How not to talk about corruption in South Africa

On Tuesday, 5 December, global retail group, Steinhoff International, headquartered in South Africa, announced the resignation of its CEO, Markus Jooste. A white South African, Jooste, resigned in connection with a German accounting fraud investigation, involving significant overstatements on revenue and assets. One asset manager noted of Steinhoff that it was “as close to a corporate-structured ponzi scheme as one can get.”

What followed has been heralded as one of South Africa’s biggest ever corporate scandals; its largest corporate collapse. Steinhoff is registered in the Netherlands, its primary listing is on the Frankfurt Stock Exchange in Germany and its secondary listing on the Johannesburg Stock Exchange in South Africa. 

Within three days of Jooste’s resignation, Steinhoff was downgraded by Moody’s to junk status. Its stock declined in value by 88 percent, causing contagion across the Johannesburg Stock Exchange, undermining South Africa’s economy in the process, devaluing millions of pensions, as well as threatening the jobs of 105,000 employees worldwide. South Africans are rightly appalled. As the Daily Maverick columnist Richard Poplak tweeted: “The rage streaming toward Steinhoff (and friends) has everything to do with the fact that corporate South Africa has long positioned itself as the antidote to corrupt government. The racial implications should be obvious. The bankruptcy (pun intended) of this notion even more so.”

The issues raised in the Steinhoff collapse deserve dedicated treatment. My interest though is less with Steinhoff than with South Africa’s debate about Steinhoff. Certain features of this debate illuminate the problem with South Africa’s general corruption debate. 

The Steinhoff scandal has been occasioned by comparison with South Africa’s state capture crisis, the latter involving President Jacob Zuma’s outsourcing of key state decisions to unaccountable and often unknown fora outside the state – most prominently involving the infamous Guptas, an Indian immigrant family close to Zuma. While no one doubts how corrupt the Zuma faction of the ANC has become or the role of the Guptas, the way the debate has developed in South African media and in anti-corruption campaigns reinforces, or fails to adequately address, racialized and ahistorical accounts of corruption as a problem specific to black people.

White South Africans bear original responsibility for poisoning this debate. Not surprisingly, they have tied it into ancient, racist themes about black people’s abilities to govern.

In post-apartheid South Africa, whites have additionally pursued related elaborations around white status anxieties about black upward mobility. In particular, white South Africans have used claims as to corruption to reinforce racism-tainted values of merit, public interest, impartiality and legality. The response from more egalitarian tendencies — in the ruling ANC, the unions, the student movement and more broadly — has been to point towards the still largely white-controlled corporations, their role in corrupting the state, and the latter’s own internal corruption. This is a credible response, but this now decades-old exchange has come to have certain limitations.

Consider, initially, the now common statement that white-controlled corporates marched, or helped foment marches, against state capture in its own interests, but also, racistly, has no interest in dealing with white corporate corruption. The first part of this statement is trite, and incomplete. If South Africans are hoping for capital to act against its interests, they’ll be disappointed. And in any case the majority of the marchers were black, with many (in the unions for instance) opposed to the corporates and moving on their own initiative. The second part of the statement is false.

Legal rules construct markets. Those around accounting fraud, at issue here, do so by ensuring the processes of verification which generate the trust that lubricates, rendering more profitable, all market exchanges. The agents of capitalism, although undoubtedly often racist, have committed immense efforts over centuries to establishing an infrastructure to ensure this trust in exchange, bringing into being whole professions; standard processes, checked and balanced; internal and external financial and other forms of accounting and auditing; financial forensics; corporate and professional codes of conduct; tribunals; specialized regulatory agencies, enforcement agencies, courts, these often with effectively transnational jurisdiction.

The market itself is allergic to a breach of trust. When Steinhoff did so, within three days it lost almost R200 billion. Its chairperson, Christo Wiese, at the same time lost 87% of his wealth. (Incidentally, Wiese “tried to board a flight from England to Luxembourg in 2009 with two checked suitcases and one carry-on bag stuffed with a combined £674,920 — just over $1 million — in bills.”) In cleansing the system, Jooste and others have resigned. Investigations in South Africa, Germany and the Netherlands are proceeding unhindered. Jail time is a prospect. As such, people denouncing the Steinhoff executive, calling for accountability, are simply promoting the legal rules established at the behest of white capitalists, to serve the general interests of their capitalism.

Universal convergence on this point, almost entirely unnoticed, is remarkable. Everyone pursues a singular cause, marching divided so to speak, but striking united. On 9 December the Zuma-aligned Progressive Professionals Forum opened a docket of inquiry for criminal charges against responsible persons. A day earlier the pro-market Democratic Alliance had written to Dutch, South African and German authorities asking for investigations to be extended to Steinhoff’s auditor, Deloitte. On that same day, the independent, socialist union federation, SAFTU (the breakaway from the ANC-aligned COSATU), had released a statement also urging wider investigations, suggesting that the collapse was evidence of a “structurally corrupt capitalist system.” A day before this, when questioned by a centrist commentator to the effect that “South African business, big established capital, is corrupt,” the CEO of Business Leadership South Africa (the peak association of broadly white corporates — the CEO is black) responded that “it is absolutely corrupt to the core,” continuing that the association would be taking steps against its members.

It is a relatively happy alignment on an immediate, shared problem, but one unfortunately much less likely to happen when it comes to that public trust, that final guarantor of all anti-corruption, that common vehicle of socially-beneficial ends: the state. The problem here is that white South Africans set, or are allowed to set, or are imagined to set, the entire agenda. White hypocrisy is declared in not physically marching against Steinhoff. In Steinhoff’s reflection, in a narrative that finds traction at various points especially across South Africa’s left, the whole movement against state capture gets reduced to white people. Any black involvement in that movement is only, completely, a cover for white-racist tendencies. 

After 23 years of post-apartheid social evolution, this discourse is clearly not intended as a serious appraisal of the current situation. Anyone who has observed state capture marches on the ground, who has paid some attention to the networks behind the scenes, who has any insight as to the wider implications of what the Zumaists are doing, would know that the situation is complex enough to make a simplistic and essentializing application of racial categories outrageous. Instead of engaging with this complexity, and while omitting to develop a more sophisticated approach on this great matter of state, many instead rest on cheap rhetorical points which have the effect of rendering other black people invisible; denying their interests, their thoughts, and their agency; excluding their contribution from legitimate participation in the body politic; reducing them to white racists for pursuing their own, quite legitimate, interests.

The discourse in question has no regard, even, for the black working class and poor for whom it often claims to speak. It elides entirely the decade-old opposition to corruption, and more recently state capture, displayed from certain quarters of the union federation COSATU and its off-shoots. It ignores the interests and expressions of the poor, many presently pressed under the boot of the ANC patronage machine. These often decry the corruption of the ward councillor, his political favoritism in the allocation of jobs, contracts, and houses; his use of these resources to co-opt insurgent popular leadership and divide incipient movements; even the assassination of popular leaders who resist incorporation. The poor generally have a better understanding of the lines up to President Zuma’s project, much better than anyone in South Africa’s myopic, middle class debate. As one member of a poor people’s movement was inclined to say, and I regrettably paraphrase: “We know that white monopoly capital is the big devil, but we need to get through Zuma to get to them.” 

By centering white people, this improvident discourse marginalizes everyone but white people. To all outward appearances, barring the Zumaists themselves, no group that expresses such centering has ever defined its own interests in relation to state capture, none has attempted to accrue a broader role in societal leadership, to embark on the detailed tactical-institutional analysis needed to craft the response in accordance with own wider objectives. They have all simply ceded this ground to opponents in the moderate wing of the ANC, the Democratic Alliance, and elsewhere. On Steinhoff, these groups unthinkingly unite behind white capital, in restoring conditions of capitalist profitability, innocent of an interest in shifting broader institutions in their favor. On state capture, these divide the left internally, foregoing opportunities to leverage crisis toward shaping a more effective state: one more inclined to drive transformative public policy, one more accountable to the interests of the black working class and poor.

Ryan Brunette

Ryan Brunette is a researcher, working on issues of governance and public administration, at the Public Affairs Research Institute in the University of the Witwatersrand. He writes here in his personal capacity.

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