Calling business to account

The public is fed up with the fallout of crony capitalism

Corruption Watch’s David Lewis has lost enthusiasm for that once-great principle of being “innocent until proven guilty”. There are two reasons it’s grating him: the criminal justice system has been so deeply corrupted it’s almost incapable of proving anybody innocent or guilty; and, if that legal system actually did work, those with money could invest in legal services to ensure justice was permanently delayed.

Lewis voiced his frustrations just a day after Bernard Agulhas’s chilling interview with Chris Barron appeared in the Sunday Times. Agulhas, who is head of the Independent Regulatory Board for Auditors (IRBA), isn’t holding out much hope of a speedy resolution of the investigation into KPMG’S audit of Gupta-owned Linkway Trading. There is apparently a process, says Agulhas — a long-drawn-out one — that is likely to be made longer by the army of lawyers available to a wellresourced entity such as KPMG.

There’s also the fact that the IRBA can only investigate the auditing services that KPMG provided the Guptas’ Oakbay — it has no jurisdiction over financial advisory services provided.

This is why all of us in the cheap seats are inclined to cheer when we hear the Institute of Directors has suspended its relationship with KPMG. “But KPMG hasn’t been proven guilty of anything,” says the establishment, frowning at the attitude of the court of public opinion. Whose fault is it that few of us in that court believe KPMG will ever be found guilty of anything?

The problem for our business leaders is that if KPMG is not found guilty of anything, then the auditing profession will be deemed guilty, as will the cosy establishment that hosts it.

Brick by brick, the “ethical” edifice that’s needed for a functioning economy is being dismantled by “leaders” who defend their unacceptable actions by claiming not to have broken any laws or rules. Like President Jacob Zuma, they point out they have never been found guilty because, like Zuma, they’ve directed huge resources against efforts to prove their guilt.

And guess what? Tomes of corporate governance guidelines will no longer help disguise the rot. The cynicism of our leaders means all this governance guff will soon cease to persuade the attending masses of stakeholders of business’s virtue. Recall that Oakbay was able to tick almost all of the King 4 boxes.

The mood has turned. In 1979 Tim Bell helped Margaret Thatcher’s Conservative Party win the UK general election. This unleashed a generation of unrelenting shareholder capitalism and killed hope of a convergence of socialism and capitalism. In 1988 Bell Pottinger was established. In 1989 the Berlin Wall came down and Francis Fukuyama talked about the end of history. Inequality across the globe headed back to levels last seen at the end of the 19th century. In 2007 the greed and fear of shareholder capitalism brought us the global financial crisis.

Our leaders are pretending things have not really changed; that our economic system is innocent because it has not been proved guilty. But the public has found it, and its Bell Pottingers and KPMGS, guilty.

Brick by brick, the ‘ethical’ edifice that’s needed for a functioning economy is being dismantled