Lessons from the state capture commissions - SACP

Party journal says prevailing regime of tenders serves as one of entry points for corporate capture of state institutions


The Guptas, Aggrizzi and the Watsons, Bain & Company, McKinsey & Company, KPMG, SAP, Naspers’ MultiChoice; the parasitic bourgeoisie and imperial and apartheid era monopoly capital: A review of the Commission of Inquiry into the corruption of state capture

The first to expose and characterise corporate state capture, and the first to call for the judicial commission of inquiry into the capture

The SACP is the first formation in our body politic that characterised the widespread corruption increasingly entrenched, post-1994, in the last decade in our state as corporate capture. The shorthand “state capture” that is used widely in the media, the economy, politics and elsewhere in the battle of ideas emanated in our national discourse from this analytical intervention by the SACP.

The corruption of corporate capture of the state was forged through a nexus involving, on the one hand, sections of public representatives and state or public sector officials, including board members and executives of public enterprises, and, on the other hand, parasitic bourgeoisie elements, domestic and foreign, including sections of apartheid era and imperial monopoly capital. The venal, corruptible and corrupting class forces were brought together by the greed of self-enrichment through the exploitation or theft of public resources and national wealth.

“…unless corruption and corporate-capture are dealt with severely and decisively these problems risk becoming systemic and difficult to reverse”, said the SACP in its Augmented Central Committee statement on 30 November 2014 in exposing the corporate, and in many ways also mafia, capture of state authorities. The SACP further called for decisive action to be taken.

There are... widespread indications of money politics at play and even of business people having a direct hand into appointments into key positions within the state”, the SACP said. “The best weapon against these dangers is two-fold”, further said the Party, identifying, firstly, “decisive state action including criminal prosecution of those allegedly involved in corrupt activities”. In the same vein, the SACP called for the capacity of the courts to deal effectively and efficiently with the scourge to be enhanced. The second measure that the Party indentified was that of combining the anti-corruption state intervention “with active communities and a united and mobilised working class”.

The Party led by example and started the mobilisation.

As part of the demands, the SACP was again the first to call for a judicial commission of inquiry into corporate state capture. The Party unveiled the call publicly on 7 March 2016 through the Central Committee Secretariat represented by Comrade Solly Mapaila, then the SACP Second Deputy General Secretary.

A follow up statement issued by the Party on 16 March 2016 pushing the call marked the nodal point of change. The SACP revitalised on an intensified basis the anti-corruption campaign known as the Red Card Corruption Campaign that the Party launched in 2010. This time focusing on fighting the corruption of corporate state capture, the SACP moved the demand for the establishment of a judicial commission of inquiry on to the campaign platform pushed it consistently.

Initial reaction by parliamentary parties and sections of extra-parliamentary organisations

Parliamentary parties and sections of extra-parliamentary organisations reacted by first rejecting the call for a judicial commission of inquiry into corporate state capture. They maintained this reaction until the former Public Protector, Thuli Madonsela, in her “State of capture” report dated 14 October 2016, prescribed the commission as a remedial measure. This prescription, of the commission as a remedial action, was preceded by a resource and time constraint investigation that she necessarily had to leave incomplete. In addition, the situation coincided with the end of her term of office.

The remedial action prescribed that the Chief Justice should solely select the judge who would head the commission. The reason for this innovation – which reshuffled the balance of forces in favour of the call first made by the SACP – was that the President was implicated. This constitutive criterion of the commission should not be forgotten as it is very important to the work of the commission.

The terms of reference of the commission were accordingly based on the allegations contained in the “State of capture” report. The commission was thus assigned with the duty of completing the work of the former Public Protector, to investigate the allegations contained in the “State of capture” report as the basis of its terms of reference, that is, its investigative inquiry into the wider phenomenon of state capture.

The SACP is inherently interested in the success of the commission and its work, first and foremost as the first political formation in our national discourse to expose corporate state capture and both call for and mobilise for the establishment of the commission.

Testimonies given at the inquiry and implications

The testimonies that have so far been given at the Commission of Inquiry into State Capture, as well as at the Commission of Inquiry into Tax Administration by the South African Receiver of Revenue expose systemic problems relating to the organisation of our state and state-society relation. Instead of building organic state capacity and fostering strategic discipline to achieve transformation towards a truly capable national democratic developmental state, the South African state has increasingly become more embedded in the profit driven private sector, whose central motive is capitalist wealth accumulation.

As a result, the state is more organised around private companies particularly in terms of economic production. In this scenario, the bourgeoisie is the economic ruling class. Its political power resides in its control of capital. This is used to delimit the realm of state or public policy making, condition policy direction and influence policy choices. Ascendency into the capitalist elite class or competition within its ranks between different sections is driven or sustained through state capture, among other strategies. This occurs in many ways, including through the career paths of public representatives, executives or officials of state establishments or public entities.

It is thus common for a public representative, executive or official from a state or public sector authority that regulates a particular economic – mostly private – sector to land a job or an appointment in one of the companies falling in that sector. This has in fact become an exit strategy from the state or public sector on the part of others, and is also one of the entry points of corporate capture or through which state regulation is stifled.  

In this scenario where the state is economically embedded in the private sector, the delivery of public goods and services is thereby defined, whether in the Public Finance Management Act, Municipal Finance Management Act, related National Treasury regulations, or in other areas of legislative, regulatory and decision-making importance in the state. These legislative and regulatory instruments were correctly intentioned to ensure good governance.

However, they were not designed to go beyond the realm of the prevailing capitalist mode of production, that is, to construct a national democratic economy proper. The result is that these governance and regulatory instruments both maintain the capitalist paradigm and form part and parcel of the framework for managing its social relations, including competition between private companies for monopoly. This includes, as a systemic trajectory, competition for outsourced or privatised state functions or assets.

In this schema, the prevailing regime of tenders, or tenderisation, serves as one of the entry points for corporate capture of state authorities, the epicentre of the corruption of state capture. The same is to be found in water, mining and maritime related licences, among other areas in which the state relates to the rest of society, that is, the working class and poor, through private companies. However, what we are faced with is by far more than that.

It is a reinforcement of the economic-political, base-state superstructure system involving embedding the state in capitalist economic control and its consequent forms of political influence, including influence on its authorities and their exercise of state power. The capture of sections of state authorities by private companies through bribery, shares, sleeping partners, career paths or related state or public sector exit mechanisms, or other methods that have, or have not been identified at the Commission of Inquiry into State Capture, is a product of capitalist private monopoly competition. 

Bourgeois or right-wing commentary or reaction does not move from the appearance to the essence, the crux of the matter, that is, the root of the problem, and is therefore devoid of any substance calling for a system change.

What is to be done?

It is absolutely obvious that any person who is implicated and found, whether on the balance of probabilities or proof beyond a reasonable doubt, to have been complicit in corruption or wrongdoing, must be removed from office.

Further, prosecution for complicity in the corruption of corporate state capture or any form of perversion should be seen actively taking place. However, this cannot be limited to state authorities or public sector representatives and officials gone rogue. Private companies and their directors, or whoever is implicated under their banner or in any private capacity, must also be prosecuted.

In the same vein, implicated foreign controlled multinational corporations or consultancy firms, to name but a few, Bain & Company, McKinsey & Company, KPMG and SAP, must also face the music, and with equal legal force, as should be the case with the Guptas and the like, the parasitic or lumpen bourgeoisie, as well as all implicated sections of apartheid era monopoly capital.

Those who captured the communications policy space, or in whose private wealth accumulation interests the broadcasting digital migration policy was deliberately forged, and those who hollowed out the SABC, our public broadcaster, as well as other public entities or state owned enterprises, should not be left out but must also be held to account for their actions.

The capture of the digital and satellite television broadcasting space by MultiChoice, a subsidiary of Naspers, the mouthpiece of the Broederbond, the vanguard of apartheid; inclusive of the collusive MultiChoice-SABC capture deal and the political-economic or business connections with and payments received by the Guptas from MultiChoice, for example via their now defunct ANN7 television broadcast channel, should likewise not be left out but should equally be dealt with decisively in terms of the law.

In the same vein, the recently implicated Watsons, as should be the case with every implicated person, should voluntarily stand up and approach the commission to account for their actions. Otherwise the Chairperson of the commission, Deputy Chief Justice Raymond Zondo, should invite them to be held to account. The self-confessed racist, Angelo Aggrizzi, is himself not an angel.

Therefore the response by the South African Human Rights Commission to initiate legal proceedings against him at the Equality Court for his racist comments should be welcomed by everyone. After all he is an accomplice in many of the actions of wrongdoing he attributed to the Watsons. He must therefore be held accountable not only for the racist remarks and beneath the surface also for the racism from which he founded the remarks.

No stone must be left unturned

The spring cleaning should also cover the South African Police Service, inclusive of the Directorate for Priority Crime Investigation (the Hawks) and Crime Intelligence, as well as the National Prosecuting Authority. The testimonies that have been given at the commission clearly suggest that there were rogue or captured elements “killing” state capture corruption related investigations or cases in the ranks of these state organs.

There must be accountability to the full extent of the law, on why on earth the corruption took place as if the crime and corruption prevention, investigation and prosecution organs of state were non-existent. A thoroughgoing investigation into what happened inside of, and surrounding these state organs, leading to their fatalistic attitude to the corruption, is required in order to answer the question and rebuild public confidence in their work.

Related to the above, on 16 June 2018 President Cyril Ramaphosa appointed a high level review panel to “identify all material factors that allowed for some of the current challenges within the (State Security) Agency (SSA) so that appropriate measures are instituted to prevent a recurrence. The main objective of the review panel is to assist in ensuring a responsible and accountable national intelligence capability for the country in line with the Constitution and relevant legislation”.

In addition, the Parliamentary Standing Committee on Intelligence subsequently concluded, that is by the end of 2018, that the plundering of the funds that were allocated to the SSA should be reinvestigated and that the scope of this fresh investigation should cover the so-called Principal Agent Network. Those who were involved, including at the highest possible levels, should be exposed and held to account.

System change

The prosecution and replacement merely of complicit individuals in what has proven to be a corruption prone system will, while absolutely necessary, alone not be sufficient. Complicit private companies must be blacklisted by the state, and this should be enforced with equal force in the economy at large rather than only in the state. Limitations on the reappointment or redeployment of complicit individuals, which should apply both in the public sector and the economy at large, must be erected and strengthened by way of reinforcement, strict implementation and compliance monitoring.

In the same vein, the exit of state or public representatives and public sector officials who land appointments in private companies that either located in the sectors regulated by the respective state authorities or that have at any state received, or may later receive a contract/tender from the state should be scrutinised and regulated by way of strict limitations.

Above all, the system in terms of which the complicity in the corruption of corporate state capture became possible should not be left unchanged. The importance of this system change cannot be overemphasised.

In political terms, a post-colonial u-turn from the revolutionary mission forged by national liberation movements during the course of the struggle paved the way in many situations for corporate state capture as well as for a diversion to a related politics of reformism. A phenomenon starkly resembling similar characteristics is discussed in detail by Franz Fanon in his critique of what became, but not inevitable, of certain national liberation movements in post-colonial societies. Particularly what Fanon described in his book, The Wretched of the Earth, as “The pitfalls of national consciousness”, which is both the focus and title of Chapter 3 of the book, merit a serious study by revolutionary democrats and progressives alike.

For the purpose of clarification, in the case of South Africa the democratic breakthrough of 1994 can be described as having marked the inception of the post-colonial epoch given that the apartheid regime was a form of colonial rule, in terms of the theory of colonialism of a special type formulated by the SACP in 1962 to characterise the colonial oppression of the majority in what had been declared as a republic. However, the overthrow of the apartheid regime three decades later, in April 1994, did not do away with the colonially imposed prevailing mode of production which was, and remains, capitalist.

Therefore governance in South Africa, in Parliament, in the Executive and government in general, as well as in the judiciary and other state organs or public establishments, is still exercised on the foundation of what is historically a colonially imposed mode of production. In addition, imperialist domination and exploitation, which Lenin characterised as the highest stage of capitalism, have not only remained intact but have further penetrated.

This is the context in which post-colonial corporate capture of the state has occurred in South Africa. The tendency of narrow nationalism, discussed by Fanon in the “Pitfalls of national consciousness”, its post-colonial rise to dominance and conception of transformation paved the way for the capture and recruitment of former revolutionaries to the ranks of the capitalist class through the promotion of private wealth accumulation.  

In a sharp contrast to the tendency, the ANC in its Strategy and Tactics adopted in 1969 in Morogoro, Tanzania, correctly declared that “our nationalism must not be confused with chauvinism or narrow nationalism of a previous epoch. It must not be confused with the classical drive by an elitist group among the oppressed people to gain ascendancy so that they can replace the oppressor in the exploitation of the mass”. It is clear from this revolutionary point of view that, in addition to the essentially necessary commissions of inquiry that are in session to help us tackle the corruption of corporate state capture, we need to initiate a complementary political process.

At the heart of the political process should be a review of the policy trajectory that was enforced in government after 1994, notably starting with the neoliberal 1996 Growth, Employment and Redistribution political-economic class project policy. We need to ask vexing questions about the u-turn that has occurred from, and in response reassert both in the movement and the state, the national democratic revolutionary values we developed in our liberation struggle.

The extent to which, for example, the post-1994 trajectory of black capitalist development, together with its political-business connections in colonial and apartheid era and imperialist monopoly capital has either contributed to, or been exploited to forge the corruption of corporate state capture, should not escape scrutiny. The direly required political process should help us reverse, deal radically with, and dismantle corporate state capture networks not only on the surface but deep down in the economic base where their material basis is anchored. This way forward should be guided by the principle correctly articulated by the ANC in the Morogoro Strategy and Tactics when it declared that: 

“Our drive towards national emancipation is therefore in a very real way bound up with economic emancipation. We have suffered more than just national humiliation. Our people are deprived of their due in the country’s wealth; their skills have been suppressed and poverty and starvation has been their life experience. The correction of these centuries-old economic injustices lies at the very core of our national aspirations. We do not underestimate the complexities which will face a people’s government during the transformation period nor the enormity of the problems of meeting economic needs of the mass of the oppressed people. But one thing is certain – in our land this cannot be effectively tackled unless the basic wealth and the basic resources are at the disposal of the people as a whole and are not manipulated by sections or individuals be they White or Black.”

This way forward should underpin what the ANC meant on 24 January 2019 when it tweeted that it acknowledges past mistakes and declared that we are in a period of “cleansing”, that is, in the context of the various inquisitorial commissions of inquiry established in the fight against corruption.

The importance of resolute and decisive party discipline

Last, for now, but not least, we also need a thoroughgoing organisational review process because, as things stand, it is very clear that organisational discipline has either collapsed or was not rearticulated in the post-1994 period in relation to the conduct of deployed members in the state. The conduct of a true cadre should bring credit and attract support to the movement as opposed to anything on the contrary.

The paralysis in organisational discipline, as well as, linked with it, excessive dependency on state investigative, inquisitorial and prosecutorial processes, is likely to continue feeding the roots of the organisational exposure to the adverse political effects of serious allegations of corruption and wrongdoing.

The process to achieve the absolutely necessary reconfiguration of the ANC-headed Alliance should include a focus on developing a proactive system of revolutionary democratic organisational discipline to hold deployed members to account and to act in advance against any unbecoming conduct on the part of any member rather than wait for processes and inquiries taking place in the state.

The benefits of decisively acting against a member who becomes corrupt and proactively removing that person from any organisational and public or state responsibility outweigh the laxity that often results in that person exposing the movement to corruption related attacks and associated consequences. 

Umsebenzi Online is the voice of the South African working class.

Issued by the SACP, 31 January 2019