/ 29 June 2022

‘It takes two to tango’: The private sector must ’fess up to role in state capture

South African Justice Raymond Zondo Hints On A Possible Extension Of The Inquiry Into State Capture
Chief Justice Raymond Zondo. (Photo by Veli Nhlapo/Sowetan/Gallo Images via Getty Images)

Far too few private sector players were transparent about their roles in alleged state capture-era corruption.

This was one of the messages that came out of a webinar hosted by the National Business Initiative on private sector reflections on the Zondo commission, which handed over the final instalment of its report on state capture to President Cyril Ramaphosa last Wednesday.

Stephen van Coller, group chief executive of EOH, called private sector participation in the commission “disappointing”. EOH became embroiled in the state capture saga when the IT services company allegedly donated millions of rands to the ANC in exchange for City of Johannesburg tender awards. In 2020, Van Coller appeared before the commission, chaired by Chief Justice Raymond Zondo. He gave evidence of irregular money flows at EOH, which was unearthed by law firm ENSafrica.

In the fourth instalment of his report, which dealt with EOH’s alleged collusion with the City of Johannesburg, Zondo commended the firm, under Van Coller, for disclosing its wrongdoing. “There is no other company that has been of greater assistance to the commission in relation to the investigation of historical wrongdoing within its ranks,” he said

On Wednesday, Van Coller said Zondo’s statement was disconcerting because “as we know, we definitely were not the only company”.

“There were lots of multinationals. And I just think unless corporates deal with these things transparently and openly, we will never actually get the truth out. And we will never actually, as a country, deal with these problems. I suppose that was a little bit disappointing for me that other companies weren’t prepared to actually help the Zondo commission.”

Van Coller said the commission’s findings contained a good lesson for corporate South Africa. “We all need to be very vigilant, because the government can’t be corrupt on its own. It takes two to tango. And in all these situations there was the private sector behind it.”

Van Coller added that confessing to EOH’s wrongdoing has helped the firm in the long term. “Clearly, we have seen the benefit of it. Because we’ve now come out the other side. We’ve got our credibility back. And we are now transacting properly with corporate South Africa.”

Sarah Meny-Gibert, of the Public Affairs Research Institute, said the private companies implicated in state capture “were not so much victims of abuse by rotten apples in their own ranks, but their leadership was actively involved in corruption”. It thus becomes important for those firms to reform their institutional culture.

“We need a balance between regulatory interventions that have a bit of a stick for the private sector, but then also the space for voluntary action — in which concerned business can set the tone for integrity, as the new leadership of EOH is doing,” she added.

Meny-Gibert said companies might take anti-corruption compliance more seriously, if they see visible enforcement from the government.

She noted that South Africa’s procurement system was “the major site of private collusion” during the state capture era. 

According to Zondo’s final report, more than R57-billion in public funds were tainted by state capture — 97% of which was syphoned from two of the country’s most fragile state-owned entities, Transnet and Eskom. The two companies are now at the heart of South Africa’s economic woes, with their declines dealing a devastating blow to business and investor confidence.

“I think there’s a role for concerned organised business to become a prominent champion of more open and public procurement,” Meny-Gibert said, adding that research has shown that open public procurement enhances competition and allows the government to make better procurement decisions, which ultimately benefits businesses.

After the release of Zondo’s final report, the chief executive of Business Unity South Africa, Cas Coovadia, reiterated that the commission’s findings constitute a watershed moment for the country. 

He said the reports “also provides an opportunity for the private sector to introspect, learn lessons and ensure businesses operate in a sustainable and ethical manner in undertaking their businesses”.