Barclays Africa and Standard Bank said on Monday they would stop working with McKinsey, a further blow to the global consultancy as it faces allegations of bribery for work done with friends of South African President Jacob Zuma.
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Privately-held McKinsey, the world’s largest management consultancy, has denied doing anything illegal but said this month that it was embarrassed by mistakes it made while working with South African state utility Eskom last year.
McKinsey said it regretted working on a 1.6 billion rand ($113 million) contract at Eskom alongside a company controlled by the Gupta family, wealthy friends of President Zuma who are accused of unduly influencing government contracts.
Zuma and the Guptas deny wrongdoing.
Barclays Africa and Standard Bank told Reuters in separate emailed responses to questions that they would terminate their relationships with McKinsey without giving reasons.
McKinsey declined to comment.
The Gupta brothers, who work with Zuma’s son, Duduzane, were accused by South Africa’s anti-corruption watchdog last year of using control over state agencies to siphon public funds.
South Africa’s parliamentary committee on public enterprises is investigating whether McKinsey knowingly let funds from Eskom be diverted to Gupta-controlled firm, Trillian, as a way of securing the deal.
Corruption Watch, a South African anti-graft NGO, is preparing a submission to the U.S. Department of Justice asking it to investigate McKinsey’s dealings with Trillian.
($1 = 14.0950 rand)
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Reporting by TJ Strydom; Writing by Joe Brock; Editing by Louise Heavens
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Two banks drop McKinsey in fallout from South Africa scandal

Global accountancy firm KPMG must be given space to “come clean” via an independent investigative process after being implicated in a scandal involving business friends of President Jacob Zuma, a central bank deputy governor said on Tuesday.
Addressing a monetary policy forum public meeting in Cape Town, deputy governor Kuben Naidoo said the troubles at KPMG, which audits several South African banks and lost a number of local clients recently, will not pose a financial stability risk to the banking sector.
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Reporting by Wendell Roelf; Editing by Ed Stoddard
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KPMG does not pose financial stability risk: S.A Central Bank

One of South Africa’s leading seats of learning, the University of the Witwatersrand (Wits), is dropping KPMG as its auditor after a scandal about the firm’s work for businessman friends of President Jacob Zuma, it said on Wednesday.
“It was agreed that KPMG had not been sufficiently transparent and that it is hard to reconcile KPMG’s conclusion that no one did anything illegal when senior individuals have been dismissed,” Vice-Chancellor Adam Habib said in a statement.

South Africa’s Wits University drops KPMG as auditor

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The chips at global audit firm KPMG continue to fall. Yesterday German insurance group Munich Re become the latest company to drop KPMG as an auditor, citing concerns around credibility.

Chips continue to fall at KPMG

South Africa’s audit regulator will fast-track an investigation into global auditor KPMG over work done for business friends of President Jacob Zuma, the regulator’s chief executive told lawmakers on Tuesday.
The Independent Regulatory Board for Auditors’ inquiry into KPMG follows an internal investigation in which the firm found work it did for companies owned by the Gupta family “fell considerably short” of the firm’s standards.
The Guptas, a trio of businessmen accused by a watchdog of improperly influencing the award of government contracts, has denied wrongdoing, as has Zuma.
But KPMG last month cleared out its South African leadership as several companies considered dropping KPMG and after the finance minister asked government departments to review their work with the firm.
“We will fast-track the investigation, but we have to respect the prescribed process of the auditing profession act and disciplinary rules,” Independent Regulatory Board of Auditors CEO Bernard Agulhas told parliament’s finance committee.
“In the beginning we did not always receive the information that we required. It was important that the process isn’t delayed,” Agulhas said, adding that KPMG has since committed to cooperate with the probe.
Nearly a dozen of South Africa’s blue-chip companies use KPMG’s services, including three of the nation’s four largest banks.
The central bank has told top lenders they cannot fire KPMG because it might undermine financial stability, two sources with knowledge of the matter told Reuters.
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Writing by TJ Strydom; reporting by Wendell Roelf; editing by Joe Brock and Jason Neely
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South African regulator to fast-track KPMG investigation

Global auditor KPMG has given its commitment to cooperate with a South African investigation into work done for business friends of President Jacob Zuma, the nation’s audit regulator’s chief executive told lawmakers on Tuesday.
“In the beginning we did not always receive the information that we required. It was important that the process isn’t delayed,” Independent Regulatory Board of Auditors Chief Executive Bernard Agulhas told parliament’s finance committee, adding that KPMG has since committed to cooperate with the probe.
Zuma and his friends, the Gupta family, have denied wrongdoing.
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Reporting by Wendell Roelf; Editing by James Macharia
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South Africa’s audit regulator says KPMG to cooperate with probe

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KPMG and the auditing profession got a tongue lashing from South Africa&#8217;s former finance minister, Pravin Gordhan, last evening in a panel discussion held at the University of the Witwatersrand in Johannesburg.

Pravin Gordhan slams KPMG for being ‘captured’

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From Parliament to the South African institute of Chartered Accountants, to Business leadership South Africa and the wider South Africa public- wants answers and accountability from KPMG about its conduct.

Accountability from KPMG about its conduct

David Everatt | University of the Witwatersrand
Moses came down from the mount with tablets inscribed with 10 commandments. Most of us know (most of) them, and most of us fail to live by (most of) them. But if Moses had turned them over and looked in the fine print on the back, he’d have found the 11th Commandment:
<blockquote>Don’t get caught.</blockquote>
That in essence summarises the rise and fall of the South African arm of the international accounting firm KPMG which has been caught with its hands in the slush fund jar. It stands accused of taking money from companies owned by the politically connected Gupta family.
Even more damaging is the charge that it submitted formal reports “confirming” that a “rogue” unit was operating inside the South African Revenue Service (SARS) – accusations that were used as the smoking gun to remove ministers and senior public officials who were seeking to hold the line against state capture.
KPMG has miraculously grown a conscience. Suddenly – having broken the 11th commandment – it was reborn as a hand-wringing, apologetic company living up to high ethical standards. It was now willing to fire its CEO and some senior managers, to reject its own findings and to “donate” Gupta-company earnings to education and anti-corruption NGOs. The latter gesture was a revolting display of supine reprehensibility – we got caught in corrupt deals so we’ll hand the profits over to anti-corruption NGOs. Really? Go to jail would be a better outcome.
KPMG isn’t alone. Throughout South Africa’s history, and across the globe, the litany of private sector corruption is breathtaking.
<h2>Private sector corruption</h2>
South Africans can recall an unending litany of private sector corruption. In the recent past, there was the case of Tiger Brands making bread more expensive so the poor would pay more to eat. Tiger Brands paid a fine and carried on trading. And a clutch of major construction firms were found looting monies for the construction of stadiums for the 2010 Fifa World Cup in South Africa. They also paid fines and carried on building. The list continues.
The private sector, contrary to those who believe that ‘market forces’ will regulate the ethics of capital, is not taking a strong line against corruption. Those on the front line include, more recently, the portfolio committees in parliament, and previously, the Public Protector and a dwindling cluth of Ministers, MECs and the like.
NGOs such as Corruption Watch, the Socio-Economic Rights Institute of South Africa and the Council for the Advancement of the South African Constitution, have by a long distance, been the most vocal campaigners in the area, and academics have worked with them to uncover the scale and identify the perpetrators of corruption. The media has also played a massive part in exposing corruption.
So let’s not fool ourselves that the private sector has set a benchmark for anything more than export-class venality.
South Africa’s state is corrupt – “captured” makes it sound as if this occurred against its will. But &#8211; it has found a multitude of willing partners in the private sector. The match between corrupt state and corrupt private sector is perhaps South Africa’s most functional display of “willing buyer, willing seller”.
KPMG executives have not set any benchmark for probity, as claimed by some – they simply acted when they got caught. Their focus was on maximising profits, even if it meant signing off on the use of public funds for a private Gupta wedding (among other sins of commission), and now buying their way out of the mess with a few heads rolling and dirty money being donated to NGOs. If this is the standard for the private sector, South Africans are in more serious trouble than initially thought.
The KPMG “apology” can’t come close to compensating for the damage done. Its report “confirming” that a rogue unit had operated in the South African Revenue Services fuelled developments towards state capture and triggered events that have had a disastrous impact on the country. These included the axing of ministers, deputy Ministers, and the subsequent haemorrhage of senior public servants from the state.
Everyone in South Africa is paying for the sins of KPMG.
<h2>Holding power to account</h2>
Governance is about the distribution of power in society, and the ability of citizens to hold power to account. This requires an engaged citizenry – whether in NGOs, ratepayer associations, street or block committees or faith-based organisations – who are sufficiently organised to call officials to account.
What is fascinating about South Africa is how engaged its citizen are. They kicked out the ruling party from running cities after just two decades of democracy and they’ve given the middle finger to e-tolls. They don’t behave the way they are told to. And they’ve reached a tipping point. When South Africans of all shapes, colours, sizes, creeds share simply being gatvol (fed-up), there’s trouble.
Ask the British public relations firm Bell Pottinger what it feels like. The company faces foreclosure following a concerted campaign &#8211; domestically and abroad &#8211; to shame it for stirring racial hatred.
Ask the Guptas how it feels now that all of South Africa’s banks have said they aren’t willing to touch their money.
South African residents and citizens have become acutely aware that they’ve been screwed. By many in the state, to be sure. But by as many or more in the private sector, for decades. And they’re sick of it.
The world is watching – South Africans brought down Bell Pottinger. They’re now going after the likes of McKinsey, KPMG and SAP, all of these companies tangled up by allegations of corruption.
The only way South Africans will ever get governance and accountability is by being organised, vocal, obstreperous, and demanding. So keep it this way – private and public sector are both on terms. And South Africans will hold them accountable, or if necessary, break them.
This article was published in The Conversation.

Lessons from KPMG: be on guard, South Africans are on your case

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In a bid to drive reforms in Nigeria&#8217;s judicial systems, the chief justice of the country has given the go-ahead for special courts to try corruption cases across the country.

Nigeria sets up special courts for corruption cases

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This year the Independent Regulatory Board for Auditors made it law that companies must rotate their audit firms after a maximum period of 10 years. The law aims to stem corruption and promote corporate governance.

Understanding mandatory audit firm rotation

JOHANNESBURG (Reuters) &#8211; South African Deputy President Cyril Ramaphosa, a leading contender to become head of the ruling ANC in December, stepped up his criticism of the government on Sunday, saying state-owned companies had been “captured” and funds looted from them.
Ramaphosa’s remarks during a speech to an African National Congress meeting in the old diamond-mining town of Kimberley were tougher than others he has made on government graft, signaling the issue will be a main theme of his campaign.
He also took aim &#8212; without naming them &#8211; at the wealthy Gupta family, friends of President Jacob Zuma who have been accused of using undue influence to win lucrative state contracts. Zuma and the Guptas have denied any wrongdoing.
“Many of these state-owned enterprises have been captured by certain people, by a certain family,” Ramaphosa said.
“All of our state-owned enterprises have been captured and we are saying we want to see an end to state capture and the money that has been stolen, we want it back,” he said, to roars of approval from the audience.
South Africa’s top prosecutor said on Wednesday police were examining a trove of leaked documents detailing relations between the Guptas and Zuma, but it was too early to say if a prosecution should be launched.
Ramaphosa said in May that South Africa was in danger of becoming a “mafia state” and he took a swipe in July at the Guptas over media reports that state funds were diverted in 2013 to pay for a lavish Gupta family wedding.
But Sunday’s remarks about a “certain family” were more pointed and come as the race heats up for the ANC’s top spot. The next head of the party, who will be selected in December, will be its presidential candidate in 2019 national elections.
Ramaphosa’s main challenger, veteran politician and Zuma’s ex-wife Nkosazana Dlamini-Zuma, will next week be sworn in as a member of parliament, a move which could see the former minister brought back into the cabinet, raising her profile.
Analysts say she has the backing of Zuma’s well-established patronage network as well as organisations such as the party’s Women’s League.
Ramaphosa is a trade unionist-turned-business tycoon who has the backing of a diverse group of unions, communists and investors who do not always see eye to eye but want to rid the ANC of Zuma’s influence and legacy.
The opposition has long accused Zuma of sleaze and influence-peddling while in office. He survived a no-confidence vote in parliament on Aug. 8 but 30 ANC lawmakers voted with the opposition, indicating deep divisions in the party that has dominated South African politics since the end of apartheid in 1994.

SA’s state-owned companies had been “captured”: Ramaphosa

&nbsp;
By Ayanda Khumalo, acting chairman of the Free Market Foundation
The Free Market Foundation (FMF) has for forty-two years been working for freedom and prosperity for all. All these years later the FMF continues to argue for government policies that will benefit all South Africans. The FMF is nonpartisan and its major focus is on putting forward policies that will improve the lives of all South Africans, particularly the poorest and most vulnerable members of the population.
Civil society organisations have been very active during the past year. Increasingly, they are demanding that government adhere to the principles set out in the Constitution and adopt policies that will lead to peaceful co-existence. Given the happenings in the country, more people are coming to understand the moral philosophical and economic underpinnings of the FMF’s work. Perhaps this understanding is not as widespread as we would like it to be but I do believe it is growing. Founded in 1975 to oppose apartheid and work for freedom, the guiding philosophical principles adopted by the FMF in 1975 are:
Perhaps this understanding is not as widespread as we would like it to be but I do believe it is growing. Founded in 1975 to oppose apartheid and work for freedom, the guiding philosophical principles adopted by the FMF in 1975 are:
<ul>
<li>All people have the right to life and the right to conduct it as they see fit, provided they do not impinge upon the similar rights of any person.</li>
<li>Amongst the most fundamental rights of all persons is the right to own and control property and the product of their own efforts and to dispose of it as they see fit.</li>
<li>No person or group has the right to initiate violence or the threat of violence against any other person or group.</li>
<li>The only economic system consistent with the above mentioned fundamental rights is a market economy, in a free unfettered market in which all persons are at liberty to deal with their property and conduct their affairs according to their own individual needs and motives.</li>
</ul>
<h4>Established as an opponent of apartheid</h4>
These guiding principles established the FMF as an opponent of apartheid or any other system of government that violated the sanctity of individual liberties. The apartheid system was characterised by authoritarian domination over the entire population. Black South Africans were compelled by force to live under full socialism (no rights in the conduct of their lives, constantly subjected to violence and the threat of violence, no right to own property in land, with black and white citizens told the lie that the system they were living under was “free enterprise”.
Under the circumstances, it was understandable, as FMF director, Temba Nolutshungu, explained, “We wanted the opposite of what we had. If apartheid was free enterprise, then we, tragically, thought that socialism would be our saviour! We did not realise that we were living under authoritarian socialism, which was the cause of our grief!” Temba went on to warn that, “Freedom is indivisible, you cannot have freedom for some and not for others in the same country”. That is a truth that should be taken to heart by all South Africans.
Unfortunately, fundamental rights continue to be abridged by legislation and regulations in our country today. It was possibly too much to hope that South Africa would transform in easy steps from authoritarianism to freedom. If we look at the world we find that it is in the freest economies that the poor are better off and not in countries in which the greatest forcible wealth transfers occur.
<h4>Economic freedom is about respeciting the rights of the people</h4>
Economic freedom is all about governments respecting the rights of the people. If their rights are respected, the people are free to utilise their talents to best advantage, are most productive, and consequently, earn higher incomes.
The issue of economic freedom receives the constant attention of the FMF because of its potential for bringing about high economic growth, increased incomes throughout the economy, and reduced unemployment and poverty. In the year 2000, South Africa, at 42nd, was ranked in the top 30% of the world’s freest economies and looked set for high economic growth.
Sadly, the economic policy options adopted since then have brought about a decline in our economic freedom ranking that has taken the country to 105th and into the bottom 35% of the economic freedom rankings.
<h4>Stop corruption and reduce red tape</h4>
If we had kept going in the policy direction that made our country the 42nd freest economy in the world, our GDP per capita would arguably have been at least 50 per cent greater than it is today. Returning to the 2000 policy formula would require that government significantly reduce its role in the economy, change its stance on property rights and foreign investment, improve policing and the integrity of the legal system, stop corruption, and reduce red tape.
The FMF’s Khaya Lam (My Home) Land Reform Project cooperates with municipal governments and with financial assistance from generous donors, to transfer fully tradable title to municipal rental properties to registered occupants, at no cost to the households. A major objective of the project is to demonstrate the benefits of property titling and to encourage municipalities and groups of people across the country to become involved in
A major objective of the project is to demonstrate the benefits of property titling and to encourage municipalities and groups of people across the country to become involved in titling the homes of people who were denied ownership rights by the 1913 Land Act and still do not have titles to their properties. To date the Khaya Lam project has, in total, presented 1,294 titles to deserving families and is in the process of transferring a further 3,409 and motivating for the transfer of another 2,000 in various areas of the country.
<h4>Transfer of properties to low-income families</h4>
The total amount donated to the project to date is R7.44 million, resulting in the transfer of property worth at least R470 million to low-income families. Legislation adopted in 1991 gave ownership to an estimated five million families but they do not have title deeds to prove it. The Khaya Lam project, participating municipalities and generous donors, are working on rectifying the situation.
The FMF’s Health Policy Unit promotes private provision and funding of healthcare for those who can afford it and the utilisation of taxpayer resources by the State to provide high-quality care for the poor. Government’s NHI plans aim to nationalise private healthcare provision and funding.
The HPU proposes the opposite: to improve health care for everyone, including the poor, the best option will be to allow private healthcare services to grow as rapidly as possible with the end goal of serving the entire population, with the government increasingly purchasing quality care for the poor from competing private providers.
<h4>Rule of Law Project set to have positive influence on laws</h4>
The FMF’s Rule of Law Project, chaired by former Judge of the Supreme Court, Rex van Schalkwyk, is set to have a positive influence on the laws of South Africa. The fact that the rule of law is incorporated in the Founding Provisions of the constitution has been largely, or almost entirely, overlooked in the drafting of South Africa’s legislation and regulations.
The Rule of Law Project seeks to correct that oversight. More than twenty pieces of legislation have already been found to contain provisions that conflict with the rule of law and are therefore unconstitutional.  Many laws that contain constitutionally dubious provisions granting excessive regulatory powers to ministers and/or government officials are in need of rectification.
What is clear is that everyone will be better off with a thriving, well-functioning economy, which will be achieved only if the private sector of the economy (small and large business) is assured of an investment environment that is stable, certain, and conducive to long term planning. Most importantly, it will be achieved in an economic environment in which consumers get the best service and the best value for their money.
&nbsp;
Ayanda Khumalo is acting chairman of the Free Market Foundation

Op-Ed: Free Market Foundation founded on moral economic principles

MALANJE, Angola (Reuters) &#8211; On a hot morning in August, João Lourenço, a man more used to army barracks and the closed doors of party politics, rose awkwardly to address thousands of rural supporters.
For most in the crowd, trucked in from surrounding villages and kitted out in red T-shirts, the stern-faced man before them was an unknown quantity, a quiet man who used to be defence minister.
But they will almost certainly be calling him their president after Wednesday&#8217;s election &#8212; the first new head of state in oil-producer Angola in 38 years, going back to when Jimmy Carter ran the United States and Leonid Brezhnev the Soviet Union.
In common with many of Angola&#8217;s Soviet-trained leaders, Lourenço&#8217;s rhetoric to the crowds was conservative, even in the face of economic crisis.
<a href="http://cnbc.africa/news/southern-africa/2017/08/21/elections-angolans-head-polls-wednesday-mpla-calls-continuity-final-election-rally/">Read: Elections: Angolan’s head to polls Wednesday, MPLA calls for continuity in final election rally</a>
&#8220;There is much that still needs to be done,&#8221; he told the rally as a loud speaker encouraged applause. &#8220;We will put you to work,&#8221; he said, vowing to grow agricultural production in this poor farming community.
Indeed, beyond common campaign promises to combat corruption, diversify the economy and attract more investment, few know what to expect from the 63-year-old when he is in office.
There are some who question how much freedom he will have.
His predecessor, José Eduardo dos Santos, who accumulated huge power and his family great wealth, ruled Angola from 1979, four years after independence from Portugal, and will continue to exert influence as leader of the MPLA party.
But those who know Lourenço say he may be quiet, but he is no puppet.
&#8220;He&#8217;s a man of conviction,&#8221; said João Melo, a party lawmaker from 1992 to 2017 who worked with Lourenço on several parliamentary commissions. &#8220;He represents change and change is absolutely vital for the long-term survival of the MPLA.&#8221;
ECONOMIC CRISIS
Corruption and a deep economic crisis have put pressure on the People&#8217;s Movement for the Liberation of Angola (MPLA), a party that has led comfortably since the end of civil war in 2002.
After years of rapid growth, the economy of Africa’s second largest crude producer contracted 3.6 percent last year.
Unemployment is officially over 20 percent, while a shortage of foreign currency due to suppressed oil prices has forced companies to pull back operations.
Corruption is rampant, inequality brutal. Transparency International ranks Angola as the 164th most corrupt country out of 176.
There are hopes among reformers that Lourenço can bring change, But he is undoubtedly of the old-guard.
He joined the MPLA as a combatant in his early 20s as the country gained independence from Portugal. He went on to study military strategy and history in the Soviet Union in the late &#8217;70s, before returning to serve as political commissar during the civil war.
&#8220;Disciplined&#8221; is a word often used to describe him &#8212; and he rarely smiles.
That leaves those guessing at his economic policy to point to his wife, Ana Dias Lourenço, a former planning minister who worked until recently at the World Bank.
Running for a parliamentary seat, she is expected to be influential.
CORRUPTION 
Lourenço has also been outspoken about corruption, criticising the paying of bribes &#8212; so entrenched in Angolan society it is referred to as a “gasosa” or soft drink, from the days when you would pay off police with a can of cola.
With this in mind, in June, he told a rally it was time to “put salt in the soft drink”.
As governor of Benguela province from 1987 to 1990, he cracked down on corruption, even jailing members of his own party.
But questions remain as to whether he will have the clout to go after senior figures. His hands already seem tied.
A recent law grants dos Santos immunity, while a separate piece of legislation protects the jobs of senior military and intelligence officials.
Dos Santos’ family hold top jobs with his daughter, Isabel, heading national oil producer Sonangol, and his son José Filomeno, in charge of the state investment fund.
For Alves da Rocha, one of Angola’s leading economists, much depends on the size of majority Lourenço gets on Wednesday.
“If the MPLA gets 55 percent or less, it doesn’t give Lourenço enough political leeway. It’s effectively a defeat,” he said.
With little credible polling, the result remains unpredictable. One of the few legitimate surveys gave the MPLA 61 percent. Party insiders say they would be happy with a score above 60.
Either way, if Lourenço is unable to combat corruption and get the economy on track, the MPLA could face future defeat under his leadership.
“It’s a question of survival,” said Paulo Faria, a politics professor at the state Agostinho Neto university in Luanda. “He has to drive reform.”
Editing by Joe Brock

After 38 years at the helm dos Santos prepares to step down, this is the man who could be Angola’s next President

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Corruption in Nigeria continues to pose a problem to the country&#8217;s economic development despite the current government&#8217;s efforts to fight corruption.

Corruption threatens Nigeria’s economic growth

By Martin van Staden
The African National Congress’ suggestion that the number of provinces should be reduced from nine to six comes as a shock. Fortunately, our Constitution and the Rule of Law do not make abusing the levers of power that easy.
It would be unfair to the ANC to imply that this is simply corruption and cheap gerrymandering to avoid losing Gauteng in 2019, as this policy was adopted back in 2007 before the Western Cape fell into the Democratic Alliance’s hands. But the ANC, the oldest and perhaps most experienced democratic political parties on the African continent, must surely be aware that wanting to reduce the number of provinces – and thereby rob the Official Opposition of its democratic mandate in the Western Cape – would be perceived as an outright attack on our constitutional democracy.
A postulate of the constitutional principle of the Rule of Law is that the law and policy must be certain and predictable insofar as it is practically possible. With the electoral – indeed, political – uncertainty currently facing South Africa, it would be reckless to fiddle with the configuration of provinces or municipalities at this stage in our history. This conduct invites uncertainty and unpredictability and is thus arguably a violation of the Rule of Law and thus the Constitution.
<h4>Legal games played by Apartheid government</h4>
South Africans would do well to remember the legal games the Apartheid government engaged in to ensure it got its way, before endorsing the ANC’s plans. Indeed, up to 1956, coloured South Africans enjoyed limited franchise in the Cape Province, but then the National Party passed legislation increasing the size of each province’s Senate representation and thereby giving the government the requisite amount of votes in Parliament to amend the South Africa Act and remove the coloured franchise.
Thankfully, however, for the government to actually decrease the number of provinces, it would need to go about a process to amend the Constitution. Section 74(3)(ii) provides that two-thirds of the National Assembly and six provinces in the National Council of Provinces must approve alterations to “provincial boundaries, powers, functions or institutions”; and section 74(8) provides that the provincial legislatures in question will need to approve such alterations.
When the government is closer to the people and people have more opportunities to participate in the daily governing of their lives, a country is more democratic. This inevitably means devolution of power to lower levels of government, like provinces and municipalities. Where there is a centralisation of power, either by taking powers from lower levels or by reducing the number of lower levels of government, democracy is being eroded.
<h4>Appropriate action to send resources in the right direction</h4>
If the ANC is truly concerned about a “concentration of resources” at the provincial level while service delivery ordinarily happens at local government level, more appropriate action might be to ensure the resources go where they are meant to go. But the real burdensome ‘middleman’ in this relationship is not the provinces, but the national government, which is the furthest away from the people.
Centralisation of power in fewer locales and, at worst, at the national level, does nothing but chip away at real democracy. It assumes all South Africans are alike, live under the same circumstances, and thus have to be governed in the exact same way. While the Rule of Law does demand equal application of the law, this does not mean all law needs to be the same everywhere.
Which laws work best under which circumstances can only be determined if South Africa embraces the cooperative federal model as envisioned by the Constitution. This would be radical transformation indeed.
Martin van Staden is Legal Researcher at the Free Market Foundation and Academic Programs Director of Students For Liberty in Southern Africa. Find out more at <a href="http://dmanalytics2.com/click?u=http%3A%2F%2Fwww.martinvanstaden.com%2F&amp;i=1&amp;d=3Uqobov8RHK8ecY3_gBODg&amp;e=Jill.DeVilliers%40abn360.com&amp;a=8anQTERaQWOIdsMxWJ5hsQ" data-dm-link-id="1">www.martinvanstaden.com</a>.

Op-Ed: Reducing the number of S.A’s provinces is an affront to the Rule of Law and democracy

Mills Soko | University of Cape Town
South Africa is reeling from a string of scandals involving state owned enterprises and the Guptas, a family with close ties to President Jacob Zuma. A trove of recently leaked Gupta emails exposed the involvement of prominent businesses in the extensive corruption networks. Sibonelo Radebe asked Mills Soko to explain the implications of the scandals.
What do you make of the situation?
If nothing else, the Gupta leaks have shown us how perilously close South Africa is to losing everything so many people fought so hard for. 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. It threatens the hard won democracy and political stability.
The ongoing revelations around state capture and patronage are giving South Africans an unprecedented and frightening glimpse into the machinery of corruption. The most unnerving element of the emails is how many of the transactions appear blatant and almost casual. The absolute cynicism and lack of ethics revealed in this correspondence is breath taking.
What we do with this knowledge as a country is going to count for everything. 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. Most critically the law must take its course.
What does it tell us about the role of business?
The emails 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.
With the Gupta’s at the centre of the rot, prominent international companies like accounting firm KPMG, consulting giant McKinsey, ICT player SAP, engineering company Liebherr and capital equipment manufacturer Shanghai Zhenhua Heavy Industries have been implicated in the mounting scandal. It’s worrying to see that companies of such calibre can be involved in such nefarious activity.
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.
How do you rate the responses by the implicated businesses?
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. For its part 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’s convenient to blame these incidents on bad apples. But this doesn’t get below the surface of what is really going on. The scale of the corruption and the apparent ease with which it 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. This isn’t something the country can afford.
What should be done to root out the corruption?
While all of this may seem overwhelming, what is unfolding also presents the business community with an opportunity for some 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?
Educational institutions, business schools in particular, are positioned as a first-line duty in making sure that graduates are equipped to recognise and reject corruption in any form. The country needs business leaders who are committed to building sustainable and profitable businesses but who are also mindful of their social and ethical obligations.
Citizens as workers and consumers also have a significant role to play. As individuals working in companies and purchasing goods and services from companies, they can condemn unethical behaviour from companies. This was partly reflected in how the general public put pressure on Bell Pottinger the UK based public relations firm which did work for the Gupta’s.
By rounding on 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 they can wield when united against wrongdoing.
But the country needs to go further. While government and business have not enjoyed the best relationship in recent times, they need to bury the hatchet and come together to fix the inequalities in this country. Deep divisions have laid South Africa open to the kind of racist exploitation that Bell Pottinger unleashed.
Until the country rights this situation, it will continue to remain vulnerable to these kinds of nefarious influences. South Africa needs 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’s not impossible to repair the damage.

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Corruption

Two banks drop McKinsey in fallout from South Africa scandal

KPMG does not pose financial stability risk: S.A Central Bank

South Africa’s Wits University drops KPMG as auditor

Chips continue to fall at KPMG

South African regulator to fast-track KPMG investigation

South Africa’s audit regulator says KPMG to cooperate with probe

Pravin Gordhan slams KPMG for being ‘captured’

Accountability from KPMG about its conduct

Lessons from KPMG: be on guard, South Africans are on your case

Nigeria sets up special courts for corruption cases

Understanding mandatory audit firm rotation

SA’s state-owned companies had been “captured”: Ramaphosa

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Corruption threatens Nigeria’s economic growth

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South African business must own up to its part in the corruption scandals

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