Restore public service to stem corruption – Amandla 71/72

Restore public service to stem corruption – Amandla 71/72 Editorial

Amandla Editorial | Amandla 71/72 | 08 September, 2020

Factional battles have long been raging in the ANC. Zuma’s attack on the President before the August NEC took the battle to a new level. There have even been calls for Ramaphosa to stand down from the leadership of the ANC. At issue is corruption and the role of ANC in the state and business.

The liberal press has targeted corruption as the centre of its strategy to push back at crony capitalism, which is undermining the interests of orthodox and traditional capitalism. In this they are riding the wave of public revulsion now focused on the Covid-19 personal protective equipment scandals.

The dominant story is one the aspiring black bourgeoisie, frustrated at the slow pace of its capital accumulation. BEE has failed to put significant chunks of the economy in their hands. So they resort to the crudest forms of primitive accumulation – these are the tenderpreneurs. We cannot ignore them, and we will return to them below.

From tenderpreneurs to tenderporations

But first, let’s look at how this tenderpreneur story is also used to divert our attention from the other, daily corruption that is hidden from view.

From the earliest days of post-Apartheid South Africa, major corporations have corrupted the state by offering bribes in order to get lucrative contracts. The arms deal is a prime example – French firm, Thales, stands in the dock alongside former President Jacob Zuma. As Open Secrets put it, “this arms company faces its own charges of fraud, corruption and money laundering, all linked to paying bribes to undermine South Africa’s democratic institutions.” If it were not for the active undermining of the investigation, Swedish, British and German arms corporations would also be in the dock. These corporations are acting in exactly the same way as the “tenderpreneurs”. Perhaps we should call these corporations “tenderporations”.

Then there are the monopolists of the South African economy. Think of the many cases involving the major domestic and foreign construction companies, food companies, banks etc. in price collusion. Or accounting fraud – look at Steinhoff and Tongatt Hulett to name but two. And let’s not forget their accomplices – the KPMGs and PWCs of this world – global corporations eager to share in the profit.

And finally, there is a special, pervasive and financially crippling form of corruption involving the biggest corporations. Every day, while we complain, rightly, about millions of rand being drained in corrupt Covid tenders, hundreds of millions of rand is siphoned out of South Africa to tax and secrecy havens. That’s direct theft from the Treasury of the tax that should have been paid. Theft of public funds. And also, by dramatically understating profit, it is theft from the wage bargaining table. It’s no different to direct theft from Eskom or Transnet, except that there’s much more money involved. In South Africa, several transnational corporations have been exposed in this form of corruption, including Lonmin, Samancor, Total Coal, Glencore, De Beers, Coca Cola, to name but a few.

The tenderpreneurs

Now we can return to the tenderpreneurs, now that we see that they are not alone in this trough. And it is easy to blame the individuals. Like Trump with the white policeman who shot Jacob Blake seven times in the back in Kenosha, we can blame “bad apples”. On the other hand, like the Black Lives Matter movement, we can say – it’s too frequent, it’s too endemic, it’s too constant to be just bad apples. There is something wrong with the entire tender system.

Regrettably, Cyril Ramaphosa’s approach is fundamentally the same as Trump’s – deal with the individuals. Or, as he put it in his letter to the ANC: “we now need to draw a line in the sand. We need to act urgently, we need to be decisive and we need to demonstrate a clear political will.”

Aside from the fact that we have yet to see a Ramaphosa who is either urgent or decisive or who has any apparent political will except for survival, there is no hint here that this is a systemic problem – a system that must be changed.

A corrupt system

It is a system which is both corrupt and corrupting.

It is corrupt to strip the heart of public service out of the hands of knowledgeable, skilled, experienced public servants and hand them over to private contractors who often lack the experience. Their incentive is to maximise profit, at the expense of their workforce and at the expense of the quality of the service they deliver.

We have seen the decline in service quality in Australia with Covid: the only state that put quarantine monitoring in the hands of private contractors was the only state to experience an upsurge in cases. Untrained, poorly paid, uncommitted staff did not provide the same service that public sector workers did. We’ve seen it in the UK: a contract for the Covid “track and trace” system was given to private companies instead of using existing public sector capacity. The results have been poor.

And it is corrupting to develop a system that maximises the opportunities for corruption. Every contract between the state and private contractors is such an opportunity. So, removing public services from the public sector and giving them to private businesses encourages corruption. It makes it far more likely. It magnifies the opportunity for corrupt practices and self-enrichment at the expense of public money and public services. Just as intense competition to win Olympic gold incentivises performance enhancing drugs, competitive bidding for state contracts incentivises, backhanders, bribery and fraud.

Neoliberalism South African style

Ironically, South Africa was protected from this process during the years of apartheid through its isolation from the global economy. 1994 presented capital with virgin territory. And it even provided it with an apparently acceptable ideology – privatise, outsource and corporatise in order to empower black capital.

And you can see the logic guiding the ANC. Under Apartheid, the public sector was home to the previously disadvantaged (the whites who were disadvantaged before 1948) – Afrikaner capital and the Afrikaner working class. Take it away from them and give it to aspiring black capitalists and the rising elites through…tenders. We have a black capitalist class initially without capital, completely dependent on the state and on its procurement and tender programme.

In the process build a black middle class as a buffer to the inevitably massive Black African underclass of the unemployed. 39,7% of the South African working population had no work even at the end of March, before the pandemic This is what this economic trajectory has brought us.

And there is a convenient ideology, a narrative that covers this private accumulation at the expense of the rest of society – it is the narrative of “empowerment”. Black Economic Empowerment, subsequently amended, when it became obvious how narrow the echelon of the empowered actually was, to Broad-based Black economic empowerment. But always individual empowerment. Never collective empowerment. There were small amounts of “Community empowerment”. But it dissolved into enrichment of a tiny elite around a chief or local leader. A small amount of money went to “worker empowerment”. This just gave temporary ownership of a tiny percentage of shares into a workers’ trust, with sometimes no payout at the end.

The only effective empowerment was of individual new black capitalists. But it came at an inevitable cost – the hollowed out dysfunctional state unable to deliver basic services to the majority.

 Collective empowerment

Meanwhile, there are opportunities for real broad-based, collective empowerment. Take the recent sale of Lonmin, for example. Workers were keen on preventing Sibanye Stillwater from acquiring this mine and thereby a monopoly position in platinum mining. Workers were prepared to use their pension money to take control of the company, collectively. Yet the state failed to support it. Instead it actively promoted the Sibanye option, the corporate capital option.

Surely, and in the context of the Marikana massacre, the state could have expropriated the mine or at least nationalised it, bought out the shareholders and put in place a democratically accountable workers committee to manage it. Instead of the form of BEE we have now, we could have affirmed the mineworkers butchered at Marikana.

We cannot pursue a model of individual enrichment and then be surprised when individuals … enrich themselves. Or shocked when inequality gets worse, not better. The ANC gives us an invidious choice that is in reality no choice at all – between the neoliberal austerity of Ramaphosa and Mboweni and the public sector looting of Zuma and Magashule.

It’s time for the popular movement to unite around demands to end the tenders and bring back public services under public control. And the advantage of such a united campaign is that it is not dependent for success on winning big national battles. This campaign can be fought in every municipality, from Alfred Nzo to Nelson Mandela Bay, from King Cetshwayo to eThekwini. A campaign to end the tenders. A campaign to bring back public services and, by doing so, curb corruption.