following-cheating-scandal/">Ramaphosa’s family</a> and acquaintances have also dismissed the latest accusations against him. </p>
<p>The fact that some refers to events about eight years ago, and the fact that they openly challenge Ramaphosa’s character, point to possible ulterior motives. </p>
<h2>Message to detractors</h2>
<p>An important aspect of the current Ramaphosa case is that it is an indirect message to Zuma’s opponents. Zuma is making it clear that he still has sufficient access to intelligence agencies to expose the skeletons in their cupboards. It will likely dampen the emerging rebellion in the ANC. An example of such rebellion was seen during the recent <a href="https://mg.co.za/article/2017-08-08-no-confidence-vote-the-people-versus-jacob-zuma">motion of no confidence</a> against him in Parliament. It saw 35 ANC MPs defy orders to toe the party line in the motion brought by the opposition.</p>
<p>If it’s seen in the same light as the <a href="http://ewn.co.za/2017/08/31/hawks-subpoenas-trevor-manuel-and-his-former-deputy-over-sars-probe">Hawks’ investigations</a> into former finance minister Trevor Manuel and his deputy Jabu Moleketi; and then former South African Revenue Service Commissioner <a href="https://www.dailymaverick.co.za/article/2017-08-31-hawks-vs-gordhan-reboot-former-finance-minister-once-more-in-special-units-sights/#.Wa__6rIjGpo">Pravin Gordhan</a>, about SARS intelligence and Treasury management; it sends a message to Ramaphosa supporters: to tread carefully in the future.</p>
<p>The fact that the ANC leadership nomination process <a href="http://www.news24.com/SouthAfrica/News/anc-officially-opens-nomination-of-leadership-contest-20170905">has commenced</a>, and that intense contestation can be expected ahead of the party’s <a href="http://www.anc.org.za/officials/current">national elective conference</a> in December, the possibility of serious incidents shouldn’t be excluded. </p>
<p>Political assassinations already underway in KwaZulu-Natal <a href="http://www.news24.com/SouthAfrica/News/political-killings-could-plunge-kzn-municipalities-into-state-of-ungovernability-cogta-mec-20170905">might increase</a>.</p>
<h2>Serious setbacks</h2>
<p>Another important symptom of the motive behind the Ramaphosa case is the fact that Zuma has experienced a set of serious setbacks lately. These include that:</p>
<ul>
<li><p>the Guptas, the business family and his friends at the centre of state capture, are <a href="https://www.bloomberg.com/news/articles/2017-08-07/backlash-over-south-africa-graft-claims-threatens-gupta-empire">suffering a meltdown</a>;</p></li>
<li><p>there are new parliamentary investigations into <a href="https://www.timeslive.co.za/ideas/2017-07-26-parliament-is-turning-up-the-heat-in-the-state-capture-kitchen/">state capture</a>;</p></li>
<li><p>the demise of his key supporters in government agencies (like <a href="https://www.iol.co.za/news/politics/brianmolefe-fired-again-9448206">Brian Molefe</a>, <a href="http://www.news24.com/SouthAfrica/News/eskom-board-chair-resigns-20170612">Ben Ngubane</a>, <a href="http://www.sowetanlive.co.za/news/2017/06/12/hlaudi-motsoeneng-is-out---former-sabc-coo-has-been-fired">Hlaudi Motsoeneng</a>, <a href="http://ewn.co.za/2017/05/18/berning-ntlemeza-s-bid-to-return-to-work-as-hawks-head-doused">Berning Ntlemeza</a>); </p></li>
<li><p>the South African Broadcasting Corporation is increasingly exhibiting <a href="https://mg.co.za/article/2017-06-12-sabc-interim-board-confirms-dismissal-of-hlaudi-motsoeneng">independence</a>;</p></li>
<li><p>the ANC’s parliamentary caucus is rebelling <a href="https://www.businesslive.co.za/bd/opinion/2017-03-16-ancs-voting-cattle-in-parliament-show-signs-of-anti-zuma-revolt/">against him</a>;</p></li>
<li><p>he has suffered several negative <a href="https://www.iol.co.za/news/crime-courts/spytapes-case-court-rules-that-zuma-charges-be-reviewed-2015740">court judgments</a>; and </p></li>
<li><p>the UK public relations company <a href="https://theconversation.com/how-pr-giant-bell-pottinger-made-itself-look-bad-83529">Bell Pottinger’s woes</a> have also discredited Zuma’s mantra of “white monopoly capital”. The British public relations company employed by the Gupta business empire got embroiled in ANC internal politics. It has since been sanctioned for its role in promoting the racially divisive “white monopoly capital” narrative sponsored by the <a href="https://mg.co.za/article/2016-03-24-00-the-gupta-owned-state-enterprises">Guptas</a>, Zuma’s friends at the core of <a href="https://citizen.co.za/news/south-africa/1525127/read-damning-new-academic-state-capture-report/">state capture</a> allegations.</p></li>
</ul>
<h2>Warning to the media</h2>
<p>The months leading towards the ANC’s December conference will be a trying period for the South African mainstream media. They are a lucrative target for abuse by the two main ANC election campaigns. </p>
<p>Leaks, planted information, fake news and attempts to lure journalists to support either faction are all very likely possibilities. The Ramaphosa case has been the first major test for the media. Clear editorial policies, uncompromised ethical practices and exceptional professionalism are what will see the media through. It cannot afford mistakes or miscalculations in the next four months.</p><img src="https://counter.theconversation.com/content/83647/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dirk Kotze does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Accusations against South African Deputy President Cyril Ramaphosa appear to be an example of the tried-and-tested trick to discredit him and his political campaign to become the next president.Dirk Kotze, Professor in Political Science, University of South AfricaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/806902017-07-12T14:19:23Z2017-07-12T14:19:23ZHow corruption is fraying South Africa’s social and economic fabric<figure><img src="https://images.theconversation.com/files/177495/original/file-20170710-29712-1pi12q7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Protests escalate as corruption and public sector incompetence in South Africa hamper the provision of basic services. </span> <span class="attribution"><span class="source">EPA/Kim Ludbrook</span></span></figcaption></figure><p>South Africans are not happy. According to the recent Bloomberg’s Misery Index, South Africa is <a href="http://www.huffingtonpost.co.za/2017/03/07/south-africa-is-the-second-most-miserable-country-on-earth_a_21875054/">the second-most miserable country on earth</a>. Venezuela tops the list of emerging countries. </p>
<p>This isn’t too surprising considering that the country is embroiled in multifaceted crises. It also has among the <a href="https://africacheck.org/factsheets/factsheet-unemployment-statistics-in-south-africa-explained/">highest unemployment</a> and <a href="https://www.businesslive.co.za/bd/national/2017-01-16-sas-rich-poor-gap-is-far-worse-than-feared-says-oxfam-inequality-report/">inequality levels</a> in the world. </p>
<p>Unfortunately, recent credit rating agency <a href="https://theconversation.com/what-a-downgrade-means-for-south-africa-and-what-it-can-do-about-it-75704">downgrades</a> as well as the fact that the country is in recession mean that these horrid conditions are unlikely to reverse soon.</p>
<p>Consequently, the poor in South Africa have little chance of improving their lives. They will therefore be even more reliant on the provision of state services. They will also increasingly be on the receiving end of the two extractive systems that are deeply embedded in country’s socio-political and economic systems.</p>
<p>The first is the patronage and state capture machinery as recently documented <a href="http://citizen.co.za/news/news-national/1525127/read-damning-new-academic-state-capture-report/">in a report</a> by leading academics. The effect of this corruption is that the capital allocated for service delivery is wasted, the private sector is crowded out, and the monopolising positions of dysfunctional state owned enterprises distort the economy.</p>
<p>The second is where state capture merges with patronage politics at local government level. This is accomplished by managing and staffing municipalities with unqualified party loyalists – or close associates – who disseminate services inefficiently from a shrinking pool of capital, while further extracting rents through a sub-layer of corruption.</p>
<p>The effect is that the poor must pay an additional tax in the form of bribes for access to mispriced and inefficient state services. In addition, as the looting via state capture and <a href="http://www.municipaliq.co.za/index.php?site_page=press.php">municipal corruption intensifies</a>, service provision and delivery declines. This means that the poor are then subject to bribe inflation to gain access to shrinking capacity. <a href="https://issafrica.org/iss-today/the-reasons-behind-service-delivery-protests-in-south-africa">Violent service delivery protests</a> inevitably escalate.</p>
<h2>Demographics and education</h2>
<p>South Africa’s five year average economic growth rate declined from 4.8% over the 2004-2008 period to 1.9% over the 2009-2013 period. Between 2014 and 2016 it averaged 1.1%. At the same time irregular, wasteful, and <a href="https://www.agsa.co.za/Portals/0/MFMA%202014-15/Section%201-9%20MFMA%202014-2015/FINAL%20MEDIA%20RELEASE%20(MFMA%202016)%20FN.pdf">unauthorised expenditure ballooned</a>. It’s therefore not surprising that the number of violent protests increased from an average of 21 a year between 2004 and 2008 to 164 a year between 2014 and 2016. </p>
<p>Unfortunately, South Africa’s demographics and education statistics don’t suggest that this trend is likely to reverse soon.</p>
<p>South Africa’s <a href="http://www.iol.co.za/business-report/economy/the-grim-situation-facing-sas-youth-1878239">youth statistics are depressing</a>. Young people between the ages of 15 to 35 <a href="https://www.statssa.gov.za/publications/P02114.2/P02114.22015.pdf">comprise 55%</a> of the country’s 36 million working age population. Of the 19.7 million youths, only 6.2 million are employed while 3.6 million are unemployed but still actively looking for work, and 1.53 million have stopped looking for work. The remaining 8.4 million are at school, tertiary education, or are homemakers.</p>
<p>Youth unemployment is 36.9%. This is nearly double the unemployment rate among adults. Among black youth, 40% are unemployed compared to 11% of white youth.</p>
<p>Taking the level of education into consideration, <a href="https://equaleducation.org.za/2017/01/09/matric-results-and-south-africas-youth-unemployment-crisis/">2011 data</a> show that the unemployment rate for 25 to 35 year olds who had less than a matric was 47%, compared to 33% for those that had a matric, and 20% for those with a diploma or post-school certificate. But if one looks at the younger group of 20 to 24 year-olds, 16% are in school, 12% are in post-schooling education, 21% are employed, and 51% are unemployed and not in any education or training.</p>
<p>Considering that the percentage of black professional, managerial and technical workers in the 25 to 35 age bracket dropped by 2% over the past 20 years (meaning that this generation is less skilled than their parents), the statistics in the 20 to 24 age bracket indicates that this trend is likely to worsen.</p>
<p>Worryingly, studies show that countries, such as South Africa, that have a <a href="http://www.un.org/esa/population/publications/expertpapers/Urdal_Expert%20Paper.pdf">youth bulge and poor education attainment</a> are likely to suffer <a href="http://www.sciencedirect.com/science/article/pii/S0176268016303470?via%3Dihub">from political instability</a>. This is because if the demographic transition occurs in a stagnant economy with a high level of corruption then the low opportunity costs <a href="https://www.dailymaverick.co.za/article/2016-04-18-the-great-reversal-stats-sa-claims-black-youth-are-less-skilled-than-their-parents/#.WVZNFIR97IV">increase the likelihood</a> of political violence by poorly educated young men.</p>
<h2>Fixing systemic failures</h2>
<p>South Africa’s current crisis is a systemic failure extending across national and local government. Although it’s possible that the political cost of corruption is now reaching unacceptable levels, reversing the effects of state decay on the poor will take short-run and long-run interventions. </p>
<p>Short-run measures will need to include holding public officials to account, reforming state owned enterprises and reversing the numerous institutional weaknesses at all levels of government.</p>
<p>But public and private stakeholders will also need to formulate long-run policies that will improve the quality and through-put of the country’s junior and secondary education systems, and entrench youth employment incentive schemes. In addition, skills training will need to be reformed and reinvigorated, and the technical vocational educational system will need to be reconstructed.</p>
<p>If South Africa is to recover, then the country’s badly frayed socio-economic fabric will need to be restitched, not just patched.</p><img src="https://counter.theconversation.com/content/80690/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sean Gossel receives funding from the University of Cape Town. </span></em></p>The political cost of corruption is reaching unacceptable levels in South Africa. Reversing the effects of state decay on the poor will take short and long term interventions.Sean Gossel, Senior Lecturer, UCT Graduate School of Business, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/807592017-07-10T15:12:02Z2017-07-10T15:12:02ZANC conference: governing party blew chance to regain South Africa’s trust<figure><img src="https://images.theconversation.com/files/177546/original/file-20170710-5923-118ozlz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">South African President Jacob Zuma closing the governing ANC's policy conference.</span> <span class="attribution"><span class="source">EPA/Stringer</span></span></figcaption></figure><p>The 5th <a href="http://www.anc.org.za/content/5th-national-policy-conference-2017">policy conference</a> of South Africa’s governing African National Congress
started on an ominous note. The party’s stalwarts had opted to <a href="https://www.businesslive.co.za/bd/politics/2017-06-29-anc-veterans-will-boycott-part-of-policy-meeting-focused-on-partys-health/">stay away</a> because they wanted the party to call a <a href="https://www.timeslive.co.za/politics/2017-07-06-anc-stalwarts-and-veterans-not-backing-down-on-call-for-consultative-conference/">consultative conference</a> first to focus on the organisation’s problems. The ANC’s leadership refused.</p>
<p>In fact, their call infuriated President Jacob Zuma. He mocked them in <a href="http://www.polity.org.za/article/zuma-lays-into-anc-stalwarts-at-policy-conference-2017-06-30">his opening address</a>. The stalwarts – who include luminaries such as <a href="http://afmcloud.co.za/office-bearers/afm-international-office-bearers/pastor-frank-chikane">Frank Chikane</a>, <a href="https://www.dailymaverick.co.za/article/2017-02-19-between-the-lines-sipho-pityana-was-a-loyal-soldier.-the-anc-wouldnt-listen.-now-hes-an-activist-again./#.WWN5N4SGM9c">Sipho Pityana</a> and <a href="http://www.sahistory.org.za/people/cheryl-carolus">Cheryl Carolous</a> – are viewed by some as the link to the progenitors of the liberation struggle. Could their stay away spell a curse? </p>
<p>By the end of the conference Zuma appeared buoyed, dubbing the conference a success in his <a href="http://m.news24.com/News24/SouthAfrica/News/live-ancpolicy-conference-closing-day-20170705">closing address</a>. But, a success in achieving what? This question is pertinent because the conference came amid growing public discontent about the way the country is run, intensified by adverse assessments of <a href="https://theconversation.com/what-a-downgrade-means-for-south-africa-and-what-it-can-do-about-it-75704">rating agencies</a> as well as the fact that the economy is in <a href="https://theconversation.com/south-africas-in-a-recession-heres-what-that-means-78953">recession</a>. </p>
<p>Are the outcomes of the conference likely to assuage the consternation about the future of the country? Can they in anyway contribute towards extricating the country from the morass it’s in? Or, are South Africans simply grasping at straws by asking these questions?</p>
<h2>Losing leadership of society</h2>
<p>The ANC appears to have lost claim to being a leader of society. Just before the 2016 local government elections, its own research pointed to an increasing “trust deficit”: less than 50% of respondents saw the ANC as a <a href="https://www.google.co.za/#q=http://www.power987.co.za/wp-content/uploads/2017/06/170630-0705-FINAL-Diagnostic">leader of society</a>. This is an ignominious indictment to a once glorious movement. Isn’t that perhaps where the focus should have been at the conference - regaining people’s trust by taking them along in the policy discussions? </p>
<p>An opportunity for this was missed as the policy discussion was contrived as an ANC affair. This is odd for a governing party. Its existence ought to be anchored in society and should always pursue the public interest. As the American senator Elizabeth Dole <a href="http://www.azquotes.com/quote/827008?=public%20policy">once put it</a>:</p>
<blockquote>
<p>The best policy is made when you are listening to people who are going to be impacted. Then, once policy is determined, you call on them to help you sell it.</p>
</blockquote>
<p>The policy conference didn’t reflect this character. The ANC’s policy deliberations were held in closed sessions. The media wasn’t allowed in. Only snippets were presented to the public. Media reports depended on press briefings and interviews. The ANC was largely talking to itself.</p>
<p>Being a leader of society is a function of making people part of the process of how the party intends to lead. And it should always be amenable to the views that emanate from society, not only from its members. The ANC is not just a political organisation or a liberation movement. It is a governing party. How it responds to its responsibility of governing is the business of South Africa’s 55 million citizens. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/177550/original/file-20170710-5923-e6tws3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/177550/original/file-20170710-5923-e6tws3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=777&fit=crop&dpr=1 600w, https://images.theconversation.com/files/177550/original/file-20170710-5923-e6tws3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=777&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/177550/original/file-20170710-5923-e6tws3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=777&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/177550/original/file-20170710-5923-e6tws3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=977&fit=crop&dpr=1 754w, https://images.theconversation.com/files/177550/original/file-20170710-5923-e6tws3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=977&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/177550/original/file-20170710-5923-e6tws3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=977&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A delegate at the ANC’s 5th National Policy Conference.</span>
<span class="attribution"><span class="source">Reuters/Siphiwe Sibeko</span></span>
</figcaption>
</figure>
<p>An elitist approach to policy disengages society. Society only reacts to the outcomes of policy discussions if it’s not engaged in dialogue. This spawns antagonism as democracy is fudged in the process. </p>
<p>The consequence of this is a “trust deficit”. This is where the biggest danger lies. A “trust deficit” questions the very legitimacy of the ANC. </p>
<h2>Vacuous discussions</h2>
<p>The ANC’s gatherings are no longer moments to assert the significance of pursuing societal interests. As presidential hopeful Lindiwe Sisulu <a href="http://www.iol.co.za/news/politics/sisulu-warns-on-two-horse-power-bid-10203448">put it</a>: </p>
<blockquote>
<p>The (policy) conference was not about issues, it was about which side is pushing which issue.</p>
</blockquote>
<p>Was it, therefore, choreographed machinations to gauge the preferences of the branches in the presidential race? One is inclined to think so, especially in the context of Zuma’s remarks at the end of the conference in which he proposed that whoever loses the race to be president should automatically become the <a href="http://www.iol.co.za/capetimes/news/anc-divided-on-dlamini-zuma-ramaphosa-power-sharing-10117583">deputy president of the party</a>.</p>
<p>This proposal is outrageous. It accepts <a href="http://www.huffingtonpost.co.za/2017/04/27/ndz-vs-cr17-battle-for-the-anc-underway_a_22058354/">factionalism</a> as part of the ANC’s organisational makeup. It seeks to institutionalise and accommodate factionalism rather than expunge it. Is this perhaps what the president was referring to when he spoke of success? </p>
<p>The other disturbing part of the conference was that <a href="https://mobile.twitter.com/Derek_Hanekom/status/883064545387962369/video/1?t=1&cn=ZmxleGlibGVfcmVjc18y&refsrc=email&iid=dae17404b2784f2e922fa44a8f96ac2a&uid=2953929718&nid=244+285282314">vulgarity held sway</a> while sanity was heckled and shouted down, scorned as proxy for <a href="http://www.sowetanlive.co.za/news/2017/07/05/pravin-hanekom-heckled-in-anc-policy-conference-talks">white monopoly capital</a>.</p>
<p>The truth is that <a href="http://www.news24.com/SouthAfrica/News/white-monopoly-capital-not-the-enemy-anc-20170704">white monopoly capital</a> is a dishonest narrative. Coupled with the narratives garbled in rhetoric on the <a href="http://www.fin24.com/Economy/radical-economic-transformation-zuma-vs-ramaphosa-20170502">radical transformation </a> of the economy and <a href="http://city-press.news24.com/News/zuma-calls-on-black-parties-to-unite-on-land-20170303">land reform</a>, white monopoly capital is nothing more than gesticulation of populism bereft of ideological context. In the meantime gluttonous politics is in ascendance. State power is contested for <a href="http://pari.org.za/betrayal-promise-report/">nefarious ends</a>. </p>
<p>Where does this leave the <a href="https://www.google.co.za/#q=http://www.power987.co.za/wp-content/uploads/2017/06/170630-0705-FINAL-Diagnostic">historical mission</a> of the liberation struggle which is about</p>
<blockquote>
<p>uplifting the quality of life of all South Africans, especially the poor, the majority of whom are African and female.</p>
</blockquote>
<p>Joel Netshitenzhe, a member of the national executive committee of the ANC, came closest to providing an answer. He went to the subterranean dimension of the debate on the transformation of the economy in pointing out that “white dominance in the economy” is a manifestation of a problem, which is <a href="http://www.news24.com/SouthAfrica/News/white-monopoly-capital-not-the-enemy-anc-20170704">“monopoly capital”</a>. </p>
<p>To use the phrase “white monopoly capital” is to reduce the policy debate to polemics and to spawn untenable interventions. As Netshitenzhe <a href="http://www.news24.com/SouthAfrica/News/white-monopoly-capital-not-the-enemy-anc-20170704">further explained</a>:</p>
<blockquote>
<p>[the] relationship between the ANC and monopoly capital in particular, but also capital in general, is one of unity and struggle, or if you like, cooperation and contestation.</p>
</blockquote>
<p>This irked the proponents of the white monopoly capital narrative who responded by displaying vacuousness and a lack of analytical depth on policy matters.</p>
<p>It appears as if the contestations in the conference hardened attitudes instead of facilitating policy choices. They intensified policy stalemate. This is perilous to South Africa. Outcomes of the policy conference don’t offer much to write home about. What they did do was to set up the ANC’s <a href="http://www.anc.org.za/content/54th-national-conference">December 2017 elective conference</a> for an internecine and bruising jostling for power.</p><img src="https://counter.theconversation.com/content/80759/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mashupye Herbert Maserumule received funding from National Research Foundation for his postgraduate studies. He is affiliated with South African Association of Public Administration and Management(SAAPAM). He is the Chief Editor of its Journal of Public Administration.</span></em></p>South Africa’s governing ANC appears to have lost claim to being a leader of society. This is clear from the outcome of its policy conference.Mashupye Herbert Maserumule, Professor of Public Affairs, Tshwane University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/799312017-06-22T13:19:48Z2017-06-22T13:19:48ZA public protector’s job is to make sure people stick to the law - not to change it<figure><img src="https://images.theconversation.com/files/175162/original/file-20170622-12027-uyy26c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Busisiwe Mkhwebane, the public protector of South Africa.</span> <span class="attribution"><span class="source">EPA/Nic Bothma</span></span></figcaption></figure><p>South Africa’s Public Protector Busisiwe Mkhwebane has directed a parliamentary portfolio committee to initiate proceedings to amend a clause in the country’s <a href="http://www.gov.za/DOCUMENTS/CONSTITUTION/constitution-republic-south-africa-1996-1">Constitution</a> that sets out the primary aim of the country’s Reserve Bank.</p>
<p>As many commentators have <a href="http://constitutionallyspeaking.co.za/absa-is-poster-child-for-apartheid-corruption-but-this-does-not-mean-the-public-protector-can-order-the-amendment-of-the-constitution/#more-9810">pointed out</a>, the Public Protector cannot order that the Constitution be amended. It is not part of her job and it’s outside her powers.</p>
<p>The Constitution gives the Public Protector the <a href="http://www.constitutionalcourt.org.za/site/constitution/english-web/ch9.html">task of investigating</a></p>
<blockquote>
<p>any conduct in state affairs, or in the public administration in any sphere of government, that is alleged or suspected to be improper or to result in any impropriety or prejudice. </p>
</blockquote>
<p>The focus of her investigation is thus conduct. This is underscored and fleshed out by the <a href="http://www.gov.za/sites/www.gov.za/files/Act23of1994.pdf">Public Protector Act</a>. The Act empowers her to investigate, among other things: maladministration, abuse of power, dishonest acts or omissions, improper enrichment, and acts or admissions which result in unlawful or improper prejudice to any other person.</p>
<p>In this case, the Public Protector claimed to approach her investigation by asking two questions: what happened? And, what should have happened? </p>
<p>The first is a question of fact. But to answer the second question she notes that the focus moves to</p>
<blockquote>
<p>the law or rules that regulate the standard that should have been met by the government or organ of state to prevent maladministration and prejudice. </p>
</blockquote>
<p>In other words, it is the law that provides the points of reference which tell her whether the banks and government’s acts or omissions constitute misconduct.</p>
<p>But what the Public Protector wants to do is to change the law itself. She is not satisfied with determining whether the Reserve Bank and government obeyed the relevant, current rules: she wants to write new ones. </p>
<p>Indeed, her recommendation goes well beyond changing individual rules to overturning their very foundation, anchored in the Constitution. She has ordered that a major decision of the <a href="http://www.sahistory.org.za/article/drafting-and-acceptance-constitution">Constitutional Assembly</a>, which drew up the Constitution following the first democratic elections in 1994, on a complex matter of economic policy, be thrown out.</p>
<p>This can’t be right.</p>
<h2>No precedent</h2>
<p>We must not be persuaded that there is any precedent for this. In her <a href="http://www.da.org.za/wp-content/uploads/2016/11/State-of-Capture-14-October-2016.pdf">“State of Capture”</a> report, the previous Public Protector, <a href="https://theconversation.com/how-south-africas-public-protector-has-set-a-high-bar-for-her-successor-63891?sr=1">Thuli Madonsela</a>, found that members of Cabinet had violated their obligations under the Constitution and the <a href="http://www.saflii.org/za/legis/num_act/emea1998252.pdf">Executive Members Ethics Act</a> by failing to prevent the misuse of state funds to upgrade the president’s private residence. </p>
<p>Part of her remedial action was to recommend that the secretary of Cabinet update the policy to provide ministers with more detailed guidance, and to recommend that the minister of police review the Apartheid-era <a href="http://www.gov.za/sites/www.gov.za/files/39147_gen874.pdf">National Key Points Act</a>. This review was required to clarify the Act’s application and to bring it in line with the Constitution. </p>
<p>There are two major differences between these recommendations and an instruction that a constitutional provision be reworded in a specific manner.</p>
<p>Mkhwebane prescribed the exact wording of the new provision. She said that the clause which currently reads:</p>
<blockquote>
<p>The primary object of the South African Reserve Bank is to protect the value of the currency in the interest of balance and sustainable economic growth in the Republic.</p>
</blockquote>
<p>Should instead <a href="http://www.pprotect.org/library/investigation_report/2016-17/Report%208%20of%202017&2018%20Public%20Protector%20South%20Africa.pdf">read</a>: </p>
<blockquote>
<p>The primary object of the South African Reserve Bank is to promote balanced and sustainable economic growth in the Republic, whilst ensuring that the socio-economic well-being of the citizens is protected.</p>
</blockquote>
<p>This is quite a different matter. Neither of Madonsela’s recommendation sets out the wording of the new provisions, merely the goal they should achieve. And each is aimed at bringing the relevant provisions into compliance with higher laws to which they are subject – either the Executive Ethics Act or the Constitution itself. And this is because it is the job of the Public Protector to remedy specific misconduct, and the job of Parliament to make laws.</p>
<p>In its <a href="http://www.news24.com/SouthAfrica/News/full-text-constitutional-court-rules-on-nkandla-public-protector-20160331">judgment on the Nkandla case</a>, the Constitutional Court held that the Public Protector is subject “only to the Constitution and the law”. But she <em>is</em> subject to them. And the Constitution sets out a specific, thorough process for the passing of any law, and particularly a constitutional amendment. </p>
<p>The elected representatives of the people are meant to debate all laws and fashion them into the form they believe is best for the country. If the wording of any law is determined in advance of this process, then the process itself is rendered meaningless. The Constitution’s law-making requirements are discarded.</p>
<p>The Public Protector cannot throw out the Constitution. Her remedial action is therefore invalid.</p>
<h2>Effects of the recommendation</h2>
<p>If taken seriously, her recommendation has the potential to influence current political debates on economic development in South Africa, supporting the line advanced by groups such as <a href="http://blackopinion.co.za/2017/02/18/black-first-land-first-marches-reserve-bank-demand-absamustpay/">Black First Land First</a>, and reducing the independence of one of the few public bodies which has not yet been tainted by evidence of state capture.</p>
<p>But if this was the intention, it could backfire, because the Public Protector can bring this influence only if she enjoys legitimacy in her own right. She does not, in part due to her <a href="http://www.sowetanlive.co.za/news/2016/10/20/busisiwe-mkhwebane.-bares-claws-towards-thuli-madonsela">hostile treatment of her predecessor</a> and a perceived unwillingness to take steps against <a href="http://ewn.co.za/2017/06/16/listen-mkhwebane-denies-being-selective-in-state-capture-probe">President Zuma and his allies</a>. </p>
<p>She laid a criminal charge against her predecessor on receiving a complaint from the president, and then attempted to <a href="http://www.sabc.co.za/news/a/4c9659804f2266a094cdd570ce873b7f/Public-Protector-says-she-did-not-lay-charges-against-Madonsela">deny the legal import of her action</a>. Staff closely associated with the former Public Protector or the State Capture report appear to have been <a href="http://www.huffingtonpost.co.za/2017/02/05/thuli-madonsela-staff-who-worked-on-the-state-capture-are-being_a_21707478/">forced out of their jobs</a>.</p>
<p>Mkhwebane could have found better ways of proving that she does not have a hidden political agenda than by <a href="http://www.pprotect.org/library/investigation_report/2016-17/Report%208%20of%202017&2018%20Public%20Protector%20South%20Africa.pdf">producing a report</a> which throws her legal acumen into serious doubt. </p>
<p>Her foray into economics is also deeply embarrassing, as she justifies a drastic change in economic policy with eight lines of text, citing no authorities in economics and no evidence that her preferred approach does in fact, uplift the poor. </p>
<p>Her report is likely only to reduce the standing of her own office.</p><img src="https://counter.theconversation.com/content/79931/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Cathleen Powell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The public protector’s proposal to change the mandate of South Africa’s Reserve Bank goes well beyond changing individual rules to overturning their very foundation, anchored in the Constitution.Cathleen Powell, Associate Professor in Public Law, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/693612016-11-24T11:27:14Z2016-11-24T11:27:14ZWhy credit ratings matter and why they can’t be ignored<figure><img src="https://images.theconversation.com/files/147339/original/image-20161124-15330-cbwrbg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">South Africa faces a possible downgrade by credit rating agencies.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p><em>This article was first published in 2016 as South Africa faced a possible downgrade by rating agencies. The Conversation Africa’s Charles Leonard asked Mampho Modise to explain the significance of a rating agency downgrade.</em></p>
<p><strong>What do the agencies look at in the process of reviewing a country?</strong></p>
<p>In their rating <a href="http://faculty.nps.edu/relooney/3040_2.pdf">methodologies</a>, rating agencies have developed rating criteria for assessing the performance of key macroeconomic and socioeconomic indicators. By assessing the indicators, the rating agencies are able to determine the borrower’s ability and willingness to honour debt obligations. </p>
<p>Rating criteria focus on the following components and indicators: </p>
<ul>
<li><p><strong>Economic structure and performance:</strong> Real GDP, per capita income, headline inflation rate, gross investment as a percentage of GDP and gross domestic savings as a percentage of GDP.</p></li>
<li><p><strong>Government finances:</strong> Government revenue to GDP, government expenditure to GDP, government debt to GDP, debt interest payment to revenue and the budget balance as a percentage of GDP.</p></li>
<li><p><strong>External payments and debt:</strong> Current account balance as a percentage of GDP, the ratio of external debt to GDP and level of official reserves.</p></li>
<li><p><strong>Susceptibility to event:</strong> Political risk, socioeconomic risk, external vulnerability risk and institutional independence. </p></li>
</ul>
<p>When reviewing the sovereign ratings, rating agencies hold discussions with various stakeholders in government, labour, civil society and the private sector. The reason the private sector is included is for the rating agencies to get an independent view on government policies and strategies.</p>
<p><strong>What do they do with their results?</strong></p>
<p>Once their reviews are concluded, the agencies will announce credit rating opinions which will reflect the borrower’s credit worthiness. That is the likelihood that the borrower will pay back a loan within the confines of the loan agreement, without defaulting. </p>
<p>A high credit rating indicates a high possibility of paying back the loan in its entirety without any issues. A poor credit rating suggests that the borrower has had trouble paying back loans in the past, and might follow the same pattern in the future.</p>
<p>The credit rating opinions are used by various stakeholders and for different reasons.</p>
<p>Firstly, investors use credit ratings as a guide to their investment decisions. Credit ratings provide an independent and objective assessment of the credit worthiness of countries and corporations. This assists investors to decide how risky it is to invest money in a certain country or corporation. </p>
<p>Secondly, for corporations and governments who want to raise money in the capital market, a favourable rating means a country will be able to obtain funds at a lower cost.</p>
<p>Lastly, governments could also use credit ratings as a measure for gauging their performance relative to peers to effect improvements. </p>
<p><strong>Which political developments in South Africa are likely to have an impact on the reviews?</strong></p>
<p>A few areas of concern have been cited.</p>
<p>The outcome of the <a href="http://ewn.co.za/2016/08/25/ANC-Divided-Confused-No-plan--Except-in-Gauteng">2016 local government elections</a> is one. The rating agencies are concerned that a drop in the voter percentage could result in fiscal loosening to draw votes back to the ruling party.</p>
<p>Another concern is the <a href="http://ewn.co.za/2016/10/11/Finance-Minister-Pravin-Gordhan-issued-with-summons-for-fraud">charges</a> instituted against the Minister of Finance Pravin Gordhan and later <a href="http://www.bbc.com/news/world-africa-37822600">withdrawn</a>. This threatened the institutional stability and integrity of the National Treasury.</p>
<p>And the political disagreements on the findings of the <a href="http://www.news24.com/SouthAfrica/News/statecapturereport-live-the-public-protector-has-been-ordered-to-publish-the-state-capture-report-20161102">state capture report</a> threatened the institutional independence of the office of the Public Protector and the courts.</p>
<p>Finally, the upcoming <a href="http://www.news24.com/SouthAfrica/News/early-anc-elective-conference-a-non-starter-20160908">elective conference</a> for the governing African National Congress (ANC) in 2017 is raising a concern on policy continuity and predictability. </p>
<p><strong>Do the agencies operate in every country around the world?</strong></p>
<p>Not necessarily. Rating agencies can operate unsolicited. But major rating agencies such as <a href="https://www.moodys.com/Pages/atc.aspx">Moody’s Investors Service</a> (Moody’s), <a href="https://www.spglobal.com/">S&P Global Ratings</a>(S&P) and <a href="https://www.fitchratings.com/site/home">Fitch Ratings</a> (Fitch) are solicited by countries to provide credit ratings. </p>
<p>Moody’s operates in 36 countries, S&P in 28, and Fitch in more than 30 countries.</p>
<p><strong>What happens to a country downgraded to junk status?</strong></p>
<p><a href="http://www.fin24.com/Economy/sa-junk-rating-seems-inevitable-economists-20161118">Junk status</a> is associated with high risk. Therefore, high borrowing costs. This is the main reason why a sovereign has to avoid being downgraded into a junk, or sub-investment grade. </p>
<p>For fund managers (who are representing the investors) a downgrade to junk status means they will have to sell the assets (bonds) they hold. Their mandates require that they only invest in investment grade assets.</p>
<p>For an ordinary person it means paying more interest, leaving little money for savings and expenditure on rent, school fees and food.</p>
<p>For governments it means allocating more to debt servicing costs (interest payment). Less money will be available for social grants, investment priorities, creating jobs and ultimately reducing the GDP growth potential of the country. More interest payment also crowds out other critical spending. Social services is an example.</p>
<p><strong>Is it possible for a government to simply ignore their ratings?</strong></p>
<p>Not really. Solicited credit ratings ensure easy access to international capital markets. Favourable credit ratings imply low borrowing costs. The South African government has solicited credit ratings from the top agencies to ensure that it can easily and cheaply access foreign funding needed to accomplish its economic development agenda. </p>
<p>South Africa therefore can’t ignore the credit ratings assigned to it, especially given that foreign investors hold more than <a href="http://www.treasury.gov.za/documents/national%20budget/2016/review/chapter%207.pdf">30% of government debt</a>.</p>
<p><strong>Which agency is taken most seriously?</strong></p>
<p>Sovereign credit rating is the most concentrated industry. There are approximately <a href="https://theconversation.com/qanda-why-credit-rating-agencies-matter-for-developing-countries-51964">70 rating agencies</a> globally. But most investors base their investment decisions on the credit ratings published by Moody’s, S&P and Fitch. These three control approximately 95% of the rating business.</p><img src="https://counter.theconversation.com/content/69361/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mampho Modise is affiliated with National Treasury</span></em></p>Credit ratings have an impact on government, as well as ordinary people. This article was first published last year as South Africa faced a possible downgrade.Mampho Modise, Post graduate researcher, University of PretoriaLicensed as Creative Commons – attribution, no derivatives.