Corruption Watch

Corruption epidemic takes hold of South Africa and world

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South Africa should not have been surprised by the apparent ‘corruption epidemic’ that has been highlighted of late in the eruption of the controversy over the relationship between President Jacob Zuma and the Gupta family.

But neither should the world have been surprised about the exposure of a similar worldwide epidemic by the so-called Panama Papers, last week on the internet.

In both instances there were ample warnings and, on closer analysis, there is good reason to believe that we are only witnessing the top of the iceberg and that the problem runs much deeper and wider than is generally perceived.

In South Africa’s case

Some time ago, in 1996, two years after South Africa became a full democracy and the same year its democratic constitution was enacted, Robert S. Leiken, who consults on governance for public and private organisations and is the president of New Moment, Inc., a non-profit group that works on international democratic issues, published a paper under the title Controlling the global corruption epidemic.  

Particularly pessimistic about the developing world, he wrote about the postcolonial era: “After achieving independence, indigenous elites improved on (colonial power’s) … methods of bilking their impoverished countrymen, usually using methods that were based on local custom. The corruption epidemic is not simply a reappraisal of once legitimate practices; it is also the modernization of illegitimate and odious ones. 

“In postcolonial Africa, neopatrimonial regimes became the rule and the state emerged as an extension of the ruler’s household; patronage, ethnic and kinship ties, and bribes became major modes of governance. Corruption-funded patronage to kinsmen and cronies has exacerbated regional, tribal, religious, and ethnic divisions and contributed to a continual fiscal haemorrhage.”

All of these word should very familiar to the present-day South African ears from news items over a wide spectrum of societal structures.

An example that Leiken uses also illustrates that corruption also goes way back in, and was inherited to some extent from, colonial history. He recalls how in 1788 Edmund Burke assailed the colonial administration of Warren Hastings in Bengal as: “Bribery, filthy hands, a chief governor of a great empire receiving bribes from poor, miserable, indigent people, this is what makes government itself base, contemptible, and odious in the eyes of mankind.”

In 1996 Leiken was hopeful that with modernisation and the development of anticorruption movements and organisations like Transparency International, independent media, a “revolution in public opinion” global competition and international treaties, among others, would see “the combination of popular protest, international pressure, international aid and government reform ...” supply the antidote to the current epidemic of corruption.”

A look at the headlines, both locally and across the world, seems to suggest the opposite has rather happened.

In one respect, however, he has been proved correct: “Studies show that corrupt procurement practices cannot only double the price developing countries pay for goods and services but can also scare off foreign investors.  A recent National Bureau of Economic Research study demonstrates that U.S. businesses invest less in countries perceived as corrupt. If globalization and the trend toward securitization mean that business confidence is critical, then controlling corruption becomes a function of self-interest for developing countries.” 

The global case

In 2012 the US-based Business News Daily under the headline “Corporate Corruption Is a Global Epidemic” reported about a Gallup poll that has found that 60% of US and Canadian residents consider corruption common in the workplace, while 76% of residents in sub-Saharan Africa felt nefarious activity was going on in their business community.

The study also found that in several regions, results vary widely across countries that are in different stages of development. In Asia, only13% of residents in highly developed Singapore perceive corruption as widespread, while nearly nine in 10 in neighbouring Indonesia believe it’s a problem.

Interestingly, it was found that Georgia’s perceived business corruption has dropped significantly since 2006 after efforts to eradicate corruption with a zero-tolerance anti-corruption campaign.

Nothing has blown the perception that corruption is largely a developing world, especially African, problem more out of the water than the Panama Papers, which have seen governments across the world, including South Africa, launching investigations in its wake.

According to last year’s Transparency International (TI) report “Corruption Perceptions Index”, 68% “of countries (with 177 countries measured) worldwide have a serious corruption problem. Half of the G20 are among them”.

And these international indexes do not always get it quite right, either. Ironically, Iceland, whose prime minister just had to resign after the publication of the Panama Papers, in the 2015 IT report was ranked 13th in the world with 79 points out of 100. This puts it on a level with Australia and two positions ahead of the US on 76 points.

More than a government problem

That corruption is a much wider problem and much deeper, often reaching down to the most personal level, is well illustrated by just three news items from last week:

  • It does not appear on any list of big companies in the world, but from the Panama Papers we now know that the family business Monaco Unaoil has for the best part of the past two decades systematically corrupted the global oil industry – distributing many millions of dollars worth of bribes on behalf of corporate behemoths including Samsung, Rolls-Royce, Halliburton and Australia’s Leighton Holdings;
  • France’s financial prosecution service (PNF) opened an investigation into allegations of corruption and embezzlement at the French Tennis Federation relating to the sale of tickets for the French Open Grand Slam tennis tournament at Roland Garros; and
  • More than 100 staff members have been dismissed by the South African Broadcasting Corporation for fraud related to their medical aid.

Is there a solution?

Considering that, as written by South African author Bryan Britton in his book of 2010, Stepping Stones, elements of corruption were already present in the period 970 to 930 BC under the reign of King Solomon, there is probably no final or absolute solution.

What is, however, clear from the Panama Papers is that transparency could be helpful to curtail it and stronger international treaties on this front are probably needed.

And, as the case of Iceland where huge public protests forced the prime minister’s hand proved, strong and lively civil society engagement is also a useful tool on this front.

Also read: Tax havens: shielding the legitimately shy as well as criminals

                   The Panama Papers and the South African connection

by Piet Coetzer

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