Editorial: Putting ethics ahead of profits

Private companies are not democratically accountable to us, the South African people. They are accountable to their shareholders. (Paul Botes, M&G)

Private companies are not democratically accountable to us, the South African people. They are accountable to their shareholders. (Paul Botes, M&G)

We can’t expect private companies to act in the best interests of people. After all, they have a duty to reward their shareholders for their investment. The whole point of their existence is to make a profit.

Public institutions and publicly owned enterprises, however, are meant to serve us. They are meant to ensure that, by providing services, they establish the conditions to ensure a just and equitable society.

Of course, the government has often fallen short of its responsibilities. Over the past 23 years, these pages have been filled with hundreds of thousands of words tracking the ANC government’s failure to serve its people. Last week, for example, Sipho Kings reported yet again on the sewage problem that could cause widespread devastation – the result of insufficient care being taken by the relevant officials. Let’s not even mention SAA, Eskom and other parastatals that should be serving the people, providing services and growing infrastructure, but which are in a state of advanced disarray and, instead, are costing the national fiscus a fortune.

A rejoinder to these stories is often a cry for more privatisation and less government. The private sector in South Africa, vast, sprawling and intricate, has largely been held up as a model of good governance, transparency and accountability – everything the government is not. It is seen by many as trustworthy – definitely worth the debit orders.

Private business inevitably flows to fill gaps left by the government, as in the private security industry, which does much of what the police should do. But private security benefits only those who can pay for it.

Likewise, a fortunate 20% of the population enjoys the ministrations of the 80% of trained medical professionals who are in private practice. The inclination to further entrench the reach of the private sector to plug the gaps left by the government will be our doom.

For one, private companies are not democratically accountable to us, the South African people. They are accountable to their shareholders. In recent weeks, the extent to which several private companies – Bell Pottinger, KPMG, McKinsey, SAP and Software AG – appear to have aided the alleged capture of the state by the Gupta family has been exposed. These are private firms with a global footprint. They show that the argument for increased privatisation to introduce more competition, reduce costs and improve quality and customer care is a pipe dream.

The greedy accumulation of profit is aided by weak governance, lack of process and the paralysis of public institutions. And it is not just big corporates doing business with the government that have fallen short. The private sector is exclusionary and its objectives often run counter to the ideals of a just and equitable society.

But the private sector does have the capacity to self-correct; it can learn principles. The decision by JSE-listed asset manager Sygnia to fire KPMG over its alleged role in aiding state capture is especially significant – it is an appeal by the private sector to both the private and public sectors to prove that their existence is not a threat to the welfare of the South African people.

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