Gupta emails: a crack becomes a canyon

Posted 23 July 2017 Written by Bruce Whitfield
Category Corruption

As evidence mounts of industrial-scale corruption in South Africa's public sector, aided and abetted, it would seem, by elements within private enterprise, it's good to know it cannot go on forever, writes Bruce Whitfield in Business Day.

Corruption on this scale has all the characteristics of a Ponzi scheme, named after a 20th-century con man in the US. They require steadily growing income to fund their mounting outgoings to survive. Choke the income and the cash flow stops. And that's when things quickly fall apart, as scores of investors have learnt.

The same holds true for South Africa's corruption networks. It helps explain why the scale of the corruption is so vast and why there is a growing sense of a feeding frenzy happening as crooked officials seek to capitalise while they still can.

Gone are the days when a couple of hundred thousand might have netted you a juicy contract. Nowadays there are too many checks and balances implemented by meddlesome Treasury officials and a series of difficult finance ministers to get away with that. No, you need to aim straight for the top. Why collude with the procurement head in a department when you can own a minister? At least, that is what the Gupta e-mails suggest has been happening.

A corrupted cabinet minister cannot do the job of hijacking the public purse single-handedly. People must be paid off along the way. If the cash stops coming, that becomes increasingly difficult to do.

In the beginning of any corrupt relationship, I am told, the numbers are likely to be quite small. As the enterprise grows, so, too, do the sums of money required to sustain it. In an ecosystem dependent on handouts, the more palms there are to grease, the more audacious the corruption. It becomes harder to hide and increasingly difficult to sustain.

Perversely, the failure of the prosecuting authority to do its job may still have a positive outcome for South Africa as a growing list of private sector companies with global reputations to preserve are linked to allegations of impropriety. They are obliged by virtue of the fact that they have shareholders that do not like scandal and the risk of even a whiff of corruption.

Despite its denials of any wrongdoing, EOH this week saw a sharp retreat in the value of its shares. SAP has had to hire a big law firm to do an investigation, and it has promised transparency. KPMG is being probed by its own industry body. Bell Pottinger, in addition to an investigation we know has already turned up evidence of malfeasance, has been summoned to explain some of the worst excesses of its work to its peers in the UK. Companies seeking to do business globally might not fear Shaun Abrahams and the NPA, but they have unwavering respect for the teeth of bodies such as the UK Serious Fraud Office and corruption busters in the US.

If any of the companies mentioned in the Gupta mails are found to have aided corruption, they would face serious financial repercussions and even legal sanction in other jurisdictions. Just one company being caught out will be enough to dissuade others, and that's how the rot will eventually be undone. It's starting.


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