Corruption & State Capture: What Can Citizens

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Corruption & State Capture: What Can Citizens Do?

Sarah Bracking

Abstract: Given South Africa’s recent history of corrupt state capture, the country faces two possible fu- Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 tures: a further decline into spoils politics or a return to an improved constitutional democracy. This essay argues that the latter is more likely in the long run, but is by no means guaranteed. Achieving such a future requires public administrators, citizens, the private sector, and top lawmakers to insist on a public-focused social order. This essay suggests that a coalition of anticorruption agents must be built across the public and private sectors, and that this effort will be successful to the extent that it can link people across tradi- tional class and race divides.

The Machiavellian behavior of political elites in modern Africa, as elsewhere, often attracts little prosecutorial response due to the widespread prac- tice of granting immunity to current and former officeholders. Former President Jacob Zuma of South Africa is no exception: he was able to secure his first term in office despite previous charges of rape and 783 counts of fraud, corruption, and racketeering. After this inauspicious start, Zuma continued throughout his tenure (from 2009 to 2018) to accrue more corruption accusations while continuing to evade prosecution.1 While political corruption is not new in postapartheid South Africa, the ten-year Zuma administration marked a shift from political corruption in the form of kickbacks and contracts for relatives to a more structural pattern of systematic state capture sarah bracking is Professor pursued with impunity. Since Zuma’s forced resigna- in the School of Global Affairs tion in February 2018, his deputy, Cyril Ramaphosa, at King’s College London. She is has served as president. However, the degree to which the author of The Financialisation of Power: How Financiers Rule Africa the deeper “shadow state” will persist remains to be (2016) and Money and Power: Great seen. The corrupt clique run by Zuma (and the Gupta Predators in the Political Economy of family, Zuma’s close associates) is essentially defunct, Development (2009). but weak and porous state structures governing con-

169 Corruption & tracting and procurement remain for oth- paratuses intimidate any political person State Capture: ers to exploit, potentially including many who resists. What Can Citizens Do? Zuma-era persons who remain in place in While the contractual relationships of the the shadow state. South African “shadow state” are complex, State capture refers to the process of ob- during the Zuma era, they all tended to in- taining, or capturing, state regulatory au- volve associates of the Zuma family, mem- thority without democratic authorization. bers of the Gupta family (hence the moni- The persons capturing state powers can be ker “Guptagate” for recent corruption rev- private or–as in South Africa–a mix of pol- elations), and the families’ relatives or close iticians and private actors who have gained associates. Those close to the former pres-

influence over regulatory processes to serve ident aimed “to convert political leverage Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 private interests. State capture of the South into commercial gain” by fashioning them- African government under the Zuma re- selves as “brokers-cum-fixers” in contracts gime proceeded in large part through con- involving state enterprises.5 They would set trol of the contracting authorities for lucra- up a legitimate commercial vehicle, usual- tive state-owned enterprises (soes). More ly with Zuma family members as benefi- recently, the power elite also consolidated ciaries, and then “bully” other players into state control by capturing the prosecuting the contract, arguing that without their authorities responsible for pursuing redress high-level political connections, the deal for criminal corruption within soes. would never go through. Using this negoti- Economist Haroon Bhorat and colleagues ating position, they would then change the have argued that the Zuma-centered power rules of the contract, often to extract huge elite staged a silent coup during the ten-year fees and service costs, which they subse- period from 2007 to 2017. This operation quently sent to offshore tax havens.6 For was not the result of isolated acts of corrup- example, the Guptas used a shell compa- tion, but a systematically pursued “political ny called Homix to broker a deal between project of a well-organised network.”2 Jour- Transnet (the national rail and port author- nalist and political adviser Sarah Chayes has ity) and the telecom company Neotel, net- noted that, in many countries, high levels of ting themselves more than zar100 million political corruption lead to the criminaliza- (about $8.4 million) simply for ensuring tion of the state and a corresponding dete- that Neotel got the Transnet deal. The “suc- rioration of security. However, the case of cess fees” from the deal were then funneled South Africa is not one of state capture by to tax havens such as the United Arab Emir- a criminal network, but an insider “politi- ates and Hong Kong through the Gupta- cal project at work to repurpose state insti- related intermediaries yka International tutions to suit a constellation of rent-seek- Trading Company and Morningstar Inter- ing networks.”3 To accomplish this political national Trade.7 Using this modus operan- project, Zuma and his cronies established di, Zuma-Gupta cronies secured inflated a symbiotic relationship between holders procurement contracts with the largest of political office and private actors, caus- state-owned enterprises, including aero- ing power to shift increasingly to a “shad- space conglomerate Denel, rail companies ow state,” where “deniability is valued, cul- Transnet and Passenger Trains, electricity pability is distributed (though indispens- utility Eskom, and the Departments of So- ability is not taken for granted) and where cial Security and Mineral Resources. trust is maintained through mutually bind- This economic project began with the ing fear.”4 This shadow state also ensures state-owned enterprises but, critically, that co-opted security and intelligence ap- evolved into state institutional capture.

170 Dædalus, the Journal of the American Academy of Arts & Sciences Beginning in about 2012, the clique began that such a report influenced his decision Sarah to capture key sites of financial control, to fire Gordhan.9 Bracking ultimately including the National Trea- sury itself. Other captured institutions in- As the state-capture project progressed, cluded the Financial Intelligence Centre, so too did public opposition, culminating which regulates illicit financial flows; the in a watershed moment of confrontation Chief Procurement Office, which regulates between Zuma allies and the opposition in and raises the alarm in procurement activ- 2017. As mounting evidence of the Zuma ities; the Public Investment Corporation; administration’s cronyism emerged in the the boards of development finance insti- public sphere in 2016 and 2017, the opposi- tutions; and the guarantee system, which tion rallied to accuse Zuma of corruption. Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 raises finances for state entities–without The term “state capture” appeared in ac- parliamentary oversight.8 The March 2017 cusations leveled by opposition parties, cabinet reshuffle that ousted Finance Min- watchdog organizations such as Right to ister Pravin Gordhan is cited as the mo- Know and Corruption Watch, investigative ment when the network finally gained con- journalists, and even some elements of the trol of the National Treasury. The network anc itself. Most anc members, however, also simultaneously captured key judicial countered with rhetorical maneuvers de- institutions, such as the National Prosecut- signed to draw attention away from Zuma’s ing Authority. malfeasance. They invoked “white monop- With the highest echelons of the state oly capital” as the real culprit, referring to captured–seemingly including the Nation- the continued hold of White-owned busi- al Prosecuting Authority, the Directorate for ness in the South African economy, and Priority Crime Investigation (also known cynically repurposing the language of the as the Hawks), the Chief of Police, and the radical agenda of anti-apartheid. anc Public Protectors’ Office–there was no one members suggested that all societal and left to indict President Zuma as corruption economic ills affecting the country could revelations emerged en masse in 2017. There be traced back to White business owners, were also sinister signs of wrongdoing with- and issued a new clarion call for “radical in the state itself, indicating that rogue ele- economic transformation.” This motif was ments of the intelligence services or a pri- intended to lend an air of legitimacy and vate mafia may be interfering with law en- moral righteousness to a grey area of graft forcement. For example, 2017 saw a spate of by suggesting that if White capital will not crimes seemingly linked to corruption scan- change voluntarily, then it is acceptable for dals, including the theft of fifteen comput- political leaders to pursue extralegal means ers from Chief Justice Mogoeng Mogoeng’s of redistributing wealth, even if these elites offices in March; the June death of a sec- are themselves the primary beneficiaries. retary at Eskom connected to corrupt ceo Thus, Zuma’s defenders attempted to ob- Brian Molefe’s fraudulent pension payout; scure and explain away a material pattern and three burglaries in July in which com- of endemic graft and fraud. puters were stolen from the offices of the However, the 2016 publication of then– Hawks, the National Director of Public Public Protector Thuli Madonsela’s State of Prosecutions, and the chief prosecutor. In- Capture report, Bhorat’s Betrayal of the Prom- telligence services also allegedly produced ise, and numerous reports of corruption in spurious reports about foreign interference the critical press added substantially to the in South African financial and political af- base of evidence against Zuma and his “si- fairs; in fact, President Zuma insinuated lent coup.”10 These timely reports com-

147 (3) Summer 2018 171 Corruption & plemented the actions of whistleblowers In his former role as minister of social en- State Capture: and public protesters, weakening Zuma’s terprises, he endorsed inflated and corrupt What Can Citizens Do? clique. Indeed, as the full extent of polit- locomotion deals with a Gupta-connect- ical corruption became apparent begin- ed firm at Transnet, while also assisting in ning in May 2017, the state-capture project reshuffling the boards of state-owned en- appeared to be unraveling: the country ex- terprises to include key clique cronies.11 ploded in the largest public demonstra- The fact that corrupt individuals ascend to tions since 1994, demanding that the presi- empty seats in office indicates that struc- dent step down; and a succession of persons tural corruption may not be so easy to erad- connected to the capture of procurement icate in South Africa. South Africa’s current budgets in soes resigned. While President president, Cyril Ramaphosa, is currently Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 Zuma initially dismissed the demonstrators enjoying a “honeymoon period” in which as disgruntled “White people,” it became he claims to be in the process of “cleaning clear from social media and a stream of se- up” the government’s corrupt upper eche- nior anc stalwarts defaulting from the par- lons with the assistance of Pravin Gordhan ty line that a wide swath of Black anc sup- (who was fired by Zuma but reappointed port also no longer saw economic transfor- by Ramaphosa in February as minister of mation in Zuma’s agenda, but graft instead. public enterprises). However, there remain By Workers’ Day (May 1), huge crowds of many persons in political and administra- trade unionists and workers were chant- tive office associated with the prior regime ing anti-Zuma slogans in the streets and de- and its networks of corruption. manding his resignation. Apparently, public There appear to be two possible futures shaming was still possible, which came as a diverging from 2017’s watershed moment surprise to many political commentators. in the state-capture process. The first is Resignations and firings resulted, includ- based on political scientist Chris Allan’s ing those of Brian Molefe (fired) and Ben model of “terminal spoils politics,” where- Ngubane (resigned) from Eskom in May in corruption becomes endemic and sys- and June 2017, respectively. Even the Gupta tematic, putting the liberal state at risk of family lawyer Gert van der Merwe turned collapse.12 This resembles Chayes’s crim- state witness in June 2017 to avoid prose- inalization model, in which the shadow cution for money laundering relating to a state deteriorates into a dominant crimi- 2010 case in Limpopo. Brian Molefe, who nal network. However, extreme and prev- seemed like the personification of state en- alent criminal corruption may not mean terprise takeover, filed papers to overturn a full state collapse. That an apparently lib- court order banning him from entering Es- eral state can survive such an onslaught kom property and petitioned for reinstate- has been previously demonstrated in sev- ment to his position. Both petitions were eral Anglophone ex-colonies such as Zim- unsuccessful, proving Molefe’s dispos- babwe, Nigeria, and Kenya. The flexibility ability to the clique. In short, by 2017, Zu- of the liberal institutional form means that ma’s twenty-year project of corruption and empty democratic rituals, such as rigged state capture was looking decidedly shab- elections, can continue while the center by. However, despite the turnover of key of the establishment serves only a crony clique members and increased pushback faction. The faction’s power is particular- from an outraged public, the shadow state ly strong when it controls the uniformed remained after the dust settled. Indeed, the services (and perhaps also a privatized ex- new finance minister, Malusi Gigaba, is a tralegal force) and is prepared to perpetrate powerful clique member in his own right. atrocities against those who challenge its

172 Dædalus, the Journal of the American Academy of Arts & Sciences power.13 The recent “coup” in Zimbabwe Certainly, the concept of violent democ- Sarah illustrates this pattern: state military per- racy, in which violence is distributed to Bracking sonnel, part of the powerful Joint Oper- groups beyond the state, maps well onto ations Command structure, were able to the South African transition.16 Even pro- depose an aging president in favor of their tests concerning everyday matters such preferred candidate, enabling the continu- as service delivery failure or student fees ation of a criminalized clique’s power. are generally marked by a high level of vi- The second possible future is that the olence and repression. Events such as the post-Zuma era will mark a true change in infamous Marikana Massacre of 2012, when the state’s corrupt practices, the clique in thirty-four miners were shot and killed by charge will rotate, and the rule of law will police, demonstrate that law-enforcement Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 strengthen. The many points of resistance agents are willing and able to kill large num- to corruption in South Africa suggest that a bers of demonstrators. In a highly unequal return to a more constitutional order is still society such as South Africa’s, violence is possible. Given that South Africa has a free used to maintain, challenge, or change the and fair system of elections, a sophisticat- distribution of power.17 Once a regime has ed free press, and a robust business sector, proven its brutality, citizens live in constant the question is just how far a concerted plot fear of the credible threat of violence should to capture the state can progress before it they stray from the party line. In short, dis- is countered by some sort of resistance. Let obedience toward the ruling party is accom- us now explore these two possible futures panied by a permanent threat of potentially in turn, before assessing the strength of the lethal retaliation. This is a reality in coun- anticorruption coalition already in place. tries such as Zimbabwe, where the Guku- rahundi massacres in the mid-1980s, Op- In 2013, development scholar Karl von eration Marambatsvina in 2005, and elec- Holdt wrote presciently about a possible tion-linked political assassinations and transition to what he termed “violent de- torture in 2009 have made political vio- mocracy” in South Africa–involving the lence and intimidation a matter of course. capture of the prosecuting authorities and This norm has fast taken hold in South Afri- a regression into localized violence at ward ca, particularly in the province of KwaZulu- level. In this model, democracy and vio- Natal, where those targeted include polit- lence, instead of being mutually exclusive ical and ngo officeholders who protest as many assume, may be configured into a against corruption. For example, a number symbiotic relationship such that violence of those protesting mining companies’ cozy plays a key role in social disputes and reor- relationships with local chiefs and the rul- derings. Thus, it is not that democracy has ing party have been murdered or assassinat- broken down, but that violence becomes ed, such as Sikhosiphi “Bazooka” Rhadebe, part of the systematic deployment of pow- a vocal opponent of potential uranium min- er.14 Von Holdt has noted that his analysis is ing on South Africa’s Wild Coast, whose ex- similar to that of political economist Mush- ecution-style killing in March 2017 deliv- taq Khan, who argued that democratization ered a strong political warning. processes in developing countries did not Elite factions often fight within the state so much replace patron-client relationships for control of its sites of wealth accumula- as accommodate them.15 “Violent democ- tion, which can generate transfer of formal racy” builds on this observation, positing power.18 These smaller skirmishes are of- that democracies can accommodate and be ten linked to internecine contests within propped up by violence as well. the security services and may lead to the de-

147 (3) Summer 2018 173 Corruption & ployment of personnel to assassinate oppo- termed his “Stalingrad Strategy” of stalling, State Capture: nents. In the case of South Africa, cliques delaying, and posting counter-cases involv- What Can Citizens Do? compete for political office, but also for ing procedure in order to delay appeals in- resources that may be useful in a holistic definitely, get cases dismissed, or prevent strategy of graft, including political en- cases from coming to court at all. After the ablers and access to violence. To this end, spy-tape saga,20 786 corruption charges cliques attempt to capture the intelligence against President Zuma were dropped in agencies, police, and the National Prose- April 2009, and even the revelation of the cuting Authority to dictate the selective ap- zar246 million in state funds he spent on plication of the rule of law, sparing faction upgrading his private home from 2013 to

members from investigation or prosecu- 2016 could not unseat him. Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 tion and targeting opponents when need- More recently, Madonsela’s State of Cap- ed. In this respect, von Holdt notes that ture report recommended that a commis- these attempts are not necessarily successful, sion of inquiry be set up to examine Zu- as they run into resistance both from those ma’s wrongdoings. Zuma demanded that state officials who do take seriously the im- a court review the claim, citing concern partial procedures that are central to the rule that it would set a bad precedent to have the of law, as well as from allies of opposing fac- chief justice appoint a judge to head the in- tions who attempt to protect or reinstate inquiry, as it is usually the president’s prerog- vestigations, or leak sufficient information ative to establish and staff commissions of to force application of the law.19 inquiry. However, Zuma’s close implication in this case would have made it farcical to However, President Zuma’s latter years follow the usual procedures, and most be- in office make a convincing case for his lieved his review request to be another ex- successful capture of prosecuting author- ample of his delaying tactics. In response to ity and undue influence over the judiciary. Zuma’s complaint, the Democratic Alliance This influence dates back to a corrupt arms filed a declaratory order that the president deal in 1997 in which Zuma was implicated had failed to implement the public protec- when he was deputy president. The arms- tor’s remedial actions, but Zuma countered deal cases against Zuma were thrown out of that if he were to implement the remedial court in 2006, dismissed due to procedur- actions first, his review application would al irregularities. (The ruling judge left open have been simply “academic”; so the re- the possibility for another judge to reopen view was permitted to go forward. Indeed, and hear the case, and these charges were Zuma’s notorious Stalingrad Strategy suc- the grounds for Zuma’s April 2018 sum- cessfully delayed the work of the Commis- mons.) Judges in South Africa generally re- sion until his departure from office in Feb- main free and independent, but there is a ruary 2018; the fate of the Commission’s in- clear tendency to behave differently in cases vestigation is now unclear. involving the president. Those procedural This story is typical of an administration irregularities during the arms deal, for ex- in which very few cases of corruption were ample, are alleged to have arisen from Chief ever prosecuted, and those that were ended Judge President John Hlophe improperly in plea bargains. The Anti-Corruption Task approaching Constitutional Court Judg- Team (actt), which unites the Hawks, the es Bess Nkabinde and Chris Jafta to influ- National Prosecuting Authority (npa), the ence that Court’s ruling on the lawfulness South African Revenue Service (sars), the of search and seizures of Zuma’s home. Independent Police Investigative Director- Zuma is also renowned for what has been ate (ipid), and the Financial Intelligence

174 Dædalus, the Journal of the American Academy of Arts & Sciences Centre (fic), oversees processing corrup- contributing to a better demarcation be- Sarah tion cases, but has a poor record of seeing tween politics and the courts. Additionally, Bracking cases through to prosecution. actt re- while many authors have written about the cently reported to parliament’s watchdog collapse and demise of South Africa, there on public spending, the Standing Commit- are natural opponents to corruption: 1) oth- tee on Public Accounts (scopa), that some er members of political parties that succeed cases in its purview date back over a decade. in free and open elections; 2) the majori- Overall, actt had 284 outstanding cases re- ty of citizens, who do not benefit from cor- lated to provincial government (support- ruption and thus would not vote for a par- ed by a 111-page dossier) and 244 pages on ty that sanctions it; 3) public servants, in- municipal cases. actt also admitted that cluding honest members of the prosecuting Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 of thirty-one cases at national departments, agencies, whose portfolios are designed to only one was in court and two were before produce public goods; and 4) actors with- the npa for a decision; twenty-eight were in the private sector who are frustrated by still under investigation. Even when perpe- the actions of the government and its cro- trators are processed and found guilty, they nies when they adversely affect them. receive suspended sentences and plea bargains. scopa chairperson Themba Godi Despite the multiple scandals outlined said the committee was “shocked and dis- above, the anc did not recall President appointed” to learn that all finalized cas- Zuma until February 2018, when it finally es had been settled through plea bargains: forced him to resign. However, the scan- “None of the cases were fully prosecuted dals came at great political cost to the par- through convictions, meaning that all of ty, causing the collapse of the historic tripar- them are outcomes where corrupt people tite alliance between the anc, the Congress have negotiated their way out of prison, of South African Trade Unions (cosatu), which largely defeats the objective of us- and the South African Communist Party ing sentencing as a deterrent against cor- (sacp). The alliance fell apart in early 2017 ruption.”21 Clearly, the executive benefits over the issue of whether Zuma should stay from the added protection of an npa head or go. cosatu asked him to step down and unlikely to prosecute, despite a flurry of denied him participation in their rallies, countersuits from the opposition. while the sacp withdrew their support Prosecutorial stagnancy and judicial ma- completely. Increasingly, factions within nipulations have severely impaired efforts the anc itself became more apparent as to hold the executive branch accountable. several senior officials also echoed grow- However, certain courageous and brilliant ing opposition to the president. cosatu, officeholders defy any description of the once an alliance member, held a national South African judiciary as entirely cap- strike against corruption on September 27, tured or without democratic checks and 2017. This is without precedent, as histor- balances. For example, the last public pro- ically anticorruption protest was the pre- tector, Thuli Madonsela (who served from serve of the Democratic Alliance (da) and 2009 to 2016), still managed to publish the “White” ngos. Such is the crisis of the state State of Capture report in 2016, among oth- that the Economic Freedom Fighters (eff), er reports on corruption; and the surpris- cosatu, and the sacp have increasingly ing independence of Chief Justice Mogo- endorsed and supported anticorruption eng Thomas Reetsang Mogoeng (appointed events and protests. in 2011) has prevented any clique from con- These coalitions of opposition within the trolling the judiciary in its entirety, while anc and its close partners have the poten-

147 (3) Summer 2018 175 Corruption & tial to spark an elite transition to a more 2018 election. Thus term limits contribute State Capture: democratic future and a more transpar- to elite rotation, if not more fundamental What Can Citizens Do? ent, open political order for the South Af- changes to governance norms. Still more rican polity. This will only work, howev- elite competition and a higher frequency er, if the trend toward the use of violence of replacement of officeholders would be is reversed and the electoral system and in- required to resoundingly unsettle the net- dependent judiciary are protected. None- works capturing procurement contracts. theless, the possibility of a shake-up in the leading factions is evidenced by shrinking When in April 2017 demonstrations and majority support of the anc, which led a national shutdown demanded that Zuma them to lose elections to the da in Pretoria, step down, the anc initially closed ranks. Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 Nelson Mandela Bay, Gauteng, and other The anc Youth League and Umkhonto we metropoles; and rural seats to the Inkatha Sizwe (mk) resistance fighters and veter- Freedom Party in Northern KwaZulu- ans made a show of strength, accusing op- Natal. There remains the possibility, there- ponents of the president of treason in vi- fore, that the anc could lose in a national olent language. mk fighters turned out in election, which motivates the party to at- battle fatigues to “defend” Luthuli House, tempt to discipline those who conducted the national headquarters of the anc, from the state capture project. the “counterrevolutionaries.” These images This anticorruption coalition also in- and rhetoric are reminiscent of zanu-pf’s cludes government ministers and sections post-2000 turn to populist nationalism to of the anc that remain more in the tradi- shore up Robert Mugabe’s rule after he lost tion of “transformational liberalism” asso- a referendum on the constitution. Such na- ciated with the Mbeki period. These poli- tional populism, or “patriotic nationalism,” ticians believe in pragmatic change with- is also associated with a rise in xenophobia in the parameters of the constitution rather (observed in bouts of violence in Durban than the permissibility of extralegal redis- and Pretoria) and a desire to tighten the na- tribution of resources executed through tion’s borders.23 Zuma’s “radical econom- corruption. The existence of dissenting ic transformation” was one such manifesta- factions within the anc suggests that ro- tion of his patriotic-nationalist push. tating power is still a possibility within the President Zuma leveraged these ideas to party and potentially in the government extend his power base by reaching out to and polity more broadly. Economist Doug- politicians on the provincial, municipal, lass North and colleagues, in their research and local levels. He made sure that he had on configurations of elite competition, ar- supporters in lower levels of government gue that when corrupt regimes are mov- while reshuffling his cabinet to include only ing toward greater democracy, there begins loyalists. However, this entailed what ap- an interchanging of elite factions in power, peared to be a sharp rise in the number of slowly leading to a freely competitive elec- officeholders removed by violent means or tion process, transforming a limited-access death in the provinces and local wards. In order into an open-access democracy.22 Ac- KwaZulu-Natal, for example, the munici- cording to this model, South Africa’s con- pal elections of August 2016 were accompa- stitutional imperative that presidents may nied by the deaths of six councilors as one only serve two terms obliged the anc to faction of the anc in the province was re- plan the replacement of President Zuma in moved to make way for a pro-Zuma lead- December 2017. This law provided momen- er. More officeholders were killed after the tum for forcing his departure before the elections, including ex–anc Youth League

176 Dædalus, the Journal of the American Academy of Arts & Sciences leader Sindiso Magaqa. More recently, an lies (and anti-Zuma rallies, prior to his res- Sarah elected councilor in Umthimkhulu was as- ignation), particularly when they are called Bracking sassinated for allegedly preparing an anti- by the sacp or cosatu. What is missing corruption speech for the December 2017 are the critical bridges between the politics elective conference. Resisting corruption of the poor when integrity is being defend- from within the anc, despite recent elec- ed at a local level and the movement politics toral losses, can be a dangerous decision. of the middle classes, which is mostly artic- Given this increasing violence, the North ulated in documents, legal challenges, and model may not well explain the South Afri- city-based rallies. This divide is highly ra- can situation, in which democracy appears cialized and exacerbated by historical mis- to be regressing to more violence and sys- trust and by resource disparities that con- Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 temic corruption in such a way that the in- dition the means and ability to protest.24 coming elite may behave similarly to the old. For example, the change in political Administrative accountability on the elite factions and accompanying violence part of public officials remains a wide- in KwaZulu-Natal in 2016 did not lead to spread check on political wrongdoing in greater transparency: rather, it was simply South Africa, and in the face of political cor- seen as time to change who was “eating” ruption, more work is required to support from an older Mbeki faction to a new Zu- the honest public servant. Corruption con- ma-loyalist faction. In this case, competi- tradicts civil servants’ agendas and briefs, tion among elites led to political instabil- creating a tension between functional line ity, which is just as likely to deteriorate the ministries and the needs of state capturers. quality of democracy as it is to improve it. Perhaps for this reason, there is an increas- Furthermore, a change of elites at the pro- ing number of persons in public adminis- vincial and municipal levels may actually tration who are prepared to come forward assist in the centralization of authoritari- as whistleblowers. In one example from an power at the center, as it arguably did KwaZulu-Natal, Umgeni Water Author- in this case. ity employees raised the alarm continu- However, it is possible that an oppor- ously about a senior executive’s procure- tunity for a more effective anticorruption ment fraud until the board finally agreed to coalition exists, even in the midst of wide- launch a graft probe. Also in KwaZulu-Na- spread violence. What emerged in 2017 tal, whistleblower Fikile Hlatshway-Rouget was a greater number of councilors from was unfairly dismissed from the provincial all parties prepared to embark on the risky Treasury in 2013 after making a protect- mission of resisting corruption at the lo- ed disclosure notification to her manage- cal ward level. However, these individuals ment concerning contracts and fees she be- face grave potential repercussions for their lieved to be fraudulent, including a zar25 principled resistance. While there is no sys- million payment for a jazz festival that nev- tematic study on the implications for civil er took place. Her concerns were later con- servants of resisting corruption, most po- firmed by a forensic audit and Special In- litical violence appears to be related to of- vestigation Unit (siu) investigation and fice-holding, and many deaths appear to be her case was adopted by the public protec- retaliation for corruption, or for resisting tor, who upheld her charge of unfair dis- it. Protesting civil servants and provincial missal.25 While no subsequent action was leaders are thus also at risk. However, tra- taken against those involved in the corrup- ditional anc supporters now seem much tion–perhaps as a result of the change in more willing to attend anticorruption ral- the public protector to a more pro-Zuma

147 (3) Summer 2018 177 Corruption & figure–provincial-level whistleblowing is violence from cliques–which can only be State Capture: on the rise. It is this organic anticorruption ameliorated through a well-funded whis- What Can Citizens Do? constituency that generates the evidence tleblower program. supporting thousands of corruption cases, whether prosecuted or not, in South Africa. The private sector, including internation- President Zuma’s efforts were often frus- al finance institutions, is another potential trated by employees in the revenue service ally in the fight against corruption. While and in departments who contested his “de- there are allegations of illegal direct trans- ployees” and procurement policies. Given fers of cash to the president, mostly in the this resistance, he attempted to repurpose form of direct deliveries to his home in

government, establishing ad hoc intermin- Nkandla in KwaZulu-Natal province, the Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 isterial committees at the executive level spoils from state capture are channeled pri- that did not have to report to parliament marily through the modern network of off- and which often bypassed other tiers of gov- shore finance in ways that make them dif- ernment. These committees clearly pursued ficult to trace. Transfers move repeatedly an accumulation agenda, focusing on sec- from one to another Gupta-related com- tors associated with large procurement con- pany account and eventually to companies tracts, such as telecommunications and in- in foreign tax havens. While the owners of frastructure. However, the core civil service these accounts are not always known, the remained an arena of contestation between management service companies and transit the honest and the corrupted, and admin- financial companies involved in soe deals istrative accountability proved a power- have been linked to clique members, and ful restraint to political power. For exam- some companies at the end of these trans- ple, there are cases in which the core civil actional chains are in jurisdictions (such as service has launched successful challeng- Dubai) where the president is known to own es against these interministerial commit- luxurious properties. To all appearances, a tees. The conflicts of interest between po- president of an apparent democracy is be- litical deployees and public servants is so coming personally wealthy without answer- acute that one senior-level respondent to a ing to an effective domestic accountability 2015 survey of public-administration offi- mechanism. Examples of such individuals cials in eThekwini observed that finishing in other countries include former Demo- a five-year term in office as director gener- cratic Republic of Congo President Mobutu al of a public works department at provin- Sese Seko, former Zimbabwe Prime Min- cial level was not possible if one was hon- ister Robert Mugabe, former Nigerian Pres- est. She stated that if director generals did ident Olusegun Obasanjo, and retired Al- not sign off on certain deals, a fake indus- gerian Army General Ibrahim Babangida. trial tribunal would be convened to re- However, what is perhaps more novel in move them from their positions. Civil ser- the South African case is that graft is under- vants often feel that the law is on their side taken using the most sophisticated finan- when resisting corruption, but because of cial networks, rather than suitcases packed this abuse of hr regulations, they also ac- with money transferring through airports. cept that they may have to engage in a costly Therefore, the private sector has substan- –and perhaps losing–battle with a labor tial power to assist in anticorruption work. tribunal in order to keep their jobs. Thus, There are already many examples of audi- building ethical universalism in the public tors, banks, and other executives raising red service must be done in the context of real flags and taking legal action against cor- fears–not just of unfair dismissal, but of rupt procurement schemes. One is regula-

178 Dædalus, the Journal of the American Academy of Arts & Sciences tory authorities’ intervention in the corrupt despite not knowing “who this [Homix] en- Sarah coal-supply contracts of the state-owned tity is.”27 Within the private sector, there is Bracking energy enterprise Eskom. Eskom moved an emerging pattern wherein legitimate di- the contracts from a coal mine, Optimum rectors and owners of firms have used legal (initially owned by the international com- means to attempt to protect their own inter- pany Glencore), to the Zuma/Gupta coal ests against those of state capture, such as supplier Tegeta Exploration and Resources. in cases of locomotive procurement.28 This This transfer was effected using several an- is because state-captured contracts repre- ticompetitive practices that were ultimately sent a cost to noncorrupt businesses, ei- flagged by the private sector. Initially, Op- ther because they are excluded from public timum was forced into bankruptcy by Es- procurement or because to participate re- Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 kom, then helmed by ceo Brian Molefe and quires the payment of extralegal rents that Minister of Public Enterprises Malusi Giga- hurt their bottom line. This implies that in ba. Eskom refused to renegotiate coal-sup- countries such as South Africa, which en- ply deals that were causing Optimum to joys a highly capitalized and modern econo- make a loss, and then fined Optimum hand- my, a majority of persons in the private sec- somely for delivering supposedly substan- tor are naturally positioned to oppose cor- dard coal. Once Optimum was subjected ruption simply because it is a rent and cost to this forced bankruptcy, Tegeta was able to their own interests, moral issues aside. to buy it at a basement price. To make sure The anticorruption and whistleblow- the transition occurred, Eskom, under state ing cases mentioned here were brought capture, also provided Tegeta with a highly by specific persons whose interests were subsidized loan, ostensibly for coal expan- damaged by the state-capture elite, for ex- sion but used to purchase the failing Opti- ample through loss of assets or contracts. mum. (Tegeta is jointly owned by Dudu- These persons are important allies in anti- zane Zuma, son of the president; Gupta corruption work and are joined by many family members; Gupta proxy Salim Essa; more who lose business because they refuse and two offshore companies registered in to pay rents to corrupt brokers in order to the United Arab Emirates for which own- be successful in public procurement. Also, ership details are unavailable.26) persons who do pay rents but consequently However, business rescue practitioners see their profit margins squeezed can also initially appointed by Glencore filed a re- be persuaded to oppose corruption. In gen- port to the Directorate of Priority Crime In- eral, the need to pay rents, “success fees,” vestigation under Section 34 of the Preven- or other management service fees in order tion and Combating of Corrupt Activities to secure a procurement deal represents Act alleging that the Eskom “prepayment” costs to businesses that are not in the win- loan to Tegeta was not used to expand op- ning clique. The resentment generated by erations as specified, and was improperly these fees can thereby motivate business used to fund the purchase of the Optimum associations, like the South African Cham- mine. Thus, it was a private-sector auditor ber of Commerce, to help restore integri- who raised the red flag on corruption. In a ty by reporting corrupt payments that flow similar case, auditors at Deloitte questioned among its members and refusing to harbor the “commerciality” of the “fees” paid to corrupt brokers. the Gupta-associated offshore firm Homix by Neotel for its success in winning a tender For some time now, there has been a con- with Transnet. The Neotel board of direc- sensus in the academic literature on corrup- tors had apparently approved the payment tion that donor-sponsored anticorruption

147 (3) Summer 2018 179 Corruption & interventions do not have much effect on butla and businessman Johnny Lucas of State Capture: political corruption. Alina Mungiu-Pippidi some zar16 million in kickbacks to secure What Can Citizens Do? has argued that individualized anticor- tenders in 2010. Indeed, all such deals re- ruption interventions do not work when quire bank accounts, which are regulat- there is endemic corruption, because such ed and thus can and should be subject to corruption constitutes a collective-action oversight. Involving international financial problem.29 A series of studies and evidence institutions in the fight against corruption reviews from donor governments in the will require further research on how indi- early 2000s showed that much of their anti- vidual payments within this lattice of ex- corruption intervention had little (measur- changes are explained, accounted for, and

able) result.30 It may be that, because many audited; and why they go undetected or Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 of these interventions focus predominantly unreported by banking staff and regulato- on public-sector reform, they fail to address ry authorities. In the so-called Guptagate the “symbiotic relationship” between the scandal, banks themselves invoked fic reg- constitutional and shadow states.31 South ulations and closed the family’s bank ac- Africa’s case suggests that to be successful, counts. Finance Minister Gordhan faced anticorruption interventions must simulta- pressure from members of the state-cap- neously prosecute businesspeople commit- ture clique to force the banks to reopen ting economic fraud in the economy and these accounts, but instead filed a suit de- political persons facilitating it in the shad- tailing the zar6.8 billion in suspicious pay- ow state. This is difficult when the clique ments that the banks had found and asked operating state capture has some control the courts to rule that he had no power to over prosecuting authorities, but because interfere with their decision. National leg- state-capture networks are internation- islation to prevent companies domiciled al, there is nothing to prevent prosecution in secrecy jurisdictions (that is, tax ha- in other sovereign jurisdictions or the in- vens) from operating in national econom- tervention of private banks to prevent the ic space, accompanied by a move from a movement of “success fees” as illicit fi- domiciliary to a contributory principle of nancial flows. The recent successful case tax calculation (which would help make se- of hsbc pursued by France for facilitating crecy jurisdictions redundant), would re- the tax avoidance of its nationals demon- duce illicit financial flows of corruptly -ac strates that private-sector corruption on quired funds. a massive scale can be prosecuted. In this The state-capture project also illustrates case hsbc paid €300 million to the French that members of the anc, particularly at government to settle these claims–just in the local level, can remain anticorruption time to face allegations of “possible crimi- allies. Not only do party members worry nal complicity” in facilitating money-laun- about the future electability of the ruling dering for the Gupta/Zuma state-capture party, but they are also adversely affected project.32 by the decline in public services that corrup- The account above shows that private- tion causes. Civil servants and public-sector sector companies who are adversely af- workers are also likely to be part of an anti- fected by corruption are a weak link in the corruption coalition if they struggle to meet state-capture project. Van der Merwe, the their formal briefs and obligations due to Gupta attorney who turned state witness, the conflicting demands of corrupt elites. admitted that he used his trust fund to In this respect, it is not a surprise that trade- launder payments between Limpopo De- union members in the public sector were partment of Health official Miriam Sega- at the forefront of pressuring cosatu out

180 Dædalus, the Journal of the American Academy of Arts & Sciences of the tripartite alliance with the anc. Pol- prosecuting power of the Hawks and the po- Sarah icy is required to facilitate a return to con- lice, and the integrity of the National Prose- Bracking stitutionalism, ethical universalism, and cuting Authority–remains. In this task, the the 2012 National Development Plan rec- potential of a multiracial anticorruption co- ommendation that South Africa “focus re- alition has not yet been realized, despite its lentlessly on building a professional public manifestation in virtual space on social me- service and a capable state.”33 In turn, this dia, expressed through satire and vernac- requires a reduction in citizens’ fear of polit- ular appeals to solidarity. The postapart- ical violence at the ward level so that public heid generation is rejecting the ideological servants are not afraid to blow the whistle, cover of patriotic nationalism in favor of a and so that a new leadership with a commit- modern state with improved service deliv- Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 ment to public service can emerge. Politi- ery. The predominantly White middle-class cal violence must be monitored, resisted, activism of the ngo sector needs to connect and prosecuted. In confronting political vi- with and extend solidarity to this new gen- olence, the police must assume their role as eration of social activists, assisting in the in a public-service authority rather than as a situ activism of those defending their neigh- tool of the ruling party. borhoods and services against corruption That effective states are still associated by monitoring political violence and pro- with modernity and freedom helps in build- viding legal services. But ngos must also ing a coalition to advocate for anticorrup- connect with the white-collar public ser- tion policies, as social media is replete with vants who are defending their public man- the outrage of the young over the state of dates: the costs of taking positions of integ- the South African nation and the elites’ bro- rity–not limited to the loss of life or em- ken promises of development and democra- ployment–cannot be borne exclusively by cy. But the major challenge–restoring the activists and the young.

endnotes 1 Jacob Zuma was president of South Africa from February 9, 2009, to February 14, 2018, when his deputy Cyril Ramaphosa took over. Since resigning the presidency under pressure from the anc, the national director of public prosecutions, alongside a Judicial Commission of Inquiry, decided in March 2018 that prosecution of the former president would move forward beginning with a summons to the KwaZulu-Natal High Court on April 6, 2018. Howev- er, with multiple appeals processes and remaining political support, this course could be ex- tremely lengthy or eventually aborted. 2 Haroon Bhorat, Mbongiseni Buthelezi, Ivor Chipkin, et al., Betrayal of the Promise: How South Africa is Being Stolen (Stellenbosch, South Africa: Stellenbosch University, 2017), 3. 3 Ibid., 2. 4 Ibid. 5 Ibid., 36. 6 Ibid. 7 Ibid., 31. 8 Ibid., 2. 9 Govan Whittles, “anc Has to Adapt or Die, Says Gordhan,” The Mail and Guardian, July 2, 2017, https://mg.co.za/article/2017-07-01-anc-has-to-adapt-or-die-says-gordhan.

147 (3) Summer 2018 181 Corruption & 10 Thulisile Madonsela, State of Capture (Pretoria: Office of the Public Protector, 2016); and Bhorat State Capture: et al., Betrayal of the Promise, 3. What Can 11 Citizens Do? Bhorat et al., Betrayal of the Promise, 13, 25–28. 12 Chris Allen “Understanding African Politics,” Review of African Political Economy 22 (65) (1995): 301–320. 13 Sarah Bracking, “Development Denied: Autocratic Militarism in post-election Zimbabwe,” Re- view of African Political Economy 32 (104–105) (2005): 341–357; Sarah Bracking, “Political Econo- mies of Corruption beyond Liberalism: An Interpretative View of Zimbabwe,” Singapore Jour- nal of Tropical Geography 30 (1) (2009): 35–51; and Lloyd Sachikonye, When a State Turns on its Cit- izens: 60 Years of Institutionalised Violence (Harare, Zimbabwe: Weaver Press, 2011).

14 Karl von Holdt, “South Africa: The Transition to Violent Democracy,” Review of African Political Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 Economy 40 (138) (2013): 590. 15 Mushtaq Khan, “Markets, States and Democracy: Patron-Client Networks and the Case for Democracy in Developing Countries,” Democratization 12 (5) (2005): 704–724. 16 Daniel M. Goldstein and Enrique Desmond Arias, eds., Violent Democracies in Latin America (Durham, N.C.: Duke University Press, 2010). 17 Michael Burawoy and Karl von Holdt, Conversations with Bourdieu: The Johannesburg Moment (Johan- nesburg: Wits University Press, 2011), 94–96. 18 Von Holdt, “South Africa: The Transition to Violent Democracy.” 19 Ibid., 596. 20 In April 2009, the Acting National Director of Public Prosecutions, Mokotedi Mpshe, an- nounced that because of an “abuse of process,” the corruption charges against Zuma related to the arms deal would have to be dropped. He was referring to a taped conversation of an im- proper discussion between the then–head of the Directorate of Special Operations Leonard McCarthy and then–National Prosecuting Authority head Bulelani Ngcuka. For a full account, see Helen Suzman Foundation, Understanding the Spy Tapes Saga (Parktown, South Africa: Hel- en Suzman Foundation, 2014), http://hsf.org.za/resource-centre/hsf-briefs/understanding -the-spy-tapes-saga. 21 Themba Godi, quoted in Marianne Merten, “Reporter’s Parliamentary Notebook: It’s Corporate Capture, States Ramaphosa, Now Let People Clear their Names,” Daily Maverick, June 15, 2017, http:// www.msn.com/en-za/news/other/reporters-parliamentary-notebook-its-corporate-capture -states-ramaphosa-now-let-people-clear-their-names/ar-BBCGh5B?li=BBqfP3n&ocid= UP97DHP. 22 Douglass C. North, John J. Wallis, and Barry R. Weingast, Violence and Social Orders: A Conceptu- al Framework for Understanding Recorded Human History (Cambridge: Cambridge University Press, 2009). 23 Amanda Hammar and Brian Raftopoulos, “Zimbabwe’s Unfinished Business: Rethinking Land, State and Nation,” in Zimbabwe’s Unfinished Business: Rethinking Land, State and Nation in the Con- text of Crisis, ed. Amanda Hammar, Brian Raftopoulos, and Stig Jensen (Harare, Zimbabwe: Weaver Press, 2003), 1–47. 24 Tom Lodge and Shauna Mottiar, “Protest in South Africa: Motives and Meanings,” Democra- tization 23 (5): 819–837. 25 Thulisile Madonsela, Rocking the Boat (Pretoria: Office of the Public Protector, 2016), http://www .pprotect.org/sites/default/files/legislation_report/Rocking_the_Bout_Final_Report.pdf. 26 Susan Comrie, “On the Trail of Tegeta’s Offshore Shareholder,” City Press, May 17, 2016, https:// city-press.news24.com/News/on-the-trail-of-tegetas-offshore-shareholder-20160507; and War- ren Thompson, “A Multi-Million Rand Pay Day for the Zuma(s),” Moneyweb, August 23, 2017,

182 Dædalus, the Journal of the American Academy of Arts & Sciences https://www.moneyweb.co.za/news/companies-and-deals/a-multi-million-rand-pay-day-for Sarah -the-zumas/. Bracking 27 Bhorat et al., Betrayal of the Promise, 31. 28 Ibid., 29. 29 Alina Mungiu-Pippidi, “Corruption, Diagnosis and Treatment,” Journal of Democracy 17 (3) (2006): 86–99; Bo Rothstein, Quality of Government: Corruption, Social Trust and Inequality in an International Perspective (Chicago: University of Chicago Press, 2011); and Anna Persson, Bo Rothstein, and Jan Teorell, The Failure of Anti-Corruption Policies: A Theoretical Mischaracterization of the Problem, Quality of Government Working Paper 19 (Gothenburg: University of Gothen- burg, 2010).

30 Persson et al., The Failure of Anticorruption Policies; Jesper Johnsøn, Nils Taxell, and Dominik Downloaded from http://direct.mit.edu/daed/article-pdf/147/3/169/1831142/daed_a_00509.pdf by guest on 30 September 2021 Zaum, Mapping Evidence Gaps in Anti-Corruption: Assessing the State of the Operationally Relevant Evi- dence on Donors’ Actions and Approaches to Reducing Corruption, U4 Issue 7 (Bergen: Chr. Michelsen Institute, 2012); Department for International Development of the United Kingdom, DFID’s Governance Portfolio Review: Summary Review of DFID’s Governance Portfolio, 2004–2009 (London: Her Majesty’s Stationary Office, 2011); Department for International Development, Joint Eval- uation of Support to Anti-Corruption Efforts 2002–2009 (London: Her Majesty’s Stationary Office, 2013); and The Norwegian Agency for Development Cooperation, Contextual Choices in Fight- ing Corruption: Lessons Learned, ed. Alina Mungiu-Pippidi, Masa Loncaric, Bianca Vaz Mundo, et al. (Oslo: Norwegian Agency for Development Cooperation, 2011). 31 Bhorat et al., Betrayal of the Promise, 3. 32 Rob Davies, “hsbc ‘Complicit’ in South Africa Scandal, House of Lords Told,” The Guardian, No- vember 1, 2017, https://www.theguardian.com/business/2017/nov/01/hsbc-investigated-fund -transfers-south-africa-corruption-row-zuma-gupta. 33 National Planning Commission, National Development Plan: Vision 2030 (Pretoria: National Plan- ning Commission, 2012).

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