Business

Songezo Zibi: Nkandla exposes corporate rot

Songezo Zibi

It is fashionable to blame politicians for a lack of ethics, but they are abetted by business

Banks have unfairly assisted Jacob Zuma because of his political position. (Rogan Ward, M&G)

Last week the Mail & Guardian published online the <a href="http://mg.co.za/article/2012-12-07-00-secret-report-reveals-how-millions-flowed-to-zuma" target="_blank">full version of the KPMG report</a> central to the National Prosecuting Authority's neutered corruption case against President Jacob Zuma. The report also details how some of South Africa's major banks broke their own rules to lend him money they knew he could not possibly repay out of his known income.

Although much is known and said about Zuma's poor relationship with rules very little attention has been paid to the banks' casual attitude towards breaking rules to service the egos of the elite. This example must raise serious questions about the extent to which various institutions bend or break the rules to accommodate powerful people but  apply punitive measures to those who do their best to play by the rules.

Schabir Shaik might have been sentenced to 15 years in a prison hospital for bending the rules with Zuma, but there has been absolutely no consequence for the banks or the officials who broke the rules to accommodate him. Questions about what they expected in return for this special treatment have not been asked, but they should be. In effect, they put the bank's money at risk for an as yet undisclosed return on that risk. It is scandalous.

This cavalier behaviour by the banks, which probably continues to this day, is a symptom of a deeper problem afflicting South African society: the weakness of institutions despite a façade of strength premised on the legal arrangements that gave rise to their formation. They are open to undue external influence and abuse by those entrusted with ensuring their optimal condition and performance.

They look strong, but are otherwise weak because they suffer from a critical deficit in the relationship between intention and action. This weakness is caused by several factors that do not originate in the institutions themselves, but in our degenerative political culture, which is the cradle of institutional formation. This culture has given rise to godfather politicians whose view of public service has long been inverted and who see themselves as overlords of everything else. Consequently, they also believe institutions of state and those they oversee must dance to their tune, no matter how offensive to the senses.

Validating this attitude requires the appointment of people whose resolve is weak and conscience is corruptible to head critical institutions. Thus they may abuse the legitimacy of these institutions and give an appearance of propriety to decisions at odds with the principles governing them.

Intervening
It also leads them to try to influence the appointment to directorship of private institutions those individuals who defer to the God complex afflicting many of our politicians. When they succeed, this results in a general culture in which unwritten rules become the norm and ordinary functionaries understand that bending the rules for certain powerful individuals will please their bosses.

This is what South Africa has become. The institutional rot is the reason why we cannot deliver textbooks to schools in Limpopo, a section 100 intervention in the Eastern Cape gets ignored, or credit lending rules are treated as an inconvenience. It is also why the government has somehow avoided intervening in the Northern Cape, despite the province's finance MEC facing serious criminal charges involving theft of public funds.

Through such scandalous choices and outcomes, we make clear that ethical probity and competence do not matter and rules apply to some and not to others. This attitude permeates the rest of society like a cancer and normalises behaviour that should otherwise be shunned.

It should therefore not be surprising that our banks bent over backwards to provide huge credit facilities to an insolvent client they should not have touched with a barge pole. We have a culture that reveres politicians, in particular those in the ruling party because of their role in the struggle. This reverence has led to a toxic mix and the belief that assenting to their needs, no matter how unreasonable, may result in greater business opportunities from the state's lucrative procurement pond.

Critical to the achievement of a stable, economically prosperous society is a solid institutional framework in which those who oversee institutions treat the principles that govern their actions as sacrosanct. To entrench the rule of law, the application of those laws must be just and consistent.

Justice and consistency can only be achieved by combining competence with ethical probity. When individuals are weak and unethical, there is little chance that justice and consistency can be achieved.

Enough substance
As the 53rd national conference of the ANC commences in Mangaung, a discussion document on reviving the rule of law and the independence of institutions is conspicuous by its absence. There is also no discussion about providing greater access to government and other information to ordinary citizens. Instead, we have various state enterprises, including Telkom, SAA and the SABC, in turmoil, a presidential scandal involving almost R250-million and business elites that will flock to the conference in apparent endorsement of the very malfeasance they hypocritically complain about.

This state of affairs exemplifies perfectly the reason why South Africa is nowhere near solving any of its problems. There is much noise, but there is not enough substance and truth in the discussions that ensue because the elites across the private and public sectors do not want to expose and disintegrate the very arrangements that keep them indebted to one another. They believe it is possible to paper over the cracks and yet deliver the kind of outcomes that will form the foundation of a more prosperous society. It is a most astonishing delusion.

And so banks will continue lending to insolvent politicians. A selected few will continue to benefit from lucrative private-sector deals because they live at the right addresses and have the right surnames or, more fashionably, are close to the nexus of ANC power. This arrangement will be kept in place at all costs despite any pronouncements to the contrary, because it is the oxygen that keeps the political system in place.

Like our politicians, some in the business sector often suffer from selective morality. They complain about political corruption while they promote nepotism and cronyism of a class and political kind.

At the heart of this tragedy is the abuse of institutions that should regulate this destructive behaviour – and they are dying. Before these institutions collapse, it will be their credibility and legitimacy that die, signalling the birth of open anarchy. The next time any of our financial or any other institution bends over to please a political godfather, they might want to pause and reflect on the legacy they are creating.

It is easy to blame just the politicians, but they cannot complete their handiwork without willing accomplices in the private sector. The Zuma case illustrates just how long ago this rot began.

We must all be very concerned.

Songezo Zibi belongs to the ­Midrand Group of social, economic and political commentators

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