Big business: Politicking ‘amounts to subterfuge’

The timing could have been worse, but not by very much.

In early January the South African Chamber of Commerce and Industry (Sacci) wrote to government departments to formally express concern about new and revamped policies the powerful business umbrella group believed were not based on evidence, but would hit some companies right in the bottom line.

The letter was confidential, but the Mail & Guardian can now report that the issues listed were:

• Planned restrictions on the way alcoholic products can be marketed;

• Tobacco legislation, and the tightening of rules on the sale and use of tobacco;

• The planned credit amnesty for consumers;

• The activities of the Competition Commission; and

• The new draft framework for intellectual property protection.

In isolation each of these is controversial, to a greater or lesser extent. Presented together, however, they can easily be interpreted as prime examples of government attempts to protect consumers from harm, past or future, by big business – and all are politically sensitive.

Restrictions on the advertising of alcohol and the use of tobacco are touted as a way to save lives.

The Credit Amnesty Bill currently under consideration would wipe out the adverse information of about 1.6-million consumers held by credit bureaus.

Support for a crackdown on collusion or anti-competitive behaviour by the Competition Commission is widespread, especially in light of revelations that the price of bread and the cost of roads and stadiums have all been maliciously manipulated.

The move towards new intellectual property rules, meanwhile, has been framed as essential to make life-saving drugs accessible to the poor.

Overt opposition to any of those initiatives would be tantamount to political suicide, one senior ANC strategist said, even if 2014 was not an election year.

That, however, was not what raised eyebrows in government circles. It was the tight deadline set by Sacci.

"They felt that we had given them an ultimatum," said Neren Rau, the chief executive of Sacci, this week. "We had just stated the timelines that we had in mind, so we responded and said this is not an ultimatum, but that we felt urgency to address these matters."

Sacci immediately apologised, Rau said.

But at about the same time, the M&G last week revealed a proposed plan by United States lobbying group Public Affairs Engagement (PAE) to launch what many saw as an aggressive, covert attempt to influence government policy on what was arguably the least controversial of the issues identified by Sacci: intellectual property and, more specifically, the drug patents held by large pharmaceutical companies.

PAE proposed tactics, such as creating a front organisation that would give the appearance of being South African-based but would be directed from Washington in lobbying against reduced protection for drug patents.

The firm also said it would manipulate countries such as Rwanda and Tanzania to convince South Africa that its leadership position on the continent would be threatened by adopting weaker rules on safeguarding intellectual property.

Suddenly the smell of conspiracy was in the air.

"I thought that letter was innocent," Health Minister Aaron Motsoaledi told the M&G, referring to the approach by Sacci.

"We were going to respond and ask for a meeting; our doors are open. When I read that document [the lobbying plan prepared by PAE for consideration by multinational drug companies] I thought, was that letter innocent?"

Motsoaledi said the revelation of the kind of tactics that would even be considered by large companies in influencing policy had "forced" him to wonder who was part of a conspiracy against the public, and who was acting in good faith.

The health minister was not alone. In several of the departments Sacci had addressed in its letter (which included the treasury, the departments of trade and industry and economic development, and the presidency), officials at various levels said they would perhaps treat their dealings with business interests or large companies with greater suspicion or paranoia.

The ANC referred to "subterfuge" in commenting on the now aborted PAE plan; Cosatu called it "treachery". They, and many other groups, made no attempt to disguise their suspicions about the lengths to which big business in general will go to protect profits.

That is not exactly what lobbying groups want to hear.

"We always try to be cordial and respectful," said Rau of Sacci’s general approach to swaying policy, as one of the most influential representatives of big business in South Africa.

"It’s not that we are bowing down to them or backing off, but if the channels of communication are not open, if someone took offence to our letter and won’t speak to us anymore, we can’t make progress."

With elections likely to take place in late April things get tricky.

"There is the risk that during that time [April] what we will be hearing will be coloured by electioneering and everything will be clouded by that," Rau said, likening lobbying during elections to speaking to a chief executive during the month of an annual general meeting.

Sacci had in the past considered whether there were members "we want to continue to have a relationship with", Rau said in the context of maintaining cordial government relations, most notably when large construction companies were caught rigging billions in government tenders.

Sacci represents about 20 000 companies indirectly, by way of local business chambers associated with it, but many large companies hold direct membership, and those large companies are well represented on its board and in its structures.

If companies made mistakes and "diverged significantly from the values the chamber holds dear and didn’t show any remorse", a quiet expulsion might be appropriate, he said. But there had been no such expulsion in at least the past six years; construction companies had apologised and committed to doing better.

It is not clear what it would take for government officials to demand what would amount to a ritual sacrifice before returning to the negotiation table. Over the past decade various departments have been involved in very vicious, and very public, spats with everyone from banks to drug-makers. But those relationships have invariably been repaired sufficiently for the affected companies and groups to make their cases when law or regulation came to impact them.

Citizens may be less forgiving.

"We need the respect of the public," said Rau. "The public needs to trust Sacci and its members for us to operate."

And at times that trust has worn thin. Sacci’s position on urban freeway or e-tolls, for example, came to be seen as support for an implementation that is almost universally hated, and the backlash is still being felt.

In other instances, drug-makers, bioengineering companies and companies in pollution-intensive industries have found it much harder to regain lost public trust than to get meetings with ministers or a hearing in Parliament.


Cracks start to show in group’s unified front

Danish pharmaceutical company Novo Nordisk this week said it has resigned from the Innovative Pharmaceutical Association of South Africa (Ipasa) because the proposed lobbying campaign by the association serves neither its interests as a company nor those of the industry.

That leaves Ipasa with 25 ­member companies – but more are said to be considering their options in light of the public ­relations fallout after the revelation of the Public Affairs Engagement (PAE) proposal.

The organisation was created to present a unified front of pharmaceutical companies involved in primary research, as opposed to groups that also represent the makers of generic drugs.

One insider said the organisation is dominated by “aggressive” American companies, which often cause tensions within the group.

It appears that American companies are particularly keen to engage in the kind of lobbying proposed by PAE. The campaign, now abandoned, would not only have been run out of Washington, but would also have been largely funded by way of an American trade association for drug companies. Ipasa was due to provide a fifth of the $100 000 a month that was to be allocated to the project.

Meanwhile, this week the South African Chamber of Commerce and Industry said it has written to Ipasa and is awaiting a response on the PAE plan and the sequence of events that brought it to light. – Phillip de Wet

Phillip De Wet
Guest Author

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