Page 24 - The Economist

24 Briefing South Africa The Economist December 9th 2017
2 2.6m to 4.1m. Princeton University wrote a bers, only four of whom are appointed by of business and you make people happy
case study on its achievement. the president. There are concernsabout the with yourwork. I’m havinga great time.”
A “research and investigations” unit competence of some judges but not their The press is also on the front line.
was set up to take on difficult cases, among independence. And appointees some- “When history is written about the Zuma
them tobacco smuggling. Edward Zuma, times exceed expectations, perhaps be- years, the media will have a very big
the president’sson, wasa directorofone of cause of a powerful culture of indepen- space,” says Sipho Pityana, chairman of
the firmsunderinvestigation. The unit was dence within the judiciary. When AngloGold Ashanti, a mining company,
successful—too successful, according to Mr Mogoeng Mogoeng, the chief justice, got and founder of Save South Africa, an anti-
Pillay. “When we really started to do well the job, there were fearsthathe would be a state-capture group. Some old warriors
on combating tax evasion in the cigarette pushover but, according to Edwin Camer- have returned to the fray. Jacques Pauw, a
and tobacco business, we started bumping on, a Constitutional Court judge: “He star of Vrye Weekblad, an Afrikaans anti-
heads.” Around that time stories began to proved us all wrong. He’s phenomenal.” apartheid paper, was tempted back onto
appear in South Africa’s Sunday Times As other institutions of state cave to the beat from a new career as a chef by
newspaper about a “rogue unit” in SARS pressure, the courts are fielding more big sources with explosive revelations. His
which it alleged had, among other things, political cases. Last year, for example, two book, “The President’s Keepers”, detailing
spied on the president and run a brothel. opposition parties, the Democratic Alli- the capture ofthe security and intelligence
Soon afterwards, SARS got a new boss, ance (DA) and the Economic Freedom serviceshassold 85,000 copiesin a month.
Mr Pillay was suspended and KPMG was Fighters (EFF), brought a case to get Mr Two newdigital papers, the DailyMaverick
commissioned to produce a report on the Zuma to follow the recommendation of a and amaBhungane (Dung Beetle)—motto:
matter. In 2016, after the delivery of the re- report by Ms Madonsela that he should “we shovel dungto fertilise society”—were
port, Mr Gordhan and Mr Pillay were pay back state money spent on his private jointly responsible for the biggest scoop of
charged with fraud. The chargeswere soon residence. The Constitutional Court found the Zuma years, getting hold of around
dropped. The Sunday Times and KPMG against Mr Zuma. In October the Supreme 200,000 e-mails supposedly to and from
apologised to Mr Gordhan, but the dam- Court of Appeal upheld a ruling in favour the Guptas about their business dealings.
age was done: the research-and-investiga- ofthe DA that the charges against MrZuma #Guptaleaks is now online.
tions unit had been dismantled and 55 se- in the arms deal case should be reinstated.
nior managers had left the service. SARS, Many such cases are brought by con- Firms speakup
which had been beating targets, is expect- cerned citizens. South Africa has a long tra- Now even business is protesting. It took a
ed to have a revenue shortfall of 51bn rand dition of civic activism, a result of the while, partly because—as is usual in re-
this year, and more in the next two years. struggle against apartheid. Notable figures source-intensive countries—the state owns
on the scene, such asFrancisAntonie ofthe and regulates much of the economy, and
Highlycharged Helen Suzman Foundation and David also because white South Africa’s history
The National ProsecutingAuthority, which LewisofCorruption Watch, are veterans of ofusing the state to impoverish and disen-
laid the chargesagainstMrGordhan, is cru- the apartheid era; others are newcomers, franchise black people makes it hard for
cial. Whoever controls it can ensure that slightly surprised to find that they have be- white businesspeople to oppose an elect-
their enemies are prosecuted and their come political activists. ed black government. But the firing of Mr
friends are not. There are 783 counts ofcor- Wayne Duvenage, former CEO of Avis Nene provoked businesspeople to act. The
ruption against Mr Zuma relating to an South Africa, founded the Opposition to replacement of his successor showed that
arms deal but no charges have been Urban TollingAlliance, nowrepurposed as they could effect change. And the damage
pressed. Nor, despite the evidence against the Organisation Undoing Tax Abuse. In that politics is doing to the economy has
them in the public protector’s report, has September it got a court to freeze 1.75bn given them courage.
any action been taken against the Guptas. rand in accounts owned by rehabilitation Investment has flopped thanks to cha-
“All you need to know about the NPA is trusts of Gupta-owned mines, pending a oticpolicymakingand risingcosts: electric-
that the only high-profile corruption court decision on its application for new ity tariffs have risen nearly fivefold over
charge they’ve brought is against Pravin trustees to be appointed. It maintained the past decade. The government’s critics
Gordhan,” says Anton van Dalsen of the that there were reasonable grounds for be- blame inflated contracts given to cronies
Helen Suzman Foundation, a think-tank. lievingthe money, meantformitigating en- by Eskom, the state-owned power utility.
“Ifyou’re a friend ofthe president, nobody vironmental damage, would be removed Since Mr Zuma came to power in 2009,
will lift a fingeragainst you.” from South Africa. Mr Duvenage is full of South Africa has become less competitive
“State capture” is spreading. “You can beans. “I’m not getting rich, but I work in (see chart 1). The economy has underper-
see the…process extending through law an organisation where there’s no shortage formed and GDP per head is falling (see
enforcement, the state-owned enterprises, chart 2 on next page). Unemployment is
the revenue service, the Treasury and now running at 28%. Standard & Poor’s recently
the central bank,” says Mr Gordhan, refer- Falling down the ladder 1 downgraded government debt to below
ringto a reportbyMsMadonsela’sreplace- South Africa, global competitiveness rankings junk; one more downgrade by Moody’s
ment as public protector, which called for Selected, 1=best will tip South African bonds out of bench-
parliament to amend the Reserve Bank’s Transparency 20 mark indices, which would further inflate
mandate to protect the currency to a vague of policymaking Better a deficit already widened by the revenue
40
one to promote citizens’ well-being. Mr service’s problems. Leading businessmen
Overall
Zuma’s opponents regard it as an attack on competitiveness 60 like Mr Pityana, Jabu Mabuza, chairman of
the bank’s independence, prompted by its Telkom SA, and BonangMohale, chairman
role in the closure ofGupta-linked bank ac- Government 80 of Shell South Africa, have become out-
budget balance
counts by the commercial banks. The Re- 100 spoken critics ofMrZuma’s.
serve Bankhit backswiftly, taking the pub- Diversion of Worse None of which means that Mr Zuma is
public funds
lic protectorto court and winning. 120 losing his grip on power. Certainly, he is
The courts seem robust, and there are Public trust unpopular. A poll by Ipsos in May found
good reasons to believe that they will re- in politicians 2009* 2017 † that 65% of voters and 54% of ANC mem-
main so. The Judicial Services Commis- Source: World Economic Forum Out of: *134 countries, bers thought he should resign. And sound-
†
sion, which appoints judges, has 23 mem- 137 countries ings among ANC delegates give Mr Rama- 1