Does business follow the path of corruption or take the principled high road?

THE European view of Africa is that of a continent which is corrupt to the core with sweetheart arrangements all-pervasive in both business and politics and where presidents rule for life.

As the undisputed master of double standards, the Eurocentric standpoint is one of ignoring the illegal practices of its own corporate sponsors of corruption in Africa and where European corporates’ practices are so iniquitous as to make some form of spotlight unavoidable, then political machinations conjure warm glows of tacit reassurance instead of prosecution.

Within South Africa, these same perceptions exist as predominantly white business leaders see that corruption is now within our business and political landscapes, while trumpeting the fact that the massive misspending and abuse of taxpayers’ funds is the responsibility of malfunctioning government departments and state-owned entities.

One is hard pressed to disagree with these business leaders’ criticism, but on further examination, is it not a case of blindly adopting the Eurocentric self-righteous and morally dishonest approach?

Corrupt practice requires both a corruptor as well as a beneficiary.

It appears that the corruptor side of the equation is overlooked by these critics as well as most financial journalists whose focus is on exposing government and public entity beneficiaries while appearing disinclined to expend energy on targeting private sector perpetrators.

The requirements for products and services for government and public entities is on such a scale that often the execution of such supply contracts falls within the preserve of publicly listed or larger private companies and any corrupt or fraudulent activity will involve government and public entities operating with the private sector.

If it is accepted that big business transacts with government and that business places a great store on codes of ethics, governance and corporate citizenship, and if it is accepted that there is a raft of anticorruption laws on our statutes, then how is it possible that there is corruption on the scale which we are experiencing in South Africa?

The answers from the perspective of government appear to be:

There is no political will to stamp out corruption – political leaders and public entity employees suspected of, or guilty of contravening the statutes have the option to resign as opposed to being fired and criminally prosecuted.

There is insufficient prosecutorial capacity to probe and convict beneficiaries and corruptors.

The answers from the perspective of business appear to be:

Codes of ethics and governance are another layer of corporate PR spin not taken seriously.

Directors and non-executive directors, despite the requirements of the Companies Act and the Pre- vention and Combating of Corrupt Activities Act (PCCA), display little commitment in rooting out corruption. They adopt a non-confrontational “hear no evil, see no evil” approach which allows them the option of “but we didn’t know” as a seemingly effective excuse.

Many sections within the National Treasury and Public Finance Management Acts focus on procurement, together with the criminal ramifications of breaches of these acts.

It is common knowledge that most government procurement, based on the quantum involved, requires tenders and yet the levels of corruption indicate that deployed cadres, politicians and public entity employees engaged in nefarious activities view these acts with contempt.

Additional statutory anti-corruption muscle is included in many sections of the Companies Act and PCCA Act which are applicable for both public and private corporate entities, their employees as well as their leadership.

Notwithstanding all this “big stick” legislation, business people seem equally dismissive of the legal requirements and appear to act with a culture of impunity, knowing that those in responsible positions will rarely be prosecuted.

So, what then is the outline of a practical solution for corruption?

All tenders apart from the usual tender submission fee must include an additional “tender compliance fee” calculated as a formula based on the tender value as well as a percentage of the respective bidder’s annual turnover.

The tender compliance funds are deposited into a separate account administered by National Treasury.

National Treasury establishes a panel of firms specialising in forensic investigation.

All corruption/tender complaints are submitted to National Treasury.

National Treasury refers cases to forensic firms on a rotational/absence of conflict basis.

The tender compliance fund pays these forensic firms’ fees for investigations and reports.

Corruption/tender fraud is fast-tracked through the commercial courts and convictions with jail terms secured.

No deals allowed for employees of corrupting firms or beneficiaries to resign instead of prosecution.

Fines for corporates involved in corruption are calculated as a percentage of turnover and on a par with the scale of fines imposed by the Competition Commission for uncompetitive behaviour.

Business South Africa has reached a departure point where decisions have to be made with or without the partnership of government. Does business decide to continue down the road of corruption laid during the colonial and apartheid eras and now aid government and public entities into upgrading corruption? Or does busi- ness choose the principled high road?

Does executive management turn a blind eye by choosing to accept representations from employees at face value when these employees are often the heart of the problem?

Do non-executive directors abdicate their fiduciary responsibilities in terms of the Companies Act, the PCCA Act and King III as they tap dance around contentious issues by referring these matters to executive management who are clearly unwilling or incapable of grasping decisive and unpopular action?

From government’s side, the kernel of a solution above requires little political will and is easy to implement although time is running out.

We can continue with corrupt business practices and effectively mortgage the economic future of our country, or business can raise the ethical bar with significant intent and decide to show real leadership by being at the vanguard of an ethical business regeneration which can counter the scourge of corruption in our society.

Mantell is a businessman who runs a biscuit factory in Cape Town.

Show real leadership by being at the vanguard of an ethical business regeneration which can counter the scourge of corruption in our society