BMF statement on State Capture Report

18 January 2022

After careful consideration and reflection about the Report, the Black Management Forum (BMF) welcomes both the release and some of the recommendations of the State Capture Report Part 1.

The promise of a developmental State that prioritises ethics and good governance has been undermined by deep seated and institutionalised corruption. The Report affords the country the opportunity to honestly reflect on the kind of society we deserve, and most importantly, the kind of leadership that is required to build a democratic and thriving country.

The BMF commends the work of the Commission in steering a complex process which has taken almost four years to complete. We believe that what has been uncovered has not reached the depth of the state of corruption in the country but has given us insight into key issues related to governance, legislation, and the brazen abuse of political and economic power.

The State Capture phenomenon, as we have come to understand it, has four key features:

Creating a shadow state where decisions are no longer made by the Executive;

Re-purposing State Owned Entities (SOE’s), government institutions and plundering their resources;

Replacing good and efficient people with pliable co-conspirators in SOE’s and government institutions, and

Weakening of State Institutions

The extent of the unearthed corruption has a negative impact on the transformation agenda. The flouting of the PFMA, Executive Ethics Code, and other key legislative requirements delegitimises the government’s commitment to transformation. It is thus highly concerning that the governing party seems to be internally conflicted on how this Report should be interpreted, and its recommendations implemented.

Minister Gwede Mantashe has come out to defend cadre deployment and is suggesting that the Report may launch attacks on deployment, which can undermine transformation and democracy. The ANCWL has said that comrades should not use the Report to fight internal party battles.

There seems to be an overarching view within the ANC that the report's recommendations should be implemented in such a way that they do not harm the party. Yet, the entire State Capture project has only been possible through the ANC as the governing party. The ANC’s response thus far does not at all inspire confidence that the recommendations contained in the report will be prioritised and implemented.

As mentioned above, one of the key features of State Capture is the replacing of good and efficient people with pliable co-conspirators in State Institutions, across all three tiers of government and especially in SOE’s.

The BMF has always held the view that an Independent Professionals Panel of highly acclaimed and experienced individuals should be established. This should be supported by the creation of the necessary legislation to bring it to life from a Constitutional and legal perspective. This body should assist both the public and private sectors in the recommendation of leaders into top and strategic positions.

Part of the work of this Panel is to filter potential leaders who seek to sit on Boards, serve on strategic positions across the State including Commissions. The overarching principle that will drive the Panel is the agenda of transformation. We therefore make this call again, that an Independent Professionals Panel be established to assist and curb future corrupt leaders and shadow agendas in top leadership echelons.

Whilst corruption in South Africa has been made to be synonymous with the public sector and government, what this report has starkly revealed, is the complicity of the private sector in aiding and abetting State Capture. The BMF believes that a spotlight needs to be shone on, not only local companies involved in State Capture, but the numerous multinationals as well.

Companies who came into our country and committed crimes which they wouldn’t dare commit in jurisdictions such as the UK and US. Among other companies who were fingered, Part 1 of the State Capture Report focuses on a US Company, Bain, as having been at the center of the capture of SARS by being involved in 3 of the State Capture phenomena mentioned above:

Bain, through its relationship with former President, Jacob Zuma, knew of the appointment of Mr Tom Moyane to lead SARS before the public did. In fact, Bain was so entrenched in State Capture that they were literally at the table with President Zuma when the capture of SARS was planned.

Bain then proceeded to work with former President Jacob Zuma and Mr Tom Moyane to hollow out SARS by sacking effective and efficient individuals and replacing them with more pliable individuals.

These co-conspirators within the SOE then proceeded to weaken the agency and cripple its ability to conduct investigations on tax evaders in South Africa – the biggest of these being some notorious members of the Gupta family.

The weakening of SARS had a huge economic impact in our country which is still gripped by the stubborn threats of inequality, poverty, and unemployment. The taxes collected by SARS are used by government to deliver services to its 60 million people, as well as to create an enabling environment for the economy to thrive and for jobs to be created.

The BMF is of the view that all companies who are fingered by the Report must be expelled from doing business in the country for their facilitation in weakening the organs of the State. This action will send a strong message to the private sector in the country and to the international business community, that their influence must be informed by the principles of justice, equity, and fairness. The companies and individuals involved must be prosecuted and sanctioned accordingly, even if they have paid back the money.

We reject the Commission’s recommendation on deferred prosecution agreements. This continuous softening of consequences for unethical business behaviour will further delay the transformation trajectory of the country. The discussion in the country is missing this key element of powerful companies being properly dealt with, who have used their influence to bully and cripple the State. Business is central to society and is the life blood of society. Therefore, business needs to be held to the highest ethical standards because they drive the lives of ordinary people in our country.    

“The BMF submits that the capture of key SOE’s has been a heinous crime against the people of South Africa and no company or individual should be mollycoddled by any credible South African individual or business organization. In fact, companies and individuals who have now been officially confirmed in the Report to have aided and abetted State Capture should face criminal prosecution at best, and the strongest of sanctions at the very least,” said BMF Deputy-President Esethu Mancotywa.

Issued by BMF, 18 January 2022