The investigation and prosecution of businessman Gaston Savoi and his politically connected cronies over allegations of massive tender rigging, corruption and fraud were celebrated last year as evidence of the government’s willingness to tackle high-level sleaze.
The scandal was widely seen as emblematic of the way corruption hobbles crucial areas of service delivery.
The charges against Savoi, Northern Cape strongman John Block, Ithala bank chief executive Sipho Shabalala and others centre on the sale by Savoi’s Intaka of water-purification and oxygen machines to provincial departments at massively inflated prices, with the help of politicians who allegedly took substantial kickbacks.
However, the unravelling of Savoi’s empire of influence offers a disturbingly detailed insight into the structural corruption at the nexus of political party funding, state tenders and black economic empowerment regulation.
The Mail & Guardian has been broadly supportive of BEE as an instrument to reverse centuries of racial discrimination and to crack open the concentrated ownership of the economy. But our reporting this week makes it clearer than ever that in an environment of unregulated party funding and political deployment it can quickly become an instrument of, and excuse for, straightforward corruption.
Savoi admitted this week that he gave the ANC R3,6-million in donations “in the interest of democracy”. Add the fact that the board of directors of each of Intaka’s provincial subsidiaries all but resembled a sub-committee of the provincial ANC executive and it appears Savoi’s business model was based on a crude strategy to buy off the ruling party.
But what if that has become the only way to do business with the state, especially if you’re a foreigner? Savoi’s defence in his criminal trial will seemingly be that he simply followed the instructions of the proper authorities as he entered the country and sought guidance on how to fulfil BEE criteria.
After all, it was then trade and industry minister Alec Erwin’s go-to man, Rafique Bagus, who was the architect of his connected corporate structure. When in Rome, Savoi might say, do as the Romans do and as the emperor instructs, and to single him out now is just another example of selective prosecution.
Savoi would be wrong, of course. An illegal instruction, even from the emperor, remains an illegal instruction and does not relieve the culprit of his or her culpability. But he would be right too, as it takes two to tango. When corruptor and corruptee lock in embrace, dancing to the same influence-peddling, kickbacking tune, the one is as guilty as the other.
Morally in the dock with Savoi belong not only the few individuals directly implicated in his alleged corruption, money laundering and fraud, but all who helped erect, participated in and benefited from his connected corporate structure.
Until there are clear rules to regulate and make party funding transparent, to remove the impression that the route to a state tender is via Luthuli House, and unless mechanisms are found to bring BEE back to its laudable purpose, the Savoi business model will soon be the only one in town.
Companies Bill slips up
It was one of those seemingly minor changes that can all too easily slip through the legislative process, a single word with far-reaching consequences.
So perhaps it is not surprising that no one but the Mail & Guardian‘s Centre for Investigative Journalism noticed that the Companies Amendment Bill greatly reduces private-sector transparency.
The Bill has had a controversial time in Parliament for all sorts of reasons, ranging from the legal liability of directors to its numerous drafting errors, but much less discussed is the change to the legal requirement that companies make public information on shareholders and directors when asked.
As the law currently stands, company directors’ records are readily ascertained via the Cipro database and auditors are required to make share registers available for inspection on request.
If it is enacted in its current form, the Bill will make it dramatically harder for potential investors, researchers, journalists, activists or members of the public to obtain this information.
The Bill effectively makes it possible for companies small and large to keep the most basic details of their ownership and control confidential, subject to a request under the cumbersome and often poorly implemented Promotion of Access to Information Act, which by no means guarantees that access will be granted.
As the investigative centre’s attorney, Dario Milo, told Parliament this week, limiting access to company information of this kind will make it harder to analyse economic power and transformation claims, to investigate the shareholding of public officials and, indeed, to make investment decisions.
Data of this kind is crucial to understanding how financial interests shape decisions both in the private and public sectors and it is a crucial instrument not just of accountability, but of free and open economic activity.
Fortunately, the problem can be remedied by the tiniest nip and tuck to the draft legislation. If it isn’t done, we will have to conclude that members of Parliament want to help companies hide from scrutiny. We trust that is not the case.