State of Capture: Corruption in Jacob Zuma’s South Africa

This is from Quartz Africa: 

The 355-page report detailing corruption in South Africa’s ruling party offers one rare uplifting moment. In the report, deputy finance minister Mcebisi Jonas reveals more details of how he turned down an offer by the powerful Gupta family of 600 million rand (about $44 million) to be the country’s finance minister.

Jonas, in an interview with Thuli Mandonsela, the country’s former anti-corruption chief who spearheaded the report released today, said he had agreed to meet with president Jacob Zuma’s son Duduzane Zuma on Oct. 23 last year, a few months before then finance minister Nhlanhla Nene was dismissed, kicking off a hailstorm of corruption allegations against the president.

Jonas met the younger Zuma at the Hyatt Regency hotel in the Johannesburg suburb of Rosebank where Zuma asked if they could move to a more private location for discussions “with a third party.”

Jonas was then taken to the Gupta compound in the suburb of Saxonwold where they were joined by Ajay Gupta, the eldest of the Gupta brothers, who briskly informed the deputy minister that “they had been gathering intelligence on him and those close to him.” Gupta informed Jonas that they were going to make him minister of finance, to which Jonas said that only the president could make that decision.

You can download the full State of Capture report here (pdf).

For more on the history of corruption in South Africa see here.

Who’s responsible for South Africa’s woes? Zuma or the ANC?

I raised this question in a post last year.

Friend of the blog and Harvard-trained historian Matthew Kustenbauder has this thoughtful response (posted with his permission. Emphases mine).

Hi Ken,

Interesting post on South Africa’s recent rollercoaster and explanations for the economic downturn under Zuma’s presidency.  A few quick comments:

I agree South Africa’s current woes may be attributed to ANC policies, not President Jacob Zuma alone.  Take the issue of land, for example, about which Mr. Mngxitama is as passionate as he is wrong.  As I pointed out previously on this blog, the politics of land redistribution in South Africa are tied to the ANC’s historic decision to support and strengthen traditional authority in the former bantustans.  In short, the ANC forged an alliance with traditional leaders to bolster its negotiating power with the apartheid government in the 1990s and, afterwards, to win elections.  Mozambique served as a cautionary tale: civil war broke out after the socialist liberation government FRELIMO abolished chiefs and traditional forms of authority outright.  The ANC’s entrenchment of traditional chiefs and kings has had a ripple effect across South Africa, creating a drag on the rural economy, locking up productive agricultural land and capital assets, not to mention denying rural people equal justice under the law.

I also appreciate the argument, and agree to a degree, that both Mr. Zuma and Mr. Mbeki are ANC cadres.  When the opposition Democratic Alliance argue that somehow the country was in good hands until Mr. Zuma came along, it is more a political manouver to appeal to the black middle classes, many of whom are embarrased by Mr. Zuma and favoured Mr. Mbeki, than it is a faithful rendering of the historical record.  Thabo Mbeki was, despite his polished veneer, a disaster on many fronts, including but not limited to: unrepentant AIDS denialism, cadre deployment as an ANC policy, racial politics, silencing of internal opposition within the ANC, and a narrative that counterrevolutionary forces lurked within the media. These ideas and practices either began or were ramped up to become de facto party policy under Mr. Mbeki’s presidency.

I disagree, however, that Zuma and Mbeki represent nothing more than two cadres of the same party.  For one thing, the challenges facing South Africa today are different than those during the Mbeki years.  At that time, South Africa still luxuriated in the glow of 1994’s transition to democracy and the Madiba magic of Nelson Mandela had not yet worn off.  Mbeki was a skilled orator with global leadership aspirations, the likes of which have not been seen in South Africa since Jan Smuts was Prime Minister during WWII.  But it is not simply Zuma’s halting English, or his multiple wives, countless offspring, traditionalism, patriarchy, and coziness with Russia, China, and Sudan that make South Africans uneasy.

What is so disturbing – and what Mbeki assiduously avoided – is Zuma’s overt corruption. The most public evidence includes: Nkandla, the Gupta family’s illegal landings at Waterkloof Airforce Base, a prolonged legal battle over spy tapes that implicate him in fraud dating all the way back to his time as Deputy President (for which Mbeki sacked him and Schabir Shaik was found guilty and went to jail), and the most recent dismissal of Nhlanhla Nene for standing in the way of sweetheart SAA and nuclear deals that would have yielded tenders for Zuma’s friends and family.  If Mbeki was a loyal cadre who represented the ANC’s failed policies, Zuma is a loyal cadre who represents the ANC’s descent into patronage, corruption, and jobs for pals hidden behind a façade of election-time slogans, “our glorious struggle history” and “A Better South Africa for All.”  

Andile Mngxitama, booted out of the EFF, and firebrands like him who drone on about the ANC’s errant support of neoliberal policies and the tragedy of Mandela’s compromise during the political settlement period have little appreciation for just how far South Africa has come since 1994. Nor do they grasp the direction in which South Africa must go – and must go soon – to avoid a[n] even more tragic tailspin.

To give just one example, a major problem in South Africa has not been, contra Mr. Mngxitama, that capitalism has been prioritised. Rather, grassroots capitalism has been far too constrained – not just by government overregulation but by monopoly capitalism sheltered by the state.  This is a historical dynamic inherited from the apartheid-era National Party, one that the ANC never addressed, mainly because such arrangements benefitted the ANC so long as they controlled the levers of the state.

The number of state owned enterprises in South Africa – over 700 by the last count – is staggering for a country so small.  Just one, South African Airways, has drained well over $2 billion in bail-outs from state coffers in two decades. The energy sector is even more dire: Eskom, another state owned enterprise, has a near complete monopoly over energy generation and a complete monopoly over its transmission.  Due to a lack of capitalist competition, the country’s electricity supply is not just overly expensive, it is also tightly constrained. Last year South Africans plunged into darkness, and for some time now manufacturers and other industrial electricity consumers have actually been paid by the state to reduce their operations.

The result is that South Africa’s manufacturing sector is less competitive globally and unable to expand to create the jobs so desperately needed at home, where there is a 30% unemployment rate.  There are countless similar examples, where state owned enterprises should have been privatised, or at the very least private companies should have been permitted to enter the market and compete.  What must be remembered, however, is that the country’s economic system, designed by the old National Party, is now controlled by and benefits the African National Congress.

Similarly, in the private sector, too many large companies have a monopoly, making the cost of entry for small companies far too expensive. Government labor regulations and aggressive trade union action ensures that only the largest companies with the deepest pockets can comply and survive. Large private companies – like the mining groups, agro-processing operations, banks, telecommunications companies, and industrial manufacturers – operate with few competitors. Relatively small players in sectors like the textile industry have closed their doors and relocated to countries where labour is more productive, regulations more lax, and costs are cheaper. Too few South African companies can compete globally.

There may be a kernel of truth in Mngxitama’s claims, but his diagnosis is overly simplistic, ideological, and ahistorical.