“State-capture” hyperbole grips South Africa

Ten years ago in March, UK’s Scotland Yard launched an investigation into the alleged sale of honours by the Labour party.

In 2006, Prime Minister Tony Blair became the first premier to be questioned by the police whilst in office. A British member of Parliament alleged that Tony Blair’s party was “selling” peerages in return for donations and often undeclared loans, as the now infamous ‘Cash for Honours’ scandal gripped the UK.

The current British Prime Minister David Cameron was involved in his own scandal at the beginning of his first term.

In 2012, Cameron was forced to admit that he had hosted wealthy Tory donors who have given a total of £23 million to his party at a series of private dinners and lunches in Downing Street and at Chequers, the prime minister’s official country residence: in effect, admitting that his party was selling dinners with the Prime Minister to business people in return for influence on legislation.

Washington is awash with similar scandals, the most recent being US President Barak Obama’s alleged sale of ambassadorships to donors for a bargain price of 1.8 million each.

Indeed, many of his donors, who had no experience in public office or diplomacy, were posted around the world as US envoys.

South Africa’s BRICS partner Brazil is also going through similar scandals where politicians are accused of corruption and malfeasance. In India, too, cosy ties between big business and serving heads of government have made for uneasy headlines. The latest being Indian billionaire Gautam Adani, known now as the “constant companion” of Indian Prime Minister Narendra Modi.

Influence of big business in politics is a topical matter in US presidential elections with Senator Bernie Sanders’ big focus on the problematic political influence of the financial sector.

Yet they have hardly provoked any significant public clamour for reform.

In South Africa, a country with fewer resources but with a politically active citizenry owing to its brutal apartheid past, the issue of business influence over politicians and its contribution to political corruption ranks significantly higher on the political agenda.

Of particular interest is the influence and clout of the wealthy business family, the Guptas, recent Indian migrants to South Africa, over government affairs.

The Gupta family moved to South Africa in the 1990’s and soon connected themselves with the governing African National Congress. As a wealthy business family, the Guptas’ have sought government business and in doing so identified politically connected individuals as partners in their businesses from mining to construction and media.

South Africa’s president Jacob Zuma is in the line of fire from critics owing to his personal ties to the Gupta group. Some members of his family having taken employment in Gupta owned businesses in the past.

The Gupta brothers Atul, Ajay and Rajesh have been major financial backers of both Zuma and the ANC.

President Zuma’s son Duduzane sits on the boards of at least six Gupta companies, and also acts as the family’s local partner to gain points in business affirmative action for blacks.

Claims that businessmen close to Zuma offered a deputy minister a cabinet job have rattled the country [Xinhua]

In February this year, the Competition Commission recommended approval of a mine deal by a company jointly controlled by the Guptas and Zuma’s son.

The current row exploded on Wednesday when Deputy Finance Minister Mcebisi Jonas said the Gupta family had offered him former finance minister Nhlanhla Nene’s job. Zuma rejected the claims in parliament on Thursday.

Amid the din, one charge being hurled by the opposition, that of “state capture” needs questioning.

South Africa is a strong democracy with viable constitutional organs of state that have displayed the ability to operate without influence or favour.

These safeguards are still in place. That has not stopped opposition politicians and commentators alleging that the Guptas have “captured” the South African state at the behest of Zuma.

Is this not ‘hyperbolic’?

There is no way to capture the South African state with varied organs, an overzealously independent judiciary, constitutional ombudsmen offices and independent prosecution authority. The test of ‘state capture’ herein would lie in parliament making laws to suit individuals and lawmakers. That is clearly not the case here.

These allegations of “state capture” intensified when it emerged that the Gupta family was seeking to supply coal to a state utility power distributor. But the criticism began when state owned companies began sponsoring a television show co-hosted by a Gupta family owned media group with state broadcaster SABC. The New Age is a brainchild of the ANC itself with members of former president Thabo Mbeki’s team having been consultants to its establishment.

In the digital media age where print media is competing for survival, more entrenched rival media groups frowned upon this new entrant securing support over themselves as an unfair advantage aimed at selling “sweetheart news” to the public and getting income other than paper sales.

Last December, Zuma made a surprising change to his cabinet removing a Finance Minister Nhlanhla Nene after credit ratings agencies had downgraded South Africa’s sovereign ratings. The South African rand had slumped to 14 year-lows in 2015. Irrespective of the economic uncertainties, the removal of Nene ignited speculation that the Gupta family had orchestrated the ouster to benefit from a proposed nuclear deal to which Nene was opposed.

This remounted criticism of Zuma’s links with Guptas, eventually leading to the “state capture” charges.

Here’s what the International Monetary Fund says about it: “We define state capture as the efforts of firms to shape the laws, policies, and regulations of the state to their own advantage by providing illicit private gains to public officials.”

Zuma’s choice for finance minister got the banking sector up in arms. CEOs of various banks formed a bloc to call for the reversal of Zuma’s decision. These bankers and business families from the top apartheid-economy demanded a rethink using their own political contacts within the governing party to exert pressure as the market suffered a severe pounding.

Former Minister of Finance Trevor Manuel, himself a banker now and associated with various apartheid-economy families was in the forefront of this group alongwith a former employee and now spouse Maria Ramos.

Manuel is also a senior advisor at the British Rothschild Group.

Manuel’s wife, Maria Ramos, is chief executive officer of Barclays Africa Group Ltd.

Manuel and Ramos have furthered these allegations of “state capture” by the Gupta family and have put forth their own recommendations for the Finance Minister’s post.

Meanwhile, more allegations of attempts to influence politicians in various ways by the Gupta family are coming out and the governing ANC will be holding a party meeting to discuss this matter.

South Africa remains a racially divided society with no clear lines in debate. Often the ‘motivation’ for complaints and scandals emanate from racial prejudice with apartheid-era business families dealing with a waning influence.

There are also deep-seated resentments and tensions among the black population of South Africa and the immigrant Indian population, some of which are now troublingly coming to the fore in the division of lines during the Gupta fiasco.

In South Africa, whilst the debate rages on against “crony capitalism” and even on attempted “state capture”, beneath it, however, is a contestation for limited resources and political influence. Zuma should show leadership and distance himself from the Gupta family especially when allegations of malfeasance have come to the fore. Incidentally, the allegations may also be revealing legislative gaps in South Africa.