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South Africa: Arrest of Guptas puts ethics under searchlight

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South Africa: Arrest of Guptas puts ethics under searchlight

The arrest in the UAE of two of the Gupta brothers, accused of corruption on a massive scale, has brought the issue of ethics in public office once again to the surface. It comes just as President Ramaphosa has been demanding much better performances from Black executives and office holders. Analysis by Mushtak Parker. 

 The issue of ethics in public office – corruption, abuse of power and failure to deliver – has been the sombre background noise in South Africa since the heady days of Nelson Mandela’s leadership. The arrest of two of the Gupta brothers, accused of ‘state capture’, in Dubai has brought the general issue of ethics into even sharper focus.

At the nexus of ‘state capture’ was former President Jacob Zuma and his family’s close relations with the Indian-born Atul, Rajesh and Ajay Gupta, who allegedly used their influence through bribing officials to rake in billions in state contracts and through sell-offs. 

The brothers fled South Africa after a judicial commission began probing their involvement in corruption in 2018,  precipitating an Interpol Red Notice for the arrest of two of them. That Commission on State Capture, chaired by Justice R M Zondo, has drip-fed parts of its Final Report and Recommendations, to which President Cyril Ramaphosa has promised to respond promptly. 

At the time of writing, the South African Ministry of Justice confirmed that Atul and Rajesh had been arrested by the UAE police, and though extradition talks had begun, it was expected to be a lengthy process. 

The arrest of the brothers and the full report of the Zondo Commission will help Ramaphosa in his fight to root out corruption and restore some semblance of integrity to the South African polity.

This development comes at a time when the President and his Finance Minister Enoch Godongwana have been targeting Black management, professionals and businesses in a carrot and stick approach – decrying their failure to deliver on the one hand, and re-affirming the government’s commitment to Black Economic Empowerment (BEE) on the other hand. 

Godongwana, the erstwhile guru in charge of Economic Transformation Policy at the ANC, raised the stakes at the gala dinner of the Black Management Forum in May when he threw down the gauntlet to Black professionals and managers, challenging them to get their act together. 

“Government remains committed to the agenda of thorough-going transformation,” he pledged. “Through our policy on Affirmative Action, we have ensured that more and more Black professionals are able to enter the corporate world.” 

(In fact, Ramaphosa recently appointed a diverse and representative group of 14 experts to serve as members of the Broad-Based Black Economic Empowerment Advisory Council and to guide the government on intensified transformation of the economy.)

Then Godongwana read the riot act; the ANC’s Ready to Govern document on affirmative action, he reminded his audience, stresses the significance of meritocracy to advance transformation and not “giving positions to unqualified people simply on the grounds of race or gender”.

It also sets out to “reverse the imbalances of the past” and upskill and support those who “have been kept back by Apartheid education and sexist assumptions”, to enable them to catch up and compete on an equal footing, he said. 

Transformation in the South African context is not only an economic and political imperative, but also a moral imperative. In its 2020-2021 report, the Commission for Employment Equity paints a grim picture about the pace of transformation in the South African economy. The progress of Black Africans into top management positions averaged around 15% between 2018 and 2020; it was 5.7% and 10.6% for the Coloured and Indian populations in 2020. The White population continues to dominate top management roles, accounting for nearly 65%. 

“So, what do we expect from Black professionals?” asked Godongwana. “They need to ask the critical question: ‘Why is it that Black managers tend to be associated with failure and incompetence?’ If you look at the state of local government, six out of every ten municipalities are in financial distress – their governance is weak, they lack professional and judicious management. These are largely municipalities led by Black managers under a Black political leadership. We must ask these difficult questions and not shy away from them.”

State capture ramifications

At a Black Business Council gala dinner in Johannesburg, the President conceded that in addition to “the legacy of our Apartheid past”, the effects of the pandemic, global economic shocks, the 21 July rioting, the recent floods in KwaZuluNatal and the Eastern Cape, state capture and government failures had contributed to setting back the transformation agenda. 

“State capture,” lamented Ramaphosa, “has deeply damaged our economy, weakened our public institutions and destabilised our democracy. It has also hurt the cause of Black economic empowerment and the advancement of Black professionals. 

“By far one of the greatest blows was the capture of key public institutions and state-owned enterprises by private interests. Billions were looted from state entities and the capacity of the state was steadily eroded. Many of those complicit in these acts of corruption used the language and the instruments of Black economic empowerment as a cover for their crimes.”

Nevertheless, the President and his Finance Minister dismiss any correlation between Black economic empowerment and the rampant corruption. They are now appealing to the current and future generations of Black professionals and business executives to be driven less by possibilities of self-enrichment and more by patriotism. 

In return, the government, they maintain, will undertake “the task of empowerment with greater intensity and purpose. We do not accept the argument that Black economic empowerment has had a destructive effect on the economy. Rather, slow progress in the pace of economic transformation is what is holding back our nation’s development. Black business in South Africa has a critical role in our economic reconstruction, recovery and in job creation.”

Shocking declines

Ramaphosa could have been equally frank about the socio-economic structural reforms needed for transformation. Successive Finance Ministers have acknowledged this but failed to meaningfully address it, partly because of ideological differences within the ANC coalition.

A shocking decline in the quality of basic, secondary and tertiary education and vocational training is a festering concern because it undermines the required quality of future Black professionals and managers. This permeates across societal sectors. When local municipalities, for instance, are dysfunctional, it has a direct effect on businesses and it affects employment.

“The poor quality of basic education limits the youth’s capacity to exploit further opportunities at post-secondary and tertiary levels. As a result, existing skill deficiencies and mismatches are likely to persist in the form of high unemployment, particularly in poor Black communities, and a scarcity of skilled workers,” observed the World Economic Forum’s 2021 Global Competitiveness Index.

Over its 28-year democratic history, South Africa saw a largely successful economic transformation and policy delivery during President Nelson Mandela’s two terms, with some extraordinary material improvements in living standards and in affordable housing, education, and electrification. 

The number of Black university students as well as Black people with jobs doubled. The number of Black buyers of suburban property rose to rival the number of White buyers. Economic growth rose to average 5% between 1994 and 2007. Government debt levels halved, and a budget surplus was recorded. 

However, this bright beginning fairly quickly lost momentum and although the number of Black executives and entrepreneurs increased, the general level of service delivery and efficiency dropped dramatically, while corruption at all levels reached epidemic proportions. Growth has declined or stayed static and confidence in the political class is at its lowest ebb.

It is clear that Ramaphosa and his Finance Minister see the problem as one of professional ethics – or the lack thereof – and have been trying to instil a sense of patriotic duty and pride over self-serving instincts as one path out of this moral morass.   

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Written by Mushtak Parker

Mushtak Parker is Editor of Islamic Banker Magazine, one of the foremost journals in the industry with a global circulation in the major Islamic Financial institutions.

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