Business leaders take a stance on clean government

By David Lewis
First published in Business Day

Ever since that fateful day in December 2015, when President Jacob Zuma tried — and failed – to make an end run around the Treasury, business leaders have shown a greater willingness to engage on crucial questions of political governance. While the full story of those four days has yet to be told, it is clear that key business leaders played a major role in seeing off the hapless Des van Rooyen and in reinstating Pravin Gordhan.

Instances of political activism on the part of business have occurred before, albeit not with quite the same urgency and unity of purpose. It has usually taken the form of a business leader publicly criticising the government only to be slapped down by whoever was in political power. It is then business as usual until the next time, so to speak.

The unusual element this time around is that the business activism that flared so dramatically in December 2015 has continued to glow. But business interventions are still largely a counterpoint to the continued efforts on the part of the president and his cronies to capture the Treasury and other key institutions, such as the South African Revenue Service (SARS). So will business activism be sustained this time?

There is some reason for believing that this may be so. Fast forward to the past fortnight. We have seen 81 CEOs of major South African corporations pledge their commitment to democratic governance. The symbolic significance of many of SA’s captains of industry and leading law professionals at the St Alban’s church in Pretoria to protest against state capture should not be underestimated. Up to now, the overwhelming business view has been its political concerns are best registered in private engagements with the government.

While some may be tempted to view the CEO pledge as mere talk, in truth the commitments it makes are familiar to many other similar pledges made by civil society organisations; commitments to the Constitution and the Bill of Rights, to an independent judiciary and impartial prosecuting authority, to social justice and transformation, and to “the highest standards of corporate citizenship, corporate governance and ethics”. Words, yes. But then so are all pledges and declarations. The hard stuff is always to translate the words into action.

Compliance programmes

But, although business participation in the demonstration is vitally important and their pledge is reassuring, all the visible business interventions of the past 11 months are still in fire-fighting mode. Public demonstrations are not the daily fare of civil society organisations, much less business. And pledges are just words. To sustain business’ engagement in political affairs, it needs to identify practices and programmes that are compatible with the daily life of business, but that clearly support the commitments made in the pledge.

One common approach is for corporations to focus on getting their own houses in order, manifest in the plethora of compliance programmes and codes of good practice. These are important and necessary, but they are ground zero of good corporate citizenship. What is still missing from this approach is clear evidence of a willingness to impose consequences on high-level transgressors. Until that happens, public participation — whistle-blowing in this instance — will not be effectively encouraged and the corporate whistle-blowing hotlines will not be trusted.

But compliance with the law is not enough. For one thing, it presupposes that it is possible to sustain on a sufficient scale ethical islands in a sea of malfeasance. Moreover, legal compliance is increasingly insufficient to mitigate fully even the legal risk posed by the extraterritorial reach of statutes such as the US Foreign Corrupt Practices Act and the UK Bribery Act. Mitigating reputational risk clearly demands the ability to demonstrate to the public that the company has gone the extra mile in countering corruption.

What is needed is an approach that has business engaging directly with the governance environment in which it operates. Corporate social investment programmes are often thought to represent this engagement. But the programmes rarely support efforts to reform political governance. Indeed, they often appear to be tightly tied to the marketing activities of the corporation in question.

What distinguishes business’ approach in the current crisis is an apparent recognition that the quality of public institutions matters and that an active, demanding public is the key mechanism for achieving this. I understand the consciously overt presence of business leaders at the November 8 demonstration to represent its concern at the performance of a key public institution — the National Prosecuting Authority (NPA) — and the effect of its conduct on other key public institutions, in this instance the Treasury and SARS. And crucially, it appears to represent an acknowledgement that a critical mechanism for achieving quality public governance is government accountability to an active, demanding citizenry.

This thinking is also evident in Business Leadership South Africa’s (BLSA) support for Corruption Watch’s recent Public Protector campaign. Not only did the members of BLSA make a generous financial contribution to this campaign but, more important, they agreed to be identified with the objectives and methodology of our campaign, with the notion that the way to strengthen our institutions is to facilitate greater public participation. Their support also reflects an understanding of the importance of actively protecting key institutions of democratic governance, such as the public protector.

Open engagement

Business’ recent engagement represents an understanding that its position on public affairs matters. And it does. It matters because its voice is loud; its brands are resonant. When it speaks and acts in a manner that the public deems contrary to the public interest — when it despoils the environment, when executive remuneration is obscenely excessive, when it colludes in fixing prices — the public hears and it condemns. While it would be helpful if business responded more positively to public criticism of certain of its conduct, there is little reason why the public should not hear and respond positively to business interventions that support the public interest.

So, the way forward for business is to engage openly with the day-to-day efforts and campaigns of civil society organisations to promote effective, responsive and accountable public institutions. Open engagement is important because it will set a standard for other corporations to follow. Just as it became good business to reject child labour or to divest from apartheid South Africa, so will it become good business to support accountable government. And in so, doing it will start to build a requisite degree of trust between the public and the corporate world. Just as social cohesion demands that the public trusts the police, the hospitals and the revenue-collection administration, so too must it be able to trust those who bake its bread, guard its savings and build its houses.

And when we get through this current crisis, public institutions that have been trashed in the orgy of corruption that has characterised recent years will have to be rebuilt. State-owned enterprises are going to have to find experienced board members and managers. Legal professionals are going to have to take up the daunting challenge of resurrecting the NPA.

This need not portend a new era of state capture. It is possible to find people of integrity who are experienced in management and board oversight. But they have to be willing to put up their hands.

I don’t underestimate the complexities that confront a partnership between civil society organisations and business. Concurrence on corruption does not imply similar agreement on, for example, economic policy. And there is frequently a blurred line between outright corruption and business practices such as aggressive lobbying and tax evasion and the covert funding of political parties that, although borderline legal, are rightly perceived as ethically suspect.

So, while business may think that engaging with civil society puts their relationship with the government at risk, it may well be that by seeking common cause with an interest group that is regarded with suspicion by the public, it is civil society organisations that are assuming greater risk. However, the scale and character of the national crisis represented by rampant corruption demands maximum national unity. The risks are worth taking.

• David Lewis is executive director of Corruption Watch.