Global Watch

Global systemic crisis explode on South African stage

Don’t expect big 2019 voter turnout
Election.jpeg

Whoever is elected at the end of this week as new leader of the governing ANC will not change the fact that a global systemic crisis has reached the country’s shores.

While South African attention has remained mainly fixated on the African National Congress’s elective conference, starting on Saturday, the fact that it happens amid a global systemic crisis received scant consideration from commentators. However, the global crisis not only complicated the election of the new leader, which the ANC hope will become the country’s new President in 2019, but also contributed to the fact that the party itself is in crisis.

In July last year we carried an article which stated: “Society (globally)is undergoing a profound transition, akin to the end of feudalism 500 years ago in Europe, but this time around, on the back of new technologies, it is happening on a global scale.

We also quoted from a book, Postcapitalism: A guide to the future, by Paul Mason published at the time, and wrote:” How complicated, wide-ranging and globally interwoven this transition is, is evident from … following quote …: ‘Without us noticing, we are entering the post capitalist era’.”

And, it is not just a crisis on the economic and financial front. In May 2014 on the eve the last general election in the country we carried an article which stated: “democracy (is) in trouble locally and globally.” At the time we calculated that, due to the relative low registration of eligible voters, if 70% of the registered voters turn up at the ballot, only 56.3% of the eligible population would have taken part in the election.

As illustrated by what has since happened for example in France, where Emmanuel Macron won the national election that was then only 14 months old, the majority of society has clearly lost trust in ‘establishment’ political parties.

Likewise, in a word of growing income, and wealth, inequality the broad population has lost trust in business corporations. At the same time, globalisation has failed to put effective regulation of multi-national corporations, and accountability mechanism for their owners in place.

While scandals surrounding so-called state capture involving President Jacob Zuma, his family and friends, and the Gupta brothers have been around for some time now, the wider problems involving multi-national corporations suddenly exploded into prominence on the South African scene in most recent weeks. Companies like MultiChoice and it international holding company, Naspers and South African based global retail giant Steinhoff find themselves in clouds of controversy.

Faith in banks and other financial institutions, and even international auditing firms, like KPMG< who should act as watch dogs have also been badly shaken. Ex-South African, Lord Peter Hain has revealed how British banks have facilitated money laundering of ill begotten fortunes from South Africa.

Not just a South African problem

While Hain has been giving dedicated attention to efforts to get money looted from South African taxpayers returned to them, it became clear from a speech by him last week in the British parliament that the problem is much wider than a bank or two, or just South African money. It also became clear that the problems have been coming for some time.

Amongst other, he said: “In June 2011, the then (British) Financial Services Authority found shocking inadequacies in UK banks’ anti-money laundering controls, with a third of banks accepting ’very high levels of money laundering risk’ and three quarters of banks failing to take adequate measures to establish the legitimacy of the wealth they were handling.”

He added that “Instead of the FSA (now FCA) getting tough with banks, since 2010 only 10 people have been convicted under the Money Laundering Regulations – not one of them a bank. It’s hardly surprising therefore that there have been repeated money laundering scandals involving UK banks.”

From the speech it also transpired that earlier this year United Kingdom banks were also implicated in the laundering of ill-gotten money out of Russia.

And while South African regulatory and enforcement institutions are often in the news for not protecting the public diligently enough by enforcing accountability, it is clear from a report last week by the London Financial Times on the Steinhoff, that again, what happens in South Africa seems to be part of a global trend.

The paper list at least four “scandals in which company bosses have got away with effectively crooking the books or justice has been delayed.” These are: Indian software group Satyam admitting to manipulating its accounts in 2009, with its chairman sentenced only six years later; Let’s Gowex, a Spanish technology company, collapsed in 2014, with the chief executive telling fellow directors the accounts were untrustworthy and he was responsible. The case is ongoing; In 2015, the chief executive and chief financial officer of UK-listed tech group Globo resigned after telling the board that data had been misrepresented in the financial reports. Investigations are ongoing there, too; and In 2002, Xerox admitted overstating revenues. There have been no guilty verdicts even though executives, banks and auditors have paid settlements.

Can the ANC survive in government?

One of the more prominent consequences of the situation described above is the disillusionment of societies world-wide with official structures and institutions, reflected declining voter participation in elections. Not only is the party’s voter support set for the largest percentage decline, but having since 1994 deliberately integrating its party-political power with state institutions, it draws almost blame for institutional decline.

Its coalition with the South African Communist Party and labour union federation Cosatu is something of the past in all but name, and internal factionalism could see it splinter further and spawn more political parties competing with it.

Whoever get elected this weekend as new leader of the ANC cannot anymore be regarded as automatically on his/her way to becoming president of the country.

But, it could still happen, even in a coalition government, especially so if it is Cyril Ramaphosa. And, the Democratic Alliance (DA) just might be his partner in government.

After all DA leader Musi Maimane already claim that Mr. Ramaphosa has adopted his party’s policy.

Whatever happens, the only certainty is that uncertainty will dominate for some time to come and however governs, like politicians across the globe have their work cut out for them regain the respect and confidence of society.

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by Intelligence Bulletin Team

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