Some years back, I had a conversation with a senior executive in one of the country’s business organisations. This was just after President Jacob Zuma had been ousted, and the experience of state capture and the corruption around it loomed large over our meeting. What he had to say was engaging and impressive.
The past years, he said, had underlined the imperative of recognising just how intimately businesses were bound up with the communities in which they operated. The abuses of the Zuma era had shown that businesses could not simply stand aloof from what was happening around them. This was both a pragmatic and principled imperative – and despite what he described as the inherent ‘conservatism’ of the business community, business people had recognised the need to reorient themselves accordingly.
Business, in other words, cannot afford to remain on the sidelines and to be indifferent to what is taking place around it. This has become part of mainstream thinking in corporate governance and business ethics, not least in South Africa, where the various King Reports on Governance have emphasised the duties of business to society as being no less important than its responsibilities to shareholders.
Indeed, for the past thirty years, a great deal of attention has been given to corporate malfeasance and the damage it has wrought on society. This has been very damaging to the reputation not just of individual firms and executives but to the whole edifice of a business-based economy. There has been no shortage of voices – left- and right-leaning – who have sought to use this as a weapon.
Unfortunately, the passing of the Zuma era and the ascendency of President Cyril Ramaphosa have not relieved South African business of the challenges that all of this implies. Nor, it seems, have these lessons been properly taken on board.
In an interview last week, FNB CEO Jacques Celliers sounded an upbeat note about the state of South Africa. On what is undoubtedly the most critical issue facing the country at present, the question of property rights, he verged on the dismissive.
‘Just certainty in policy’
Noting that the bank was participating in the ‘dialogue’ around the issue, he trusted that everything would, well, turn out okay. ‘In the end, we’ve got comfort that the right things will happen. We will facilitate and play our part to try and support that outcome. Back to the topic of what it is that we’re looking for, is just certainty in policy. Then we can all move on.’
In the circumstances of contemporary South Africa, ‘comfort’ is a wonderful state to be in. It’s unclear just how much ‘comfort’ the banks’ clientele should take from this. Banking, arguably more so than any other, is an industry that carries a special burden of responsibility towards its clients. Banks are entrusted not only with people’s money, but with their financial security. In a very real sense, banks hold the futures of millions of people – many of whom are by no means affluent – in their hands.
It is to these that banks should, by any ethical standard, have their primary and rock-solid commitment. It is grotesquely inadequate to simply trust the good sense of a ruling elite that has all too often shown itself swayed more readily by ideology than by pragmatism. Let it not be forgotten that even in the aftermath of the Zuma presidency, when ‘reform’ was the watchword (a matter of urgency in a rapidly contracting time horizon, as even President Ramaphosa acknowledged), scant reform has emerged. Indeed, one of the few ‘reforms’ that the ruling party and the government have pushed is the degradation of property rights.
For banks, the threat to their clients’ assets is a grave one – and it is not confined to land. For the government, yawning fiscal gaps and lousy projections for growth in the coming years make the shift to the seizure of financial assets tempting, to say the least.
On this terrain, the attitude of the banking sector will be decisive. Will it resist expropriation on behalf of those whose money is in its stewardship – or collude with the state in taking it?
Four-part question
We at the IRR have asked South Africa’s financial institutions what their approach to this will be. This took the form of letters sent in February which posed a four-part question:
- Had they made submissions to Parliament on the Expropriation Bill, and if not, why not?
- Had they informed their clients of the risks which the Bill posed to their financial and asset interests, and if not, why not?
- Had they requested that the government conduct and release a socio-economic impact assessment report on the Expropriation Bill, and if not, why not?
- Did these institutions oppose the expropriation of assets without compensation?
The correspondence campaign includes, incidentally, a letter sent to Mr Celliers. We received few responses. This was not reassuring.
Indeed, to hear that ‘certainty’ is the central concern, rather than the content of policy, suggests that the industry will accommodate the realities that it faces – whatever they may be. There is a certain cynical logic to this. Perhaps the interests of the mass of its clients are dispensable when compared with the industry’s relationship to the government. (One financial adviser remarked that prescribed assets would probably mean a ‘haircut’ for savers.) Perhaps in a globalised world, the interests of the banks’ South African clients might pale in comparison to the opportunities they see elsewhere. And perhaps ‘certainty’ would enable them to choose a course that minimises their own exposure to the perilous course on which the country is set.
Narrow institutional interests
This may well be a compelling strategy for the various individual institutions, and for their own narrow institutional interests. Yet it would also be an exercise in declining to face the turmoil, and abandoning the society of which they are a part.
In our letter, we asked: ‘Will you help South Africans protect their right to own securely what they have worked hard to earn? Will you do your bit to #KillTheBill? Or will you choose to side with the interests of government, enabling another wave of state capture and blemishing further the reputation of South Africa’s corporate citizenry?’
To which one might ask whether any of South Africa’s business titans have learned the lessons of the state-capture era. Pardon the pun, but I for one would not bank on it.
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