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<p>Olanrewaju Suraju, National Chairman of the Civil society Network Against Corruption joins CNBC Africa to discuss Nigeria&#8217;s fight against corruption.</p>


Nigeria’s fight against corruption

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<p>A few months ago, a <a href="https://www.youtube.com/watch?v=Kcv4Hes8iHg">video</a> in which a street boy blamed bad leadership for Nigeria’s socio-economic problems, went viral on social media in the country. He called for a mass burial of the country’s political elite, which in his opinion, would help combat corruption and unlock the country’s potential.</p>
<p>His view echoes the inner and hidden sentiments many people living in African countries have about their leaders.</p>
<p>The reasons for this are not hard to find. Most African leaders have done little to improve the welfare of their people, who are very poor, while they, and their cronies, live in opulence.</p>
<p>The rot goes all the way through the political chain to elected and appointed public officers – starting with political parties. Party financiers and godfathers dictate who holds what public office without regard for competence and internal democracy. They ultimately dictate how state affairs and funds are managed with barely a distinction between public and private funds. So, elections don’t seem to help, mainly as the politicians are the same. Despite African political parties espousing different ideologies and launching welfare manifestos, nothing really changes when governments change.</p>
<p>Corruption is prevalent throughout the continent. Tied to this is the fact that anti-corruption efforts fail because of a lack of honest and accountable leaders. Many have co-opted democratic systems, such as regular elections, or they simply make up the rules as they go along to stay in power. Behind it all lies an insatiable appetite for money, and the realisation that power can deliver untold wealth. In these scenarios, played out across dozens of countries on the continent, the state (and the people) are sacrificed to greed.</p>
<p>And those brave enough to stand up and be counted are driven out – either literally or figuratively.</p>
<h2>Ubiquitous corruption</h2>
<p>Every year about USD$50 billion is lost through illicit transfers. Not only does this hold back the continent’s socio-economic progress, it also threatens peace, security and stability.</p>
<p>A recent study found that in Sokoto State, Nigeria, corruption facilitates the spread of radical ideology and induces about 70% of the youth to join Boko Haram, a group which killed 11,885 civilians between 2011 and 2016.</p>
<p>Whereas the ubiquity and repercussions of corruption in Africa have been widely articulated, the fight against it seems to be a fleeting illusion.</p>
<p>Anti-corruption measures mainly revolve around legislating to tighten loopholes, strengthening anti-corruption institutions, and empowering the media and citizens to report or stand up against malfeasance.</p>
<p>But the success of these measures depend on the often overlooked but crucial role of good leadership.</p>
<p>Willing, able and visionary leaders are required to push through sweeping reforms to curb corruption and augment public accountability. Unfortunately, such leadership is lacking in Africa.</p>
<h2>Leadership vacuum</h2>
<p>Africa is home to despots and sit-in presidents who either abuse their power or allow abuses to be perpetrated. Countries are run like family property and political dynasties are created by fathers passing power to sons. Checks and balances are weak, dissent is crashed, and alternative views are discarded, culminating in low accountability which further deteriorates leadership and reinforces corruption.</p>
<p>One would expect multiparty democracy and its associated principles to produce visionary and effective leaders, but this is rarely the case in Africa. While elections are held and leaders are changed at the ballot, things usually remain the same. Oftentimes, policies and corrupt practices which were criticised by political leaders while in opposition suddenly become right and justifiable when they win power.</p>
<p>In essence, there may be new faces in government, but the status quo does not change. The big question is, why?</p>
<h2>Politics and money</h2>
<p>Politics in Africa is synonymous with wealth, whether acquired legally or otherwise. Hence, the scramble for power can be intense and sometimes dangerous. The expectation of quick riches increases internal competition for party candidature, which often requires deal making and vote buying.</p>
<p>And failure to align with the party establishment can prevent members from ascending the party hierarchy.</p>
<p>Party members are socialised in the same way, mainly to do whatever is necessary to win power by fair or foul means, and those who dare to think or behave differently are sidelined, sabotaged or expelled.</p>
<h2>Political party financing and corruption</h2>
<p>At the core of Africa’s corruption and leadership problems is opaqueparty financing. In most countries, parties rely on private funding from individuals and organisations. But regulations on financial disclosure are either non-existent or ineffective, which allows wealthy individuals, known as godfathers, to wield significant influence, mainly for their benefit but to the detriment of the state.</p>
<p>Even leaders perceived to be strong-willed can find it hard to withstand the pressures.</p>
<p>In an interview in 2016, Nigeria’s first lady, Aisha Buhari, stated that her husband does not know all of his appointees, which shows how a president can be the face of mightier but invisible forces.</p>
<p>In South Africa, President Jacob Zuma stands accused of being a stooge of the wealthy Gupta family.</p>
<p>These examples attest to how African leaders can be controlled from behind the scenes by vested interests and crooked godfathers. In some cases, the leaders are incapable of addressing the excesses of their sponsors, leading to anarchy and recklessness.</p>
<h2>Being different is political suicide</h2>
<p>There is a popular idiom: “do not bite the hands that feed you”. Indeed, anecdotal evidence suggests that this is true for African leaders. There is a high chance that leaders who act against the interests of their party establishment, financiers and godfathers, even for the benefit of the state, will not last long. The same applies to their policies.</p>
<p>So what’s the way forward? Africa must regulate political party financing and strengthen state institutions such as electoral commissions to enforce compliance.</p>
<p>Until then, most leaders on the continent will continue to be prone to capture and control by powerful and parochial godfathers. And the looting of public funds won’t stop.</p>


Op-Ed: Why African citizens are fed up with politicians

<p>South Africans are not happy. According to the recent Bloomberg’s Misery Index, South Africa is <a href="http://www.huffingtonpost.co.za/2017/03/07/south-africa-is-the-second-most-miserable-country-on-earth_a_21875054/">the second-most miserable country on earth</a>. Venezuela tops the list of emerging countries.</p>
<p>This isn’t too surprising considering that the country is embroiled in multifaceted crises. It also has among the <a href="https://africacheck.org/factsheets/factsheet-unemployment-statistics-in-south-africa-explained/">highest unemployment</a> and <a href="https://www.businesslive.co.za/bd/national/2017-01-16-sas-rich-poor-gap-is-far-worse-than-feared-says-oxfam-inequality-report/">inequality levels</a> in the world.</p>
<p>Unfortunately, recent credit rating agency <a href="https://theconversation.com/what-a-downgrade-means-for-south-africa-and-what-it-can-do-about-it-75704">downgrades</a> as well as the fact that the country is in recession mean that these horrid conditions are unlikely to reverse soon.</p>
<p>Consequently, the poor in South Africa have little chance of improving their lives. They will therefore be even more reliant on the provision of state services. They will also increasingly be on the receiving end of the two extractive systems that are deeply embedded in country’s socio-political and economic systems.</p>
<p>The first is the patronage and state capture machinery as recently documented <a href="http://citizen.co.za/news/news-national/1525127/read-damning-new-academic-state-capture-report/">in a report</a> by leading academics. The effect of this corruption is that the capital allocated for service delivery is wasted, the private sector is crowded out, and the monopolising positions of dysfunctional state owned enterprises distort the economy.</p>
<p>The second is where state capture merges with patronage politics at local government level. This is accomplished by managing and staffing municipalities with unqualified party loyalists – or close associates – who disseminate services inefficiently from a shrinking pool of capital, while further extracting rents through a sub-layer of corruption.</p>
<p>The effect is that the poor must pay an additional tax in the form of bribes for access to mispriced and inefficient state services. In addition, as the looting via state capture and <a href="http://www.municipaliq.co.za/index.php?site_page=press.php">municipal corruption intensifies</a>, service provision and delivery declines. This means that the poor are then subject to bribe inflation to gain access to shrinking capacity. <a href="https://issafrica.org/iss-today/the-reasons-behind-service-delivery-protests-in-south-africa">Violent service delivery protests</a> inevitably escalate.</p>
<h2>Demographics and education</h2>
<p>South Africa’s five year average economic growth rate declined from 4.8% over the 2004-2008 period to 1.9% over the 2009-2013 period. Between 2014 and 2016 it averaged 1.1%. At the same time irregular, wasteful, and <a href="https://www.agsa.co.za/Portals/0/MFMA%202014-15/Section%201-9%20MFMA%202014-2015/FINAL%20MEDIA%20RELEASE%20(MFMA%202016)%20FN.pdf">unauthorised expenditure ballooned</a>. It’s therefore not surprising that the number of violent protests increased from an average of 21 a year between 2004 and 2008 to 164 a year between 2014 and 2016.</p>
<p>Unfortunately, South Africa’s demographics and education statistics don’t suggest that this trend is likely to reverse soon.</p>
<p>South Africa’s <a href="http://www.iol.co.za/business-report/economy/the-grim-situation-facing-sas-youth-1878239">youth statistics are depressing</a>. Young people between the ages of 15 to 35 <a href="https://www.statssa.gov.za/publications/P02114.2/P02114.22015.pdf">comprise 55%</a> of the country’s 36 million working age population. Of the 19.7 million youths, only 6.2 million are employed while 3.6 million are unemployed but still actively looking for work, and 1.53 million have stopped looking for work. The remaining 8.4 million are at school, tertiary education, or are homemakers.</p>
<p>Youth unemployment is 36.9%. This is nearly double the unemployment rate among adults. Among black youth, 40% are unemployed compared to 11% of white youth.</p>
<p>Taking the level of education into consideration, <a href="https://equaleducation.org.za/2017/01/09/matric-results-and-south-africas-youth-unemployment-crisis/">2011 data</a> show that the unemployment rate for 25 to 35 year olds who had less than a matric was 47%, compared to 33% for those that had a matric, and 20% for those with a diploma or post-school certificate. But if one looks at the younger group of 20 to 24 year-olds, 16% are in school, 12% are in post-schooling education, 21% are employed, and 51% are unemployed and not in any education or training.</p>
<p>Considering that the percentage of black professional, managerial and technical workers in the 25 to 35 age bracket dropped by 2% over the past 20 years (meaning that this generation is less skilled than their parents), the statistics in the 20 to 24 age bracket indicates that this trend is likely to worsen.</p>
<p>Worryingly, studies show that countries, such as South Africa, that have a <a href="http://www.un.org/esa/population/publications/expertpapers/Urdal_Expert%20Paper.pdf">youth bulge and poor education attainment</a> are likely to suffer <a href="http://www.sciencedirect.com/science/article/pii/S0176268016303470?via%3Dihub">from political instability</a>. This is because if the demographic transition occurs in a stagnant economy with a high level of corruption then the low opportunity costs <a href="https://www.dailymaverick.co.za/article/2016-04-18-the-great-reversal-stats-sa-claims-black-youth-are-less-skilled-than-their-parents/#.WVZNFIR97IV">increase the likelihood</a> of political violence by poorly educated young men.</p>
<h2>Fixing systemic failures</h2>
<p>South Africa’s current crisis is a systemic failure extending across national and local government. Although it’s possible that the political cost of corruption is now reaching unacceptable levels, reversing the effects of state decay on the poor will take short-run and long-run interventions.</p>
<p>Short-run measures will need to include holding public officials to account, reforming state owned enterprises and reversing the numerous institutional weaknesses at all levels of government.</p>
<p>But public and private stakeholders will also need to formulate long-run policies that will improve the quality and through-put of the country’s junior and secondary education systems, and entrench youth employment incentive schemes. In addition, skills training will need to be reformed and reinvigorated, and the technical vocational educational system will need to be reconstructed.</p>
<p>If South Africa is to recover, then the country’s badly frayed socio-economic fabric will need to be restitched, not just patched.</p>


Op-Ed: How corruption is fraying South Africa’s social and economic fabric

<p>Enterprise application software provider SAP has initiated an independent investigation into allegations that it agreed to pay <a href="http://amabhungane.co.za/article/2017-07-11-guptaleaks-software-giant-sap-paid-gupta-front-r100m-kickbacks-for-state-business">10% “sales commission” </a>to a company controlled by the Guptas to clinch business from Transnet.</p>
<p>The New York Stock Exchange listed company is governed by <a href="https://www.justice.gov/criminal-fraud/foreign-corrupt-practices-act">The Foreign Corrupt Practices Act, </a>which prohibits such practices.</p>
<p>SAP&#8217;s probe will be spearheaded by a multinational law firm and overseen by Executive Board Member Adaire Fox-Martin, who will  vigorously review contracts awarded by SAP South Africa.</p>
<p>SAP has also launched an internal review and will make the results of the investigation public once it is concluded.</p>
<p><strong>READ: </strong><a href="http://cnbc.africa/news/political/2017/07/13/state-capture-probe/">SA’s Public Protector wants an urgent inquiry into state capture</a></p>
<p>In a statement SAP said &#8220;Consistent with company policy, SAP has brought in senior expert staff across all relevant functions while the current management team has been placed on administrative leave pending the findings of the review&#8221;.</p>
<p>Fox-Martin is currently travelling to South Africa to address the concerns of customers, partners and employees.</p>
<p>The SAP (Global) interim team are expected to arrive from Germany tomorrow morning.</p>


SAP to investigate Gupta corruption allegations

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<p>&#8220;Africa is an awakening giant,&#8221; according to the former South African President Frederik Willem de Klerk speaking at the World Petroleum Congress in Istanbul.</p>
<p>The leader who oversaw the transition of his country&#8217;s power to Nelson Mandela said Tuesday that the future looks bright for a continent previously blighted by war, famine and a lack of infrastructure.</p>
<p>&#8220;I believe Africa is an awakening giant and, yes, it is not performing according to what we expected soon enough, but it will perform,&#8221; he said.</p>
<div id="inline_movable_ad"> De Klerk believes that African countries are primed to take advantage of the world&#8217;s growing size.</div>
<p>&#8220;If we look at food shortages for the rest of the world with a growing population, Africa is the solution,&#8221; he said.</p>
<p>&#8220;It has underdeveloped land, frugal land, which can provide food for the growing billions of the world.&#8221;</p>
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<div class="pro-video-chapters fall dyperf dyMonitor" data-adid="535383||1437|||">Companies investing in Africa have bemoaned rampant corruption in countries such as Kenya and Nigeria that have seen strongmen leaders enrich themselves at the cost of their own people.</div>
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<p>But de Klerk said Africa is not alone in this regard: &#8220;Corruption is a worldwide problem, it is just more sophisticated in the developed world and more unsophisticated in the developing world. But it is everywhere.&#8221;</p>
<p>&#8220;Africa has a great future. I firmly believe in it. But we need to get our house in order we need to fight corruption more effectively,&#8221; he added.</p>
<p>The former leader added that investors in his own South Africa, can rely on the country&#8217;s constitution for asset protection rights and dismissed recent headlines about &#8220;property seizures&#8221; as comments from extremists.</p>
		
				
		
<p><strong>South African leadership</strong></p>
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<div class="pro-video-chapters fall dyperf dyMonitor" data-adid="535383||2186|||"> This year South Africa&#8217;s ruling ANC party will elect a new leader and de Klerk viewed it as a great opportunity.</div>
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<p>&#8220;What is going on is bad leadership at the moment. It&#8217;s not good governance; it is a governing party which is itself in disarray,&#8221; he said.</p>
<p>&#8220;But there is light at the end of the tunnel. The time of President Zuma is running out. He will be replaced as leader of the African National Congress (ANC) in December this year.&#8221;</p>
<p>De Klerk said a strong candidate to lead South Africa is emerging but refused to name the person on the grounds it might be a &#8220;kiss of death for him.&#8221;</p>
<p>De Klerk added that independent courts, a free press and a civil society that is &#8220;bulging its muscles,&#8221; are all combining to provide increased stability in South Africa.</p>
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“Africa is an awakening giant” – Former SA President FW de Klerk

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<p>CNBC Europe recently caught up with former president of South Africa, FW de Klerk to speak about the state of the country&#8217;s economy amongst other issues. The conversation started with claims of deep-seeded corruption in government.</p>


FW de Klerk speaks on SA’s economic decline

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<p>The Eastern Cape ANC delegations are successfully convincing some party branches of a &#8220;one-member, one-vote&#8221; approach to choosing its leader in December says Oscar Mabuyane.</p>


EC ANC delegates call for review of leadership voting process

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<p>The Daily Maverick has published another instalment of the Gupta Leaks saga, revealing that tax-payers money was used to pay for the lavish Gupta wedding last year, Craig Mckune, Investigative Journalist for Amabhungane joins CNBC Africa for more.</p>


SA tax-payers money used to fund lavish Gupta wedding

<p>Institutions and the rule of law are the essential elements that protect individual South Africans from the excesses and abuses of state power. The recent fiasco where the Public Protector recommended changes to the Constitution is an example of institutions gone awry.</p>
<p>Constitutionalism as a branch of jurisprudence did not develop to foster effective government, but explicitly to restrain government interference in the personal and economic lives of ordinary people. The Public Protector’s recommendation does the opposite: it proposed to alter its establishing statute – the Constitution – to change the very nature of our central bank for seemingly political reasons. The markets reacted predictably and, today, South Africans are a little poorer than they were yesterday.</p>
<p>The business of our institutions should not be to make life harder for anyone – except government, that is.</p>
<h3>Institutions are meant to be immune from political interference</h3>
<p>Institutions are divorced from the politics of the day because they are meant to be consistent and as immune as possible from political interference. In a country with rich constitutionalism and strong institutions like the United States of America, the character of the country does not change when political leadership does. Donald Trump’s influence on America’s status as a bastion of freedom and democracy will be negligible. He might fiddle with the composition and policy of Cabinet, but the Supreme Court and the sturdy devolution of power to states ensure that the reach of the President does not extend too far.</p>
<p>In other countries, such as ours, the political leadership of the day has far greater influence and institutions are secondary considerations. We already refer to the terms of our post-Apartheid presidents as “eras” – the Mandela-era, the Mbeki-era, and the Zuma-era – each with their own style that had a profound impact on South Africa’s world image. Before 1994, no matter who was president, we simply had “the Apartheid-era”, because the institution of Apartheid was so strong (in a bad way!).</p>
<h3>South Africa&#8217;s economy brought to its knees</h3>
<p>Our political leadership does not have to reach far to impact the lives of ordinary South Africans negatively. That a political appointment practically brought South Africa’s economy to its knees is indicative enough that this situation is not right.</p>
<p>South Africa’s institutions may appear strong on paper, yet it is evident that the executive branch of government can act with a free hand. For instance, the Department of Mineral Resources’ recently-published Mining Charter wiped more than R50 billion off the mining industry’s share value. Our institutions seem powerless to stop government from enacting such destructive policy even when the Charter’s history is questionable when it comes to public participation and impact assessments.</p>
<h3>What is the solution?</h3>
<p>Institutions must be concerned, first and foremost, with the government. There is no doubt that private firms and individuals, too, can be corrupt, but the consequence of private sector corruption, by its nature, is limited. Government corruption and overreach, however, can potentially destroy economic growth and the livelihoods of millions. Private corruption is dealt with by market forces, and, failing that, the courts and the criminal justice system. Government corruption is dealt with politically.</p>
<p>Our institutions need to make sure government does only that which it is designed to do, and does it well. Most of all, our institutions must never enable the growth of government for political reasons – something our superior courts have been guilty of on occasion in recent years.</p>
<p>When institutions lose their character as a restraining force and become an enabling force, they cease to be the custodians of constitutional democracy and the rule of law. Instead, they become part of a very corruptible political process. When this happens, tyranny is inevitable.</p>
<p><em>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=htkauALeQYSCx850UiJv_w&amp;e=Jill.DeVilliers%40abn360.com&amp;a=SqFOozLaTpqmevQjn3SPLw" data-dm-link-id="1">www.martinvanstaden.com</a></em></p>


Op-Ed: Institutions must remain mindful of their core mandate

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<p>OUTA released a compelling case document in an effort to convince Parliament and other organs of state, including the Constitutional Court if need be, to have Jacob Zuma removed as the President of South Africa.</p>


OUTA reveals compelling case document to unseat President Zuma

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<p>The South African Cabin Crew Association‚ which represents 1‚300 South African Airways cabin crew members‚ has slammed government for failing to act on reports of corruption at the already embattled SAA.</p>


SA Cabin Crew Association alleges major corruption at SAA

<p>South Africa&#8217;s rand fell more than 1.5 percent on Monday after Public Protector Busisiwe Mkhwebane recommended changes to the constitution to force the central bank to promote economic growth rather than currency and price stability.<span id="midArticle_byline"></span></p>
<p>By 1222 GMT, the rand was trading 1.44 percent weaker to the dollar at 12.9900, having hit 13.0075.</p>
<p>Mkhwebane said at a news conference that the primary objective of the South African Reserve Bank should be to promote balanced and sustainable economic growth, rather than to target inflation, as it is now.</p>
<p>It is unclear why Mkhwebane, a constitutionally mandated anti-corruption watchdog, should have made the comments, which alarmed currency traders.</p>
<p>&#8220;They want to initiate changes to alter the primary objective of the Reserve Bank. Some of the suggestions being to remove the reference to protect the value of the currency and all this has caused a knee-jerk reaction,&#8221; said Andre Botha, Treasury One currency dealer.</p>
<p>(Reporting by Tanisha Heiberg and Olwethu Boso; Writing by James Macharia; Editing by Ed Cropley)</p>


S.Africa’s rand weakens 1.5 pct after watchdog comments over cenbank

<p><span class="articleLocation">JOHANNESBURG</span> (Reuters) &#8211; South Africa&#8217;s anti-corruption watchdog will oppose President Jacob Zuma&#8217;s court bid to set aside an influence-peddling report, Public Protector Busisiwe Mkhwebane said on Monday.<span id="midArticle_byline"></span></p>
<p>The Public Protector, a constitutionally-mandated watchdog, released the report in November last year, after an extensive probe over allegations of influence-peddling against Zuma, whose administration has been marred by scandals.</p>
<p>The carefully worded report by Thuli Madonsela, Mkhwebane predecessor, stopped short of asserting that crimes had been committed and called for a judge to investigate the allegations. Zuma has denied any wrongdoing, and is challenging the Public Protector&#8217;s report in court.</p>
<p>(Reporting by Tiisetso Motsoeneng; Writing by Ed Stoddard; Editing by James Macharia)</p>


South Africa watchdog to oppose Zuma bid to set aside influence peddling report

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<p>Nigeria&#8217;s Senate President, Dr Bukola Saraki was discharged and acquitted on all charges by the Code of Conduct Tribunal on Wednesday. Opeyemi Agbaje, CEO RTC Advisory joins CNBC Africa for more.</p>


<p><span class="articleLocation">Mfuneko Toyana | PRETORIA</span></p>
<p>South Africa&#8217;s Finance Minister Malusi Gigaba said on Friday he would not be implicated in documents leaked to the media that allegedly expose influence-peddling in government.<span id="midArticle_byline"></span></p>
<p>Gigaba said allegations he was involved in anything untoward were &#8220;made to impugn my integrity and is meant to divert us from the work of transformation and growing the economy&#8221; adding that he had &#8220;done no wrong&#8221;.</p>
<p>Some South African media reported on Thursday they had access to over 100,000 leaked documents and emails that showed improper dealings in lucrative government contracts by business friends of President Jacob Zuma.</p>
<p>(Reporting by Mfuneko Toyana; Writing by TJ Strydom; Editing by Joe Brock)</p>
<p>http://cnbc.africa/trending/state-capture/2017/06/02/south-african-graft-accusations-expose-split-anc-zuma/</p>


South Africa’s Gigaba says not implicated in leaked documents

<p>Joe Brock | <span class="articleLocation">JOHANNESBURG</span></p>
<p>The ruling African National Congress said on Friday it is gravely concerned by leaked documents alleging influence-peddling by friends of President Jacob Zuma, deepening a divide in South Africa&#8217;s ruling party over its leader.</p>
<p>Some South African media reported on Thursday they had access to over 100,000 leaked documents and emails that showed improper dealings in lucrative government contracts by business friends of Zuma.</p>
<p>The latest allegations of influence-peddling may deepen divisions in the ANC as factions battle for control ahead of a party conference in December where a successor to the beleaguered, scandal-plagued Zuma will be chosen. Zuma can remain as head of state until an election in 2019.</p>
<p>Zuma and the Gupta family, wealthy Indian-born businessmen whose companies have contracts with state-owned firms, have not commented but have denied similar allegations in the past. Reuters could not independently verify the new allegations.</p>
<p>&#8220;These reports contain very worrying claims about the nature of the relationship between government and private interests,&#8221; the ANC said in a statement, calling on government to urgently establish the veracity of the leaks.</p>
<p>&#8220;The ANC views these allegations in a very serious light as, if left unattended, they call into question the integrity and credibility of the government.&#8221;</p>
<p>The statement appeared to contradict Zuma, who said at a parliamentary session on Thursday that he was not interested in &#8220;hearsay&#8221; published in newspapers.</p>
<p>A backroom schism in the ANC over Zuma has burst into the open in recent weeks as his opponents seek to oust him or ensure his chosen candidate does not take over the reins.</p>
<p>Analysts say Zuma&#8217;s camp will back his ex-wife and former African Union chair Nkosazana Dlamini-Zuma in December, while another faction will support Deputy President Cyril Ramaphosa.<span id="midArticle_byline"></span></p>
<p><strong>ANC SPLIT IN TWO</strong></p>
<p>&#8220;This week we have seen there are clearly two ANCs,&#8221; said political analyst Daniel Silke.</p>
<p>&#8220;One ANC sees very little wrong with crony capitalism, kickbacks and shady payments. The other ANC sees the reputation of the party among the electorate disintegrating and fear the real possibility they could lose power.&#8221;</p>
<p>Opposition parties have made upbeat comments about unseating the ANC in 2019, an unthinkable scenario a few years ago for a party that has led comfortably since it swept to power under Nelson Mandela at the end of apartheid in 1994.</p>
<p>Zuma survived a call to resign at an ANC meeting last week due to disputes over political appointments and his friendship with the Gupta family.</p>
<p>Parliament is expected to hold a no-confidence vote in Zuma later this year but he has survived similar attempts before.</p>
<p>When Zuma sacked respected finance minister Pravin Gordhan in March, three of the top six members of the ANC, including Ramaphosa, openly criticising his decision, breaking the party&#8217;s strict rule of showing unity in public.</p>
<p>Gordhan&#8217;s replacement Malusi Gigaba has been accused of having close ties to the Guptas. Gigaba said on Friday that he had done nothing wrong and the leaked documents would not link him to the family.<span id="midArticle_byline"></span></p>
<p>(Additional reporting by Olivia Kumwenda-Mtambo, TJ Strydom and Tiisetso Motsoeneng; Editing by Mark Heinrich)</p>


South African graft accusations expose split in ANC over Zuma

<p>South Africa has, in the past, been credited with taking on innovative corporate governance <a href="https://www.ft.com/content/bb4557d2-5b75-11e4-b68a-00144feab7de">standards</a> and integrated reporting. So it’s particularly depressing to see the spectacle around the country’s largest state-owned enterprise, its power utility Eskom.</p>
<p>The <a href="http://www.timeslive.co.za/politics/2017/05/12/Molefe-didnt-resign%E2%80%9A-says-Eskom.-He-retired">drama</a> has revolved around Eskom’s CEO Brian Molefe, who has returned to the job just months after quitting. The contradictory explanations of his return point to huge flaws in the accountability systems of the country’s state owned enterprises. It’s clear that Eskom flouted many basic <a href="https://www.icaew.com/en/technical/corporate-governance/overview/does-corporate-governance-matter">principles</a> of sound corporate governance.</p>
<p>This poses enormous risks as these systems are imperative for ensuring an ethical public service and society.</p>
<p>When Molefe announced his <a href="https://www.businesslive.co.za/bd/national/2017-05-12-brian-molefe-did-not-resign-that-is-why-we-can-reinstate-him-eskoms-board-says/">departure</a> from Eskom, he specifically connected his leaving to “corporate governance”; he was certainly accurate in that. On top of the issue of his claimed connections to the <a href="http://www.bbc.com/news/world-africa-22513410">Gupta family</a>, the <a href="https://www.ujuh.co.za/state-of-capture-public-protectors-report/">allegations</a> that spurred his exit spoke to breakdowns in information sharing and decision making that were made to benefit only a few.</p>
<p>The National Executive Committee of the ruling party, the ANC, has since ordered that Molefe’s return to Eskom should be reversed, a decision seen to be going against the wishes of its President Jacob Zuma.</p>
<p>There are many flaws that need to be examined in this saga, but let me flag three foundational faults in corporate governance. Firstly, there were serious lapses around Eskom’s senior executive remuneration processes. Secondly, it looks like the basic rules of consultation around critical decision making were flouted. And thirdly, creating a <a href="https://www.ujuh.co.za/lynne-brown-brian-molefes-return-to-eskom-is-better-than-r30m-payout/">false dilemma</a> between handing Molefe a R30 million payout or allowing him to return to his Eskom job points to a simple disregard of the rules.</p>
<h2>Process failures</h2>
<p><strong>The compensation question:</strong> the question of fair and justified compensation for senior executives looms large in the Eskom saga. There’s still no clarity over why Molefe left Eskom in December last year: whether he “retired” or “resigned” remains a contested point. More recently, South Africans were informed that he was, in fact, on <a href="https://mg.co.za/article/2017-05-22-now-eskoms-molefe-was-on-unpaid-leave">unpaid leave</a> in the months between his departure in December and his return in early May.</p>
<p>Whatever the reason for his departure, Eskom’s board chose to award Molefe <a href="http://www.iol.co.za/news/politics/why-did-brian-molefe-get-a-r30m-golden-handshake-8690587">R30 million</a>. This raises the first potential failure in the accountability system: the responsibility of board members to decide fair and justified compensation for senior executives.</p>
<p>This is true regardless of whether they retire or resign or go on unpaid leave. Each is governed by sets of rules to guide a board’s decision-making. Leaving aside the obvious contradiction that anyone would be paid R30 million for being on unpaid leave, none of the normal remuneration rules seem to have been followed. But without a basic understanding of the terms of his departure, a proper analysis is almost impossible. This failure of transparency in the process makes justifying the award on the grounds that it was in the interests of Eskom’s stakeholders even less likely.</p>
<p><strong>Flouting consultation processes:</strong> The second failure in the governance system is a lack of clarity around the <a href="https://www.ujuh.co.za/lynne-brown-brian-molefes-return-to-eskom-is-better-than-r30m-payout/">role</a> of the Public Enterprises Minister, Lynne Brown. Her decision to contradict the board and deny the R30 million pay-out triggered an evaluation of what to do about Molefe’s connection to Eskom. In her statement, Brown highlighted the fact that she hadn’t been consulted and referred to decisions that appeared to have been made without the required approvals.</p>
<p>An effective corporate governance system has clearly delineated processes for both consultation and decision making.</p>
<p>In this case, it seems that steps in that process were skipped over, and key people weren’t consulted, leading to an unsupported outcome.</p>
<p><strong>Creating a false dilemma:</strong> Brown claimed that there were only two options open to her – to pay Molefe R30 million or reinstate him. But by doing so she created a false dilemma that stood to benefit the person who stepped down, rather than the company and its stakeholders. In the process, the board and the minister ignored multiple options that would have likely been better.</p>
<p>For example, if neither the board nor Brown could agree on severance compensation, Molefe could be paid his old salary in the interim, while final negotiations took place (there is a paid leave option in his contract). This type of bridging arrangement would create fairness for him while avoiding disruption to Eskom’s operations.</p>
<h2>A question of ethics</h2>
<p>A fundamental principle of good governance, laid out in <a href="http://www.iodsa.co.za/?page=KingIV">King IV</a> (a set of guidelines for strong corporate governance which companies/directors should comply with and explain their choices), that applies here is that:</p>
<blockquote><p><em>governing bod[ies] should govern the ethics of the organisation in a way that supports the establishment of an ethical culture.</em></p></blockquote>
<p>Regardless of political ideology, it is difficult to see that Molefe’s return to Eskom can be said to be in the best interests of creating an ethical culture.</p>
<p>Strong accountability systems create ethical cultures because everyone knows the rules, and believes the rules are being followed. As a result, people trust that when things don’t go their way, there’s a clear explanation. While they may not agree with choices, they are confident that a decision was made after a known process was followed.</p>
<p>Strong accountability systems can certainly privilege some people over others in different circumstances, but they clarify what gets rewarded and what gets punished. This leads to an ethical culture because there’s a common understanding and, crucially, some levels of shared purpose.</p>
<h2>Not just about following the rules</h2>
<p>Good accountability systems are about more than creating and following rules; while compliance is an aspect of these systems, it is really the bare minimum. They create and support a sense of shared destination, bolstered by agreed processes.</p>
<p>Recently, leaders have too often relied on their legal “right” to do something, ignoring their ethical obligation to the greater good: the good of their company, their portfolio, their electorate, their country.</p>
<p>While the legal grounds for better governance are worth debating and enforcing, South Africans must never neglect the profound ethical impact of failed accountability systems. Eskom’s current situation is about more than fulfilling its legal obligations. It’s a warning that South Africa’s ethical culture might slip through our hands. Let’s hold on tight.</p>


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