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A lack of business ethics that this country cannot afford


 

With the Gupta Leaks, the business community has an opportunity to hold themselves to a higher standard.

By Prof. Mills Soko


The ongoing revelations around state capture and patronage thanks to the leaked Gupta emails, are giving South Africans an unprecedented and frightening glimpse into the machinery of corruption. What we do with this knowledge as a country now is going to count for everything.

Corruption is, of course, not a new phenomenon – and nor is it unique to South Africa, as the Global Corruption Index shows. But certainly, the scale of what is going on in South Africa right now is unprecedented.

The trove of about 200 000 emails that was leaked to the media six weeks ago have consolidated evidence that has been carefully scraped together over the past few years, notably by investigative journalists and the former Public Protector, Thuli Madonsela, whose report on state capture was released in November 2016. They lay bare what previously was only suspected.

The most unnerving element of these emails is how blatant and almost casual many of these transactions appear. The absolute cynicism and lack of ethics revealed in this correspondence is breathtaking.

The emails also remind us that in any corrupt interaction it takes two to tango. And while governments and public money are so often at the centre, the enablers of corruption are not in government but in the private sector.

Prominent international companies KPMG, McKinsey, and SAP have all been implicated in the mounting scandal.  The #GuptaLeaks have also revealed that two more companies that won Transnet tenders – Swiss-based Liebherr-International AG and China’s Shanghai Zhenhua Heavy Industries Limited – each paid tens of millions to Gupta offshore fronts.

This brings to seven the number of companies known to have secretly paid Gupta fronts in connection with Transnet contracts.

Last year, amaBhungane reported how the global consulting firm McKinsey won Transnet contracts that were gradually ceded to Regiments Capital and the Gupta-linked group Trillian, which won Transnet contracts worth at least R484-million. More recently, McKinsey is allegedly complicit in agreeing to sub-contract 30% of its Eskom work to Gupta-owned Trillian under the guise of ‘supplier development’. Questions are also being asked of KPMG as to why it failed to raise the issue when businesses controlled by the Gupta family diverted R30m of public money to pay for a wedding and their auditing firm. German software giant SAP stands accused of paying a Gupta front company R100m for state business.

These companies have scrambled to distance themselves from the reputational firestorm that the Gupta Leaks have unleashed. McKinsey acted promptly to suspend Vikas Sagar, a director in its South African office to allow an internal investigation to proceed while SAP, which originally denied the allegations, has similarly suspended South African staff while launching a full anti-corruption investigation, which is to be carried out by a multinational law firm and overseen by its executive board member Adaire Fox-Martin.

It is convenient to blame these incidents on bad apples, but this does not really get below the surface of what is really going on. The scale of the corruption and the apparent ease with which is has been unfolding speaks to the fact that something is very wrong with the system. And it highlights an utter lack of business ethics and governance failures that this country cannot afford.

Not only does corruption divert capital allocated for public services away from the poor, it hollows out important state institutions and, ultimately, frays the social and economic fabric of the country.

While all of this may seem overwhelming, what is unfolding also presents the business community with an opportunity to engage in introspection.  Calls have been made for greater purpose and responsibility on the part of South African leaders. 

But how can we make sure these fine words and intentions are internalised? How do we make sure as a country that our business as well as our state institutions are committed to not allowing this to happen ever again?

As a business school, we have a first-line duty in making sure that our graduates are equipped to recognise and reject corruption in any form. We need business leaders who are committed to building sustainable and profitable businesses but who are also mindful of their social and ethical obligations.    

As individuals working in companies and purchasing goods and services from companies we also have a significant role to play in refusing to accept unethical behaviour from companies. By rounding on Gupta PR-firm Bell Pottinger, effectively causing the company to lock its twitter account and issue a formal and unprecedented apology to the country (even though they also blamed the fiasco on bad apples rather than the system), South Africans have shown the power that they can wield when united against wrongdoing.

But we need to go further than that.   While government and business have not enjoyed the best of relationships in recent times, they need to bury the hatchet and come together to fix the inequalities in this country. The deep divisions in this country have laid it open to the kind of racist exploitation that Bell Pottinger unleashed.   

Until we right this situation, the country will continue to remain vulnerable to these kinds of nefarious influences.  We need to be united in the spirit of building a country that works for everyone – not just a select few. Things are broken, yes – but it is not impossible to repair the damage. 

If nothing else the Gupta leaks have shown us how perilously close we are to losing everything so many people fought so hard for. As a business community we can look away and call these tales of corruption isolated incidents or we can step up to ensure that our organisations hold themselves to a higher standard. 

 

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