Stupidity & greed, interrupted?
Former KPMG chairman Wiseman Nkuhlu has offered this country an opportunity. The auditing giant must be pressured into following through on redress payments, which should form a precedent that allows us to focus on economic justice for the looting of the
I t’s always been difficult to determine the worst fashion brand in Australia, a country in which beer sleeves count as formal attire. But then there’s David Jones, a brand so Sydney-on-boxed-wine that it would constitute a fashion crime in Upington. Major credit must go to Ian Moir, the former CEO of Woolworths, who not only managed to discover David Jones but also to buy it. He was cheered on by the South African retailer’s board and shareholders, largely because of the three-letter honorific preceding his name, which conferred on him the status of oracular High Priest.
Almost every time a South African CEO forays out of the country to make an acquisition, the bottom line is artificially juiced for a quarter or two … and then ensues an embarrassing mess. And so it was with David Jones.
Shortly following the purchase in 2014, long before the Covid-19 retail meltdown, the Woolworths share price started plummeting. The company has since lost more than 70% of its value, with R12-billion wiped off the books.
For this gargantuan screw-up, Moir has been punished with a R70-million windfall: he received R13.9-million for his eightmonth stint at Woolworths and R7-million for his five months as acting CEO of David Jones. He is currently also due R22.8-million in notice pay and a further R34.8-million in restraint-of-trade payouts.
Restraint of trade? If I were Woolworths, I’d pay a competitor R34.8-million to take him.
Neatly contrasting — or rather echoing — this formal economy debacle, there is the saga of a young tenderpreneur named Hamilton Ndlovu, who in May posted on social media images of three Porsches, a Lamborghini SUV and a Jeep Cherokee that he had purchased for his family during the Covid-19 lockdown period. Ndlovu is one of those lucky souls who magically secured a PPE contract from which he splooged money on big-ticket luxury items while his fellow South Africans starved in their homes. And he made sure that everyone knew about it.
We now suspect that a large portion the hundreds of billions earmarked by President Cyril Ramaphosa for emergency procurement was either stolen or misspent. In a recent address, the President promised immediate action and implied that the perpetrators would soon be wearing (David
Jones-designed?) orange overalls in a jail cell near you.
Subsequently we’ve learned that Ramaphosa is insisting that only parts of the Special Investigations
Unit’s homework assignment will be made available to the public.
In other words, if the government can help it, we’ll never really know the scale of procurement corruption.
Ndlovu has been so adept at plastering social media with his new toys that last week SARS was obliged to seize several of his vehicles, a whack of cash and other assets suspected stolen from the South African public.
But not everyone has proved so unwise. When you add up the plundering at stateowned enterprises, the rapaciousness of the Big Banks (who couldn’t figure out how to dispense the hundreds of billions of Covid-19 relief ZAR that were earmarked for small and medium-sized businesses) and, of course, the cover-up specialists and looters-in-chief of the state capture years, we arrive at a litany of names that are milestones along the highway to an IMF bailout: Steinhoff, Tongaat, Edcon, Eskom, SAA, Denel, SAP, Liebherr, McKinsey, Lonmin, EOH, AngloGold Ashanti, etcetera. Top this off off with a big heaping dollop of BBBEE bullshit and the Covid-19 bonanza, and we can start to process the total, complete failure of South African liberalised “development state” capitalism, a hybrid model of state/public corporatism that has massively enriched a handful of men and women while annihilating the nascent post-apartheid middle class and creating oceans of poverty.
As a result, just as in many parts of the world, this country now finds itself at a major historical inflection point: the hyper-wealthy can just about taste victory. There are almost no remaining challenges to their authority. Organised labour was once the alloy out of which economic and racial justice was forged. But it was co-opted by — or, rather, sold out to — the ruling party. Average citizens have been reduced to standalone units of labour to be discarded without any recourse. New coinages like “gig economy” and “outsourcing”, along with old tricks like the veneration of the
“entrepreneurial spirit”, can’t hide the fact that exploitation now exists on a previously unimaginable scale.
It’s hard to pin down the ontological spark of this class war, but it kicked off in earnest in 1970 when a Milton Friedman paper titled The Social Responsibility of Business is to Increase its Profits finally and fully unfettered the capitalist esprit. CEOs became the new gods and the market slowly started to decouple from reality — a process that is now fully complete in the wake of the global pandemic lockdowns.
Across the world, those god-like CEOtypes kept failing upwards, and now dominate both democratic and authoritarian politics alike. Their shareholders are not their so-called constituents but rather the hyper-wealthy benefactors backing their campaigns, who rig the system ever more tightly in their own interests.
But into this smoke-darkened dystopia last week shone a ray of light. It came from an unlikely source: Wiseman Nkuhlu, former chairman of KPMG SA.
As one of the Big Four auditing and consultancy firms, KPMG helps underpin monster capitalism more than any other, by creating the illusion of a functioning economic system. Weirdly, however, during a virtual book launch for his memoir, the absurdly-titled Enabler or Victim? KPMG SA and State
Capture, Nkuhlu did two things largely without precedent in South African corporate history. First, he admitted that his former employer had behaved poorly during the “Rogue Unit” report escapade: a rank piece of consultancy work that all but finalised the destruction of SARS and remains the most important piece of propaganda produced during the state capture era not to be burned in a Nkandla braai pit.
Second, Nkuhlu said that reparations should be paid to the more than 30 actual human beings who were materially and psychologically harmed by the contents of the report (and its subsequent laundering via the Sunday Times).
These comments may not have been meant for wider consumption, but they very quickly started doing the media rounds. As a towering member of the Mbeki-ist centre-right establishment, anything Nkuhlu says carries weight. And what he said was that corporates must bear responsibility, not only to their shareholders but also to the people they harm in the process of enriching a handful of hedge fund operators.
Even more importantly, Nkuhlu has opened the door to the idea of corporate redress, which could in turn expand out into other forms of compensation. During the reconciliation era, it was enough for black and white South Africans to appear in beer commercials together — the idea was that forgiveness had been granted to whites by the black population through the vicarage of Madiba, and it was now time to hug a new dispensation into being.
That didn’t work out so well, mostly because forgiveness without redress may be possible between individuals but it cannot form the basis of a sustainable national culture.
South Africans have learned the hard way that the only foundation on which a country can be built is justice. But justice wasn’t served to the fallen regime’s main instigators, and nor were any impositions made on the local or foreign corporations that banked all that sweet apartheid loot.
The muckraking NGO Open Secrets has written extensively in Daily Maverick about apartheid-era sanctions-busting enrichment, implicating the French “defence group” Thales, Nedbank, BAE Systems and many others in a decades-long project of organised corruption, the bill for which was forced upon the new democracy and paid off by taxpayers.
Wittingly or no, Wiseman Nkuhlu has offered this country an opportunity. KPMG SA must be pressured into following through on redress payments, which should form a precedent that allows us to focus on economic justice for the looting of the past 70 years. The money exists. And we can get it back. The stupidity and greed exemplified by the Ian Moirs and Hamilton Ndlovus of the world are the result of a twisted system that reifies profit and demonises humanity. If a company that has caused as much grief and destruction as KPMG SA can carve out a path toward a slightly better future, they should be encouraged to do so. As for their peers in state capture, the sooner we see them in some David Jones-inspired orange overalls the better.
But, more important still, it’s time for CEOs to get docked and for the South African people to be recompensed. DM168
South Africans have learned the hard way that the only foundation on which a country can be built is justice.