INSIGHT

SHARE

Sign up to ICA insight
Complete this form to receive a weekly email with our latest blog posts.


ARCHIVE

#Financial Crime Prevention

Cronyism and Corruption in South Africa

International Compliance Association

Corruption , South Africa

South Africa is a country blessed with an abundance of riches, and it utilises them fully to earn precious revenue. An impressive feat for a country that belongs to a continent predominantly associated with extreme poverty. Think third-world and most people will immediately conjure up an image of Africa.

South Africa is undoubtedly a success story though, from its lush winelands which produce world class wines, diamond mines producing gems sold all over the world, to the Kruger National Park, which is populated by big game and is a huge magnet for tourists, and not forgetting the beautiful coastline and beaches to be found on the Western Cape, which offer once in a lifetime holidays to many. South Africa seems to have it all, so why is its leader getting it so wrong? And what effect could this have on how the country is perceived around the world?

South African President, Jacob Zuma, has completed a Cabinet reshuffle which has made headline news around the world. Mr Zuma fired several ministers, including Pravin Gordhan, who was considered by many to be an extremely important influence. He was a steady hand for the markets, and was admired for standing up to the president by fighting corruption and cronyism in Zuma’s government.

It’s not the first time, of course, that President Zuma has been the cause of unwelcome headlines for South Africa. You might recall a couple of years ago he was the focus of intense scrutiny over his allocation of £13m of public funds to upgrade his private residence, an amount described as ‘obscene’ at the time. More recently, questions have been raised regarding an advanced payment of R81m, for a tender on an acid mine drainage, to be made to Philani Mavundla, a friend of President Zuma. This has resulted in the Auditor General being asked to investigate, and could lead to other accusations coming to light.

So, what are the president’s motivations for this seemingly overt action to force out a potential threat, in the form of Gordhan, from his cabinet? A move that could spell the beginning of the end for the 75 year old president, as it has prompted speculation that he could now be forced out of office. If he does go, it’s likely he won’t go without a fight though, with some critics accusing Zuma of hoping to assure the succession of a former wife who may protect him from multiple corruption charges once he has left office.

Corruption has followed Zuma, and South Africa, for several years. The level of corruption, embezzlement and corporate fraud pervading the country is disproportionate and, frankly, disappointing given the array of opportunities its natural attractions, some of which I mentioned earlier, could offer a non-corrupt government.

Unfortunately, corruption in South Africa is not limited to the president, it pervades into other areas of society and has become endemic for many people’s way of life. Some examples include:

  • Tenderpreneurship Fraud -  Tenderpreneurship was meant to empower disadvantaged business people. But it is now all about greedy government employees partnering with people “politically connected”, manipulating the supply chain management procedures to win tenders from the state.
  • Police bribery - In the South African Police Service, corruption typically manifests in forms of criminals bribing officers to manipulate evidences against them whereas victims especially those who can’t afford to bribe the officers are denied justice. In the Metro Police It’s no longer news when Metro police officers are accused of brutality, soliciting and accepting bribes from motorists and harming those they are paid to protect.
  • Tshwane Prepaid Meters - Tshwane paid PEU R830 million between October 2013 and May 2015 to install 800 000 meters and manage the project for eight years. When Tshwane called-off the contract due to the controversies surrounding it, only 12 930 meters had been installed whereas PEU was required to install more than 435 000 during the first two years.
  • Prasa Scandal - The Passenger Rail Agency of South Africa (PRASA) wasted R620 million on unsuitable trains. R3,9 billion was wasted in irregular, fruitless and wasteful expenditures. Prasa’s former CEO Lucky Montana, was found responsible for large-scale maladministration, abuse of power and wasteful expenditure during his tenure at Prasa.


The outcome of this activity and the negative headlines they generate in the world’s business press is that it creates barriers to companies wanting to do business in South Africa. Corruption remains as one of the most problematic factors for doing business in Africa, according to the World Economic Forum.

For South Africa though, the problem seems to be the president himself, so how do you fix a problem like Zuma? Well, maybe that problem will take care of itself eventually, only time will tell.


 

Find out more about the ICA Certificate in Anti-Corruption.

Anti-corruption is becoming a critical field of knowledge required and this course will offer specialist knowledge that sets you apart from your peers and positions you to contribute positively in an area of significant global concern.

 

Find out more about ICA qualifications in South Africa >


Please leave a comment

You can leave the name empty should you wish to remain Anonymous.

You are replying to post:

Name

Country

Email *

Comment *



Comments:

LOAD MORE

MAILING LIST SIGN-UP
Complete this form to join the ICA Mailing List









Please complete all marked fields (*)

Note links are not valid


*These updates may come from us or our training partners.

© International Compliance Association I Company registration 4429302 I Registered office 5th Floor, 10 Whitechapel High Street, London, E1 8QS, United Kingdom