Corporate Corruption of South African Politics and Economics – CADTM

 Abstract

The new Government of National Unity has been such a relief to business interests that immediately after its announcement on 13 June 2024, the stock market and rand value both soared. However, the danger of such hubris is that a renewed corporate entitlement is normalised, as if it were in the broader public interest
Interest
An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set.
. Yet private-sector corruption is a much more significant problem than state-based graft. This paper documents how so-called “state capture” extends far beyond the usual suspects: syndicates such as the Gupta brothers who operated from 2008-17, or the Watson brothers’ Bosasa state-outsourcing operation through the 2000s-2010s, or the Shaik brothers who, via late-1990s Arms Deals operations involving a French firm prone to bribery, first implicated Jacob Zuma as corrupt, to the extent he was fired as Thabo Mbeki’s Deputy President in 2005. The South African state is relatively mediocre in the best-known “Corruption Perception Index” ranking of 180 countries’ administrations (including politicians), compiled by Berlin-based Transparency International. In contrast, during the 2010s the PwC “economic crime and fraud” reports revealed that South Africa’s corporations were considered the worst in the world in general and – in the 2014 survey – also in the categories of money laundering, bribery and corrupion, procurement fraud, asset
Asset
Something belonging to an individual or a business that has value or the power to earn money (FT). The opposite of assets are liabilities, that is the part of the balance sheet reflecting a company’s resources (the capital contributed by the partners, provisions for contingencies and charges, as well as the outstanding debts).
misappropriation and cybercrime. Systematically addressing corporate corruption may, in turn, allow public interest critics of South African capitalism, as well as private-sector whistleblowers, some long-overdue attention.

 Introduction: Narratives and silences

In South Africa, the typical analysis of corruption is limited to blaming individual political leaders or managers of state departments and parastatal corporations. Secondarily, citizens regularly complain about petty forms of graft by lower-level bureaucrats. How serious are such forms of graft? How might we understand the problem in deeper terms, in relation to South Africa’s economic history? And how do not only state-society, but state-market-society forms of corruption operate? Indeed, how far does so-called “state capture” extend beyond the usual suspects: syndicates such as the Gupta brothers who operated from 2008-17, or the Watson brothers’ Bosasa state-outsourcing operation through the 2000s-2010s, or the Shaik brothers who, via late-1990s Arms Deals operations involving a French firm prone to bribery, first implicated Jacob Zuma as corrupt, to the extent he was fired as Thabo Mbeki’s Deputy President in 2005?

Corruption Perception Index ranking of South Africa, 1996-2023 (least corrupt out of 180 states)

Source: https://tradingeconomics.com/south-africa/corruption-rank

It transpires that the South African state is relatively mediocre in the best-known “Corruption Perception Index” ranking of 180 countries’ administrations (including politicians), compiled by Berlin-based Transparency International (TI). The TI (2024) Index measures “bribery; diversion of public funds; officials using their public office for private gain without facing consequences; ability of governments to contain corruption in the public sector; excessive red tape in the public sector which may increase opportunities for corruption; nepotistic appointments in the civil service; laws ensuring that public officials must disclose their finances and potential conflicts of interest; legal protection for people who report cases of bribery and corruption; state capture by narrow vested interests; access to information on public affairs/government activities.” South Africa’s 2023 ranking is 83^rd least corrupt, or 97^th most corrupt.

South Africa governance is by this measure far cleaner than is typically acknowledged by society. In 2023, polling by TI (2024) recorded 64 percent of the population “who thought corruption increased in the previous 12 months,” with 18 percent of public service users acknowledging they “paid a bribe in the previous 12 months.” This degree of state graft is certainly worse than in the mid-1990s, when just after apartheid ended, South Africa’s rank was 23^rd least corrupt. The sharp 2021-23 degradation in rankings from 69^th to 83^rd least corrupt state probably reflected not only high-profile Covid-19 procurement fraud, but current president Cyril Ramaphosa’s own recent scandal in which US dollars were illicitly hidden in a couch at one of his residences.

But if TI is correct, the South African state suffers a relatively minor level of such corruption, compared to the corporate economy’s far deeper and more pervasive strain of capitalist “accumulation by dispossession.” That term, signifying outright theft (instead of “accumulation by exploitation” through capital-labour relations at the point of production in the workplace), was coined by David Harvey (2003), based on a revival of the work of the first Marxist political economist of South Africa, Rosa Luxemburg. In 1913, her Accumulation of Capital included the observation that imperialism reflected capitalism periodically suffering overproduction crises, requiring expansion to new territories (what many term ‘globalisation’), and in that process, increasing contact with the non-capitalist spheres of the world.

Luxemburg drew extensively on secondary sources: writings about how South Africa’s earliest corporations were plying their trade, suffused with their desire and capacity to carry out systemic theft, dating to the Portuguese, Dutch and British colonialists. Capital’s interactions with non-capitalist society and nature is the appropriate way to frame the worst tendencies of corporate graft, as described in the next section. To illustrate those interactions, at least four factors that are missing from mainstream economists’ Gross Domestic Product
GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
(GDP) measurements reveal aspects of accumulation by dispossession: migrant labour systems that amplify the importance of unpaid labour by women (who typically live in distant ex-Bantustans or even the wider Southern African region, in contrast to social reproduction within urban areas where super-exploitative relations are more difficult to sustain), and three aspects of environmental degradation: local pollution, global-scale greenhouse gas emissions and uncompensated depletion of non-renewable wealth (Bond
Bond
A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange.
2021).

Yet today, the private sector is usually mentioned as “corrupt” in narrow ways, for example according to Kenneth Brown, who was Treasury’s leading procurement officer until 2017, the average state contract entails illegitimate price mark-ups of 35-40 percent (Mkokeli 2016). In addition, consciousness has recently been raised about white South Africa’s propensity to corporate financial fraud thanks to the March 2024 firearm suicide of Markus Jooste, the Stellenbosch-based chief executive who caused Steinhoff’s collapse (Wiener 2024). (Two other white tycoons appeared to have died through assisted suicides – Brett Kebble in 2005 and Gavin Watson in 2019 – after corruption charges became unavoidable.) Jooste’s death occurred on the eve of long-overdue state prosecution for looting an international retail network, thanks to graft costing more than $15 billion. When discovered in late 2017, the firm’s crash stunned stock markets and resulted in liquidation six years later. (Another bankuptcy that resulted from accounting fraud was KwaZulu-Natal sugar and real estate firm Tongaat Hulett. In 2019, chief executive Peter Staude and a half-dozen other officials – nearly all white – were exposed, and two subsequent revelations of graft included two dubious firms attempting a business rescue.)

In February 2023, there was also the high-profile ‘grey listing’ of South Africa by the Paris-based Financial Action Task Force (FATF), a network associated with the main Western imperialist powers’ policing of the global economy (especially in the wake of the 2001 airplane hijacking that spurred greater scrutiny of radical Islamic financial circuits). The FATF (2023) revealed the systemic character of banking-sector crime in South Africa, as did, simultaneously, the Al Jazeera (2023) ‘Gold Mafia’ report (mainly about Zimbabwe but also implicating major Johannesburg banks whose staff facilitated the graft, namely Absa, Standard Bank and Sasfin).

Society’s suspicions about international finance were again confirmed during South Africa’s high-profile 2023-24 prosecution of local and foreign banks for currency manipulation (a decade late) (Wasserman 2023). It was a rare moment for judicial action (Competition Tribunal 2023), no matter the Competition Commission’s apparently flawed inclusion of too many banks, as pointed out by Judge Dennis Davis (2024) in a case still to be heard at the Constitutional Court (Bond 2024a).

Tellingly, financial regulators from both Treasury and the Reserve Bank – the latter owned by the very banks engaged in prolific illegal acts – had not only denied currency manipulation (Phakathi 2019) but also ignored FATF warnings dating from 2019 until late in 2022, when three new laws were hurriedly passed and regulatory procedures tightened – but to no avail, as the grey listing was still imposed. And after all, Treasury’s Financial Intelligence Centre had already in 2019 estimated annual costs of illicit financial flows to the economy already ranged from 3 to 7 percent of GDP (Planting 2019).

In an even broader context, beyond these high-profile cases, consider what is termed private-sector “economic crime and fraud” – i.e., corporate corruption – by international consultancy PwC (2020) (sponsor of a biannual survey during the 2010s). This category of capital accumulation, typically facilitated by governments turning a blind eye (or indeed even codifying systemic underpayment for natural resource extraction and pollution), is still too rarely mentioned in popular accounts of state capture. Corruption Watch (CW), for example, regularly ignores systemic exploitation and super-exploitation of labour (i.e., meaning that the wage that is paid to workers is below their social cost of reproduction, especially in migrant labour systems reliant upon women’s unpaid caregiving). CW never remarks upon the uncompensated depletion of non-renewable resources (especially minerals), or wanton pollution and greenhouse gas emissions.

Instead, CW’s (2022, 1-2) “Analysis of Corruption Trends” merely reports that from its consumer complaints line, “in the private sector the most commonly found corruption types are fraud (56 percent) and maladministration (25 percent), which relates more to compliance,” and that “Corruption straddles the public and private sectors and in the period under review, 62 percent and 25 percent of corruption cases are attributed to each respectively” – as if the broader system of South African capitalism’s relations with the non-capitalist spheres is otherwise unobjectionable, not worthy of systemic treatment. Likewise a new project in mid-2024, “State Capture and Beyond,” was launched by the Legal Resources Centre and Human Rights Media Trust, without mention of corporate and financial crimes or even of inadequate state regulation (NewzroomAfrika 2024).

Part of the problem is that nearly all incidents of private-sector corruption are typically understood as stemming from greedy individuals and small-scale syndicates, not as a systematic problem – accumulation by dispossession – that appears to have become much worse during the era of neoliberalism (given that other stages of South African capitalism included much stronger regulatory apparatuses and a different ethos, e.g. Afrikaners’ 1930s-80s “Volkskapitalism”).

Of course, there are many other micro incidents of dispossession that receive news coverage. For example, as the 2023 Africa Organised Crime Index pointed out, South Africa “has seen increased instances of kidnap for ransom and extortion that has halted billion-dollar construction projects. Moreover, in 2022, South Africa experienced a record number of mass shootings, all attributed to protection rackets in the liquor and nightlife industries” (Enact 2023, 61 and see also Dolly 2019). The “construction mafia” has reportedly shaken down building firms in more than 180 projects (Irish-Qhobosheane 2022).

But in search of broader analysis, there are only rare exceptions, e.g. when

Hennie van Vuuren and Michael Marchant (2023, 201) argue (based mainly on critique of military-oriented capitalists), “Until grand corruption is understood as continuity, there is little hope of tackling it. In the form of state capture, the economic crime that today confronts the country primarily results from failure to dismantle the criminal networks that profited from apartheid. Not only have actors in these networks continued to profit
Profit
The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders.
, but they have undermined any attempts to hold them to account.”

In the same volume, editors Mbongiseni Buthelezi and ‎Peter Vale (2023, 8) correctly blame “the continuity of a strain of capitalism that characterised apartheid.” So too do Sizwe Mpofu-Walsh (2023) and Ryan Brunette (2023) seek to identify seque-ways not breaks between apartheid-era and post-apartheid capitalism. But these writers do not develop the idea in the direction it might logically proceed: the theory pioneered by Luxemburg and Harold Wolpe (1972) to describe the ‘articulations’ of two modes of production, the capitalist and pre-capitalist, especially with the historical sensitivity that Ben Magubane (2001) brings to the race-class debate, so that capital accumulation by dispossession is better understood – and then better combatted (as discussed in the conclusion).

 Strains of South African capitalist accumulation by dispossession

To reiterate, there is a widespread belief in society that South African private-sector economic activity is generally clean, and corruption is essentially state-centred, which often contributes to pressure for outsourcing, corporatisation, commercialisation and privatisation, especially as the state retreats from areas such as service provision and infrastructure (Ruiters and Bond 2023). Yet dating to the earliest epoch of profit as the incentive structure for the South African economy, the opposite has been more true.

In her Accumulation of Capital, Luxemburg included a chapter in which she explored the way South African mining houses utilised the power that capitalist enterprise wielded against pre-capitalist relations, and how multifaceted resistance emerged. As Luxemburg (1913) concluded, “Non-capitalist relations provide a fertile soil for capitalism; more strictly: capital feeds on the ruins of such relations, and although this non-capitalist milieu is indispensable for accumulation, the latter proceeds at the cost of this medium nevertheless, by eating it up.” That era’s anti-imperialist political economists and social commentators were already documenting super-exploitation, including Sol Plaatje, Olive Schreiner and John Hobson. But Luxemburg’s theorisation – applying Marx’s understanding of capitalist crisis (based on overproduction tendencies) to the first era of corporate-dominated but colonial-managed globalisation – provided indicators of the articulation of the two modes of production. These have illuminated microeconomic, social and environmental features of extreme uneven development, where race, gender and socio-ecological power relations are all abused for the sake of earning super-profits (Bond 2021).

Likewise, Samir Amin’s long career did much the same, especially in his scathing assessments of how South African racial capitalism evolved from his first analysis in 1972 (when he termed South Africa ‘imperialist’), through and beyond 1994 (Bond 2023b). In a posthumous autobiography, Amin (2019, 178) charged the post-apartheid government with amplifying these tendencies: “Nothing has changed. South Africa’s sub-imperialist role has been reinforced, still dominated as it is by the Anglo-American mining monopolies.”

Shortly after Wolpe’s (unacknowledged) rediscovery of Luxemburg’s capitalist/non-capitalist surplus drain as the articulation of modes of production, the term racial capitalism emerged, in the same spirit but aimed at replacing the SA Communist Party two-stagist framing known as “colonialism of a special type” (first end racism, and then later, end capitalism). Studying multinational corporations during the height of apartheid, Martin Legassick and David Hemson (1976) introduced the idea of racial capitalism to argue for a one-stage revolution overthrowing both apartheid and capitalism simultaneously. In contrast, Magubane (2001) put the South African history of evolving (not fixed) race-class relations into historical perspective, as he explored several waves of what is now called Foreign Direct Investment (FDI). The era of slavery – and also Indigenous people’s social resistance – was initiated in 1488 at the hands of Portuguese explorers Bartolomeu Dias and Vasco da Gama, followed by the first durable FDI: the Dutch East India Company’s Cape Town settler-colonialism in 1652 led by Jan van Riebeeck. His objective was not the enslavement of Indigenous people, but their extermination, so he could squat the valuable agricultural-provisioning land for mercantile capitalists.

Diamonds were discovered in Kimberley in the 1870s and De Beers was consolidated by Cecil John Rhodes, who required a different kind of race-class power: coerced migrant labour. His racial capitalism was, hence, aimed at “civilising” the workers in inhuman hostels using hut taxes (as novelist Anthony Trollope approvingly remarked) (Magubane 2001). In 1886, the world’s largest gold seam was found in what became Johannesburg, and the world’s deepest digs were ultimately dominated by Ernest Oppenheimer’s and New York banker JP Morgan’s Anglo-American Corporation. In 1890, meanwhile, Rhodes’ British South Africa Company won City of London backing and further FDI promises, to initiate “Cape to Cairo” sub-imperialism. These diverse forms of accumulation by dispossession – between the capitalist and the non-capitalist spheres of life – had thus progressed, although remaining firmly within white power’s grip, first, over the black body (slavery followed by indentured labour and migrant labour coercion); second, over land (settler colonialism); and third, over non-renewable natural resources (often termed “extractivism”) and associated despoliation of the air, water and soil. The 20^th century witnessed transnational capital stitching these strains of accumulation together as a systematic form of corporate plunder. Following the British troops’ defeat of the Dutch-descendent Afrikaners in 1901 and the fusion of white voter interests against Black South Africa, formal national status was granted in 1910. With the Land Act of 1913, extreme uneven geographical development was cemented along racial lines, a process endorsed by European colonial powers and the U.S., who required access to cheap gold, chrome and other metals and minerals.

The most succinct explanation drawing together class, race, gender and ecological degradation associated with South African racial capitalism, comes from the Chamber of Mines in this oft-quoted defense of super-exploitative migrant labour: ‘the mines are able to obtain unskilled labour at a rate less than ordinarily paid in industry… otherwise the subsidiary means of subsistence would disappear and the labourer would tend to become a permanent resident upon the Witwatersrand, with increased requirements’ (cited in Wolpe, 1972). From reliance upon coal-fired power, was a set of impressive backward-forward linkages that distorted South Africa ever since, under the rubric of “uneven and combined development” (Ashman 2023 and Baran 2024).

While mining remained the central determinant of race-class relations, uneven sectoral development emerged in the 1930s-40s, when Black manufacturing workers were hired to serve the booming import-substitution industrialisation process (resulting from the decline of trade due to global Depression and World War II). But instead of durable delinking from a chaotic global economy, the assimilation of South Africa as one of U.S. imperialism’s most reliable sub-imperial allies occurred in 1944 in the Bretton Woods Agreement. (At the time, nearly half the world’s gold was to be found more than a kilometre deep underneath Johannesburg and a similar amount was underneath Fort Knox.) The two creditor states’ agreement on the $35/ounce peg (until the Nixon Administration’s 1971 default) confirmed a system of U.S. monetary hegemony that remains to this day – in spite of ever more fruitless ‘de-dollarisation’ rhetoric from the BRICS
BRICS
The term BRICS (an acronym for Brazil, Russia, India, China and South Africa) was first used in 2001 by Jim O’Neill, then an economist at Goldman Sachs. The strong economic growth of these countries, combined with their important geopolitical position (these 5 countries bring together almost half the world’s population on 4 continents and almost a quarter of the world’s GDP) make the BRICS major players in international economic and financial activities.
+ network (Battista 2023).

A group of scholars at Johns Hopkins University associated with Giovanni Arrighi identified various dialectical contradictions within the late 20^th century system of accumulation by dispossession that caused apartheid’s downfall (Arrighi et al 2010). But corporate profitability resumed with a new financially-liberated, neoliberal regime of accumulation (Bond and Malikane 2019), e.g. with the historic wealth of the country disappearing to London and New York in 1999-2001 when Anglo American Corporation, De Beers, Old Mutual, SA Breweries, Sasol, Mondi, Investec, Didata and other firms established overseas stock market listings with Mandela-Mbeki’s permission (Bond 2014).

 Contemporary corporate and state graft

For those following Buthelezi and Vale (2023, 8), a concern for “the continuity of a strain of capitalism that characterised apartheid” should lead to a richer assessment of how corruption became so ubiquitous in South Africa. When it comes to state graft, there are more detailed perspectives available than in Transparency International’s first-cut surveying. The NGO Corruption Risk (2023) complained, “A sound system of monitoring assets and conflict of interest of public officials would have avoided a scandal like the 2022 theft of a large amount of money hidden in the residence of President Cyril Ramaphosa” (Corruption Risk 2023). Ramaphosa’s most famous scandal, in 2012, was unveiled in the Farlam Commission: the main role in Lonmin’s financial capital flight to Bermuda (Alternative Information and Development Centre 2014). Questions have often been raised about his close connections to Glencore’s Ivan Glasenburg, given that the world’s largest commodity trader was fined $1.5 billion in 2022 for corrupting African states (15 percent of the company’s pretax profit the year before), which as Tim Cohen (2022) pointed out, “is, in all honesty, a parking ticket” – and there was no investigation of Johannesburg-born Glasenberg’s profitable role in South Africa.

But Glencore is the tip of the iceberg. As noted above, during the 2010s the PwC “economic crime and fraud” reports revealed that S

outh Africa’s corporations were considered worst in the world in general and – in the 2014 survey – also in the categories of money laundering, bribery and corruption, procurement fraud, asset misappropriation and cybercrime (Hosken 2014). In the 2018 PwC survey, the runners-up were Kenya, France and Russia. In 2020, Indian corporations were considered most corrupt, and China tied for second with South Africa, closely followed by firms from Kenya, the U.S. and UK (PwC 2020).

PwC index of economic crime and fraud, 2020 and 2018

Source: https://www.pwc.co.za/en/press-room/global-economic-crime-and-fraud-survey-2020.html

A more balanced accounting is even attempted by the World Bank
World Bank
WB
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

, Natural Resource Governance Institute and Brookings Institution (2024). Their “Control of Corruption” assessment “captures perceptions of the extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as ‘capture’ of the state by elites and private interests.” From 1996-2022, South Africa’s mean percentile rank fell from 76^th to 45^th with the most dramatic decline occurring between 2021-22.

South Africa’s “Control of Corruption” ranking: percentile, 1996-2022

Source: https://data.worldbank.org/indicator/CC.PER.RNK?locations=ZA

 Help from Washington (!)

In spite of Washington and New York being two of the core managerial sites for corporate-led Western imperialism, the U.S. Foreign Corrupt Practices Act (FCPA) and other anti-graft legislation have been deployed against South African corporations. U.S. officials have been far more aggressive than South African counterpart prosecutors in cases such as Hitachi’s 2007 bribery of the African National Congress (ANC) via its Chancellor House investment wing, which was successfully prosecuted under the FCPA in 2015 (insofar as the Tokyo firm paid a fine), and New York State’s mid-2010s attack on some of the world’s largest banks for currency manipulation involving the Rand.

The Hitachi incident not only adversely affected Eskom’s Medupi and Kusile coal-fired power plants – leaving the economy without sufficient energy and hence destructive load-shedding for many years, as well as more than 50 megatonnes of additional CO2 emissions (a tenth of entire economy’s greenhouse gas pollution) and thousands of deaths because former Eskom CEO Andre de Ruyter refused to install pollution-reduction scrubbers on Eskom coal-fired power plants – but represented the country’s single most damaging case of corporate corruption in simple monetary terms.

As de Rutyer (2023, 35) put it in his Truth to Power exposé, Medupi and Kusile “were way over budget, they weren’t on schedule, and they performed well below their specifications, thereby failing all three project management tests. The project to add new generation capacity was just a miserable failure.” In part, de Ruyter blames “ANC deployees close to the [Eskom] board” who

informed Chancellor House that the initial discussions with the successful bidder, Alstom, were not going well. It’s fair to assume that this information was then also relayed, via Chancellor House, to top Hitachi officials. At a meeting at O.R. Tambo International Airport in September 2007, Klaus-Dieter Rennert, a senior executive at Hitachi Power Europe, urged Chancellor House chair Professor Taole Mokoena to apply pressure on Eskom to reopen the tender process. The chairperson of the Eskom board at that stage was Mohammed Valli Moosa.

The Hitachi contracts were won after a suspicious reconfiguration of the tender, which the firm then failed to properly provide and install, e.g. requiring 7000 welding repairs. A News24 investigation based on U.S. Securities and Exchange Commission documents revealed in early 2023 that according to a Hitachi memo, Mokoena “has good connections within Eskom. Dr Mokoena is personal friends with Mr Valli Moosa (chairman) and Mr Tulane Gcabashe [sic] (CEO).” U.S. prosecutors concluded that, according to News24, Hitachi was introduced to Chancellor House “and ultimately decided to work with them not for any technical expertise, labour force or infrastructure, but for the influence wielded by the companies” (Cowan 2023).

A smoking-gun memo was found by U.S. authorities: according to a Hitachi executive in a 2010 email, “When we adopted [Chancellor] at the time of [Hitachi Power Africa’s] establishment, we took ANC influence into consideration and still we believed it was a right decision” (England 2015). As Eskom chair from 2005-08, Moosa was a key decision maker. In 2015, Mail & Guardian reporters complained, “For nearly a decade, the South African branch of Japanese giant Hitachi lied, obfuscated and denied. And other than a minor slap on the wrist for ANC stalwart Valli Moosa, neither Hitachi nor the ANC or its funding front Chancellor House suffered any repercussions” (De Wet and Mataboge 2015).

South African society, environment and economy did suffer enormously, though, as breakdowns at the early units were prolific. Yet even after Hitachi paid $19 million to the U.S. government as a fine in 2014, the 2018-22 Zondo Judicial Commission of Inquiry into Allegations of State Capture, Chipkin and Swilling (2018), Buthelezi and Vale (2023) and many other commentators forgot about this case, perhaps mistakenly assuming the corruption problem really only became severe once Zuma took office. The missing case of Hitachi and its facilitators – including Moosa, who in the early 2020s headed the Presidential Climate Commission and Mokoena who in 2023 was named South Africa’s Health Ombud – remains an appalling gap.

 Corruption as a reflection of class formation (not cultural deviance)

One major source of ‘state capture’ that gives the impression of widespread corruption is the advent of commercialised, corporatised or outsourced procurement contracts. According to Kenneth Brown, who was Treasury’s leading procurement officer until 2017, the average state contract entails illegitimate price mark-ups of 35%–40% (Mkokeli 2016). There are both traditional white-owned South African and western multinational corporations which take advantage of such procurement opportunities, but it is also important to acknowledge how limits to black capitalist class formation in the post-apartheid economy in turn create dependency on accumulation via the state, and prevent a productive capitalism from emerging given the initial ease of simply serving as middle-man.

The 1998 crash of the Johannesburg Stock Exchange was revealing, given its implications for the model that had been put in place especially to assist those black elites who could afford to borrow money to buy shares in white-owned companies. They had assumed that interest rates
Interest rates
When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation.
would remain affordable and that share
Share
A unit of ownership interest in a corporation or financial asset, representing one part of the total capital stock. Its owner (a shareholder) is entitled to receive an equal distribution of any profits distributed (a dividend) and to attend shareholder meetings.
prices would remain sufficiently high, so that in order to service the loans, partial liquidation of their (debt-based) ‘ownership’ in major firms was possible without losing net capital. But as the Emerging Market crisis of the mid-1990s roiled South Africa by 1998, the decline by more than 50% in ‘black chip’ share values from April–September that year, amplified by the July–August rise in interest rates by 8%, collapsed that model and led the early BEE pioneers into near-bankruptcy. A second stage of BEE was then based upon the state compelling white-owned firms to deracialise ownership, which often entailed giving away one-quarter or more of company equity
Equity
The capital put into an enterprise by the shareholders. Not to be confused with ’hard capital’ or ’unsecured debt’.
, based on expectations that black partners would be granted preferential access to state contracts or other favours (Bond 2014). Patronage emerged from national to provincial to local levels (Bracking 2019).

Hence like most of the African continent’s ‘national bourgeoisie’ (Fanon’s term) which relies upon state patronage, South Africa’s grew dependent on hand outs. This occurred in the context of whatFanon (1961) explained as a cultural symptom: “The national bourgeoisie of the neo-colonial African countries identifies itself with the decadence of the bourgeoisie of the West. We need not think that it is jumping ahead; it is in fact beginning at the end. It is already senile before it has come to know the petulance, the fearlessness or the will to succeed of youth.” Before learning to become productive capitalists – especially in the (rapidly shrinking) manufacturing sectors – or otherwise express the will to succeed in organic enterprise (were there any space in what have been mainly stagnant markets), South Africa’s new capitalist class were predominantly rentiers, being gifted large shares in both local and international firms.

That kind of relationship runs the risk of eliding quickly into corporate–state corruption. The single largest South African beneficiary of deals with Glencore, Lonmin, Coca-Cola, McDonalds, Standard Bank and many other transnational corporations was Cyril Ramaphosa, who gained the presidency (16 months earlier than scheduled) in a 2018 palace coup after serving as Jacob Zuma’s deputy from 2014–2018. Allegations were made to the Zondo Commission (2022) that in 2014, Ramaphosa was given authorisation to oversee the ‘Eskom War Room’ when he radically improved the price of coal purchased from the Optimum Mine, against then Eskom chief executive Brian Molefe’s advice (although the latter was himself profoundly implicated in Gupta-related corruption). Ramaphosa had chaired Optimum in a joint venture with Swiss-based Glencore – one of the most corrupt companies in Africa’s history, as revealed in 2022 prosecutions in the U.S. and Britain – until a few months before the repricing of its coal. Glencore still ran Optimum, until the Guptas forced a sale via a corrupt mining minister in late 2015.

Regardless of that incident’s details – which were given only cursory consideration by the Zondo Commission (2022) – Ramaphosa’s own trajectory reflect the vicissitudes of such primitive accumulation. His wealth had dipped to near-bankruptcy level in 1998 due to the first BEE model’s failure, and it did appear that patronage was bound up in the second stage of BEE. His own version of neopatrimonialism was on display in 2017 when a reported $50 million was raised for his ANC presidential campaign, ‘CR17’, and again in 2022 when his main personal scandal – the hoarding of $580 000 worth of US dollars in his Phala Phala ranch couch – led to an adverse parliamentary finding and his near-resignation. In all these respects, the fusion of corporate and state corruption appears to embody a degree of colour-codedness, based on white owners and managers assimilating a black elite to their decadent ways of business.

In contrast, such processes also open up the terrain for mischievous pseudo-cultural ways of explaining macroeconomic dysfunctionality, as Thandika Mkandawire (2015) identifies in Jean-François Bayart’s (2009) ‘politics of the belly.’ Mkandawire (2015, 572) sums up the ‘Africa Works’ school as blaming African elites’ “insatiable greed and gluttony… tropical lasciviousness, excessive conviviality, ostentatiousness and sexual appetite.” For two others in the same tradition, Patrick Chabal and Jean-Pascal Daloz (1999, 39), an “instrumentalization of disorder” occurs because of African voters’ “patrimonial reciprocity… On the whole they do not vote because they support the ideas, even less read the programmes of a particular party, but because they must placate the demands of their existing or putative patron.” There are, as well, two interlocking (U.S.-based) liberal intellectual currents that address African corruption in a manner Mkandawire (2015, 567) also opposes, namely,

the public choice view regarding rent seeking, formulated by Anne Krueger and seminally applied to Africa by Robert Bates, and the neopatrimonialism school view. In both cases, the answers point toward some form of malevolent state simply acting on behalf of, or at the behest of, ruling interests… neopatrimonialism can be interpreted as building on methodological communalism where the community serves as the foundational unit of analysis and from whence macrolevel phenomena are derived.

South African versions of ‘Africa Works’ (Mills et al. 2017) include the Oppenheimer mining tycoon family’s Brenthurst Foundation in Johannesburg, whose director, Greg Mills, openly offered racist cultural explanations (in this case when writing for a think tank, Washington’s Cato Institute):

This apparent passivity of the populace in the face of bad leadership must, at least in part, be attributed to a neopatrimonial culture. In that culture, the ‘big man’ rules and dispenses favors. He uses all manner of tools to bolster his rule – from traditional governance structures and kinship ties to witchcraft and the church. The system that many African leaders have preferred thrives on corruption and nepotism… a primordial lust for wealth and power along crude racial, tribal, party, and familial lines (Mills 2011, 4).

This is an exemplary instance of what Mkandawire detested. Yet to be fair to those making neopatrominial assessments, South Africa has also been cursed by state-centric ‘big man’ accumulation in practice and theory, what with Zuma’s relationship to at least three family-based support networks. First, the Shaiks of Durban allow us to recall the late 1990s arms-deal corruption by Paris-based Thales, which was responsible for 783 charges of bribery against Zuma and Schabir Shaik which landed both in jail (although both received medical paroles, but which in 2023 remain subject to ongoing state prosecution). Second, the Watsons of East London ran the Bosasa enterprise, which was prolific at gifting ANC politicians, including Ramaphosa’s CR17 election campaign in 2017. Third, the Guptas, as spelled out in excruciating detail at the Zondo Commission (2022), thanks to whistle-blowers’ leaks of 200 000 emails.

Nevertheless, for Fanon and Mkandawire, the point of rebutting explanations such as an alleged “primordial lust for wealth and power along crude racial, tribal, party, and familial lines,” is that there is a context. To interpret neo-patrimonial surface observations, it is important to remember not only the role of multinational corporations in often leading the bribery, but also, the periods of capitalist crisis which make businesses more predatory than in ordinary times (Harvey 2003). Such conditions have prevailed especially in the neoliberal transition to democracy, as well as in the 2010s following the peaking of capital accumulation, GDP growth and credit-based displacement. It was not preordained that Zuma would take power in 2009 and until 2018 allow widespread state, parastatal and private-sector corruption. But it was excellent timing given the stage of the accumulation process that had been reached.

 A structural basis for corruption within capitalist crisis displacement

Corporate corruption in South Africa corresponds to the third stage of what David Harvey (1982) has regularly termed the ‘fixes’ to capitalist crisis. In short, when overaccumulation tendencies in an economy drive excessive capital investment (in relationship to demand for goods), thus leaving large excess capacity and high unemployment, an unchecked capitalist has three typical ways forward. (There are also, of course, two more immediate strategies: what Karl Marx described as a search for relative and absolute surplus value. Respectively, these entail replacing workers with machines for the sake of greater productivity, or making workers toil more intensively, both of which amplify the problem of overproduction.)

At the stage where standard techniques of firm-based management of overaccumulation have been exhausted, the managers of capital look, first, for a ‘spatial fix’ by moving capital to sites where profits are potentially greater, by shifting the problem around, as we have witnessed with globalisation. Second, they explore a ‘temporal fix’ in the form of debt-based strategies, so that at present consumption can occur through extending credit, so long as in future there is anticipated income sufficient to cover repayment of the principle and interest (Harvey 1982). This stalling is a displacement, not resolution, because the financialisation process ultimately requires genuine surplus extraction to occur in future periods sufficient for the debt to be repaid. Third, the ‘accumulation by dispossession’ strategy increasingly comes into effect, representing capital’s appropriation of profits not at the point of production but through, in essence, stealing (Harvey 2003).

Typically under capitalism, the only way to decisively deal with overaccumulation is devaluation
Devaluation
A lowering of the exchange rate of one currency as regards others.
of the surplus capital (or labour), but in the meantime, capitalist managers use shifting, stalling and stealing strategies to stave off the declining rate of profit. All three have been evident in South Africa (Bond and Malikane 2019), and often in combination. To illustrate, South African society learned how serious illicit financial flight had become when the international grey listing of the economy in February 2023 raised consciousness about the extent to which Treasury and the Reserve Bank had deregulated systems meant to control illegal outflows of capital. (One example of the degree to which this became indefensible was, in March 2024, the open admission by Finance Minister Enoch Godongwana that his 2022 relaxation of exchange controls – to release at least $100 billion in local institutional investor funds to international markets instead of reinvestment within South Africa – was a ‘grave mistake,’ a term he repeated three times.)

In early 2023, cognisant of how much abuse of international financial transfers was underway in South Africa, the Paris-based Financial Action Task Force (FATF 2023) imposed a light form of sanctions. Comprising international regulatory bodies, the FATF’s grey listing judgement is not difficult to reverse, but nor is it impossible for South Africa to slip further onto a black list that currently contains mainly rogue regimes: the Democratic People’s Republic of Korea, Iran and Myanmar. On the FATF’s (2023) grey list alongside South Africa are Albania, Barbados, Burkina Faso, Cameroon, Cayman Islands, Croatia, Democratic Republic of Congo, Gibraltar, Haiti, Jamaica, Jordan, Mali, Mozambique, Nigeria, Panama, Philippines, Senegal, South Sudan, Syria, Tanzania, Türkiye, Uganda, United Arab Emirates, Vietnam and Yemen.

This kind of peer group is a profound embarrassment, reflecting a regulatory apparatus in Pretoria that has been utterly co-opted by financial fraudsters.

South African Illicit Financial Flows were measured by Treasury’s Financial Intelligence Centre in 2019 at 3%–7% of GDP, i.e., as much as $28 billion annually. In 2018, according to Mbeki (who assisted the African Union and UN Economic Commission on Africa in studying such flows) a rigorous estimate amounted to 5% of GDP compared to estimates of 1% of in 1999 (SA Broadcasting Corporation 2018). In one detailed case study, De Beers was estimated to have mispriced $2.8 billion for illicit funds export from 2004–2012 (Bracking and Sharife 2014). During the 2014 platinum strike, disputes over manipulated corporate profits and resulting Illicit Financial Flows had major implications for wage demands (Alternative Information and Development Centre 2014). It is widely known that the extractive industries are the most prolific of multinational corporations that externalise wealth, and in the most recent study of South Africa, Adam Aboobaker, Karmen Naidoo and Leonce Ndikumana (2022, 152) confirmed that “The mineral sector has been an arena for massive export misinvoicing and tax evasion by politically well-connected private individuals and corporations,” contributing to economy-wide capital flight of $330 billion from 1995 to 2018.

Such fusions of geographical expansion, financialisation and theft – i.e., the shifting, stalling and stealing processes – mean that extractive-industry Foreign Direct Investment (FDI) typically draws far more from Africa, and especially South Africa, than has been invested and reinvested. This often occurs in ways that can be considered structurally corrupt, i.e., removing unconscionable levels of wealth and leaving enormous ecological damage. The Illicit Financial Flows are here accompanied by Licit Financial Flows that rise because of inadequately compensated depletion of natural resources, as well as pollution and greenhouse gas emissions.

 FDI and the extractive industries

Multinational corporations began to play a significant and permanent role at the bottom tip of Africa when in 14988 and 1497, voyages by Portuguese mercantilists Bartolomeu Dias and Vasco da Gama were soon followed by slavers, traders and settlers from Portugal and the Netherlands. The first South African settlement of note for FDI was by the Dutch East India Company’s Jan van Riebeeck in 1652, at what is now Cape Town. Like other such firms, the immediate objective was extermination of local indigenous people, the Khoi San (Magubane 2001). Many overseas firms followed the same pattern of coastal port development and financial market
Financial market
The market for long-term capital. It comprises a primary market, where new issues are sold, and a secondary market, where existing securities are traded. Aside from the regulated markets, there are over-the-counter markets which are not required to meet minimum conditions.
deepening, so as to facilitate global trade (e.g., London-based Standard Chartered Bank which was founded in 1857 in what is now Gqeberha) (Bond 2003).

But of greatest importance to South Africa’s future was the first company that arose from combined natural resource extraction and extreme surplus value appropriation in the colony’s interior, De Beers. By the mid 20^th century, it had become a global monopoly controller of diamonds. Instead of enslavement and extermination, the firm and its successors engaged in the economic coercion of Bantu peoples to work in Kimberley’s ‘Big Hole’ mine. Here, the region’s notorious migrant labour system emerged, funded in large part through London financial capital, arranged by entrepreneur-turned-empire-builder Cecil Rhodes.

The 1870s–1880s witnessed a consolidation of Kimberley’s diamond mines, but Rhodes and his allies initially missed the 1880s–1890s gold rush in Johannesburg. Because of that error and the resulting control of Johannesburg by the Dutch settlers’ descendants, known as Afrikaners, the backlash from his office in Cape Town – and in turn, London – was robust. It first took the form of the infamous failed Jameson Raid on Johannesburg in 1895. That, in turn, persuaded Rhodes and Queen Victoria to engage in full-fledged war from 1899 to 1902. The British military embarked, largely on Rhodes’ behalf, on a colonial land grab from the resident Afrikaners in the Boer War (also called South African War), which was fought unsuccessfully by mainly Afrikaner peasants against Rhodes’ invading army. From that victory of what came to be known as ‘English-speaking capital,’ there emerged a favourable intra-white political settlement in 1910 which determined the Union of South Africa’s final borders. Afrikaners remained in the numerical majority within the new national boundaries, hence it was important for English capital to assimilate of one of their leaders, Jan Smuts, who became one of the world’s leading politicians during the 1920s-40s. Soon after, in 1917, the most powerful company in twentieth-century Africa, Anglo American, was listed in Johannesburg and New York. Aside from some London Stock Exchange allies of the founding family – the Oppenheimers, who soon also took over De Beers – Anglo’s main funder was J.P. Morgan.

While they had numerous British and U.S. investors, these multinational corporates were increasingly home-grown, especially De Beers and Anglo (although both departed Johannesburg to list on the London Stock Exchange in 1999 in the wake of the threat to their wealth posed by democracy). By the early 1900s they had established an exceptionally profitable system. The corporates had fused exploitation of black workers in part through colonial and then apartheid political oppression, with the extraction and export of the country’s vast natural resource wealth. The system allowed for generations of ‘super-exploitation,’ through both taking labour’s surpluses at extremely low rates of pay, and free resource depletion. The former entailed patriarchy-amplifying, migrant labour that relied on women’s unpaid work in social reproduction, located within distant ‘Bantustans,’ resulting in unprecedented ‘cheap labour’ (Wolpe 1980). A 1930s period of what Samir Amin (1990) would have described as ‘delinking’ intensified local capital accumulation, what with 8% annual GDP growth from 1933 to 1945 and the development of secondary industry on the basis of impost-substitution industrialisation.

In this period, there was always danger of producing too many luxury goods given the small size of the local market, and neglecting production for low-income South Africans’ basic needs – points made by both Amin (2019) and Ruy Mauro Marini (1972) in explaining the interrelationship of sub-imperialism and super-exploitation (Bond 2023). To some extent, proceeds of the extracted minerals were recirculated through local shareholders and the local tax base, but they were mainly externalised to London, New York, Frankfurt and other international headquarter cities (Bond 2021). Vincent Harris (1985, 13) remarked how “investment in South Africa provides U.S. transnational firms with some of the highest profit margins in the world. Between 1979 and 1983, for example, the average rate of profit on investment in South Africa was 16.31 percent, nearly double the international average.” But this was an era of rising concern about the morality of taking profits in a country whose racist system of government the United Nations had labelled a crime against humanity.

Capitalist crisis then hit. After high private-sector fixed investment rates in the 1960s–1970s when apartheid appeared invulnerable, the gold price crashed when Federal Reserve
FED
Federal Reserve
Officially, Federal Reserve System, is the United States’ central bank created in 1913 by the ’Federal Reserve Act’, also called the ’Owen-Glass Act’, after a series of banking crises, particularly the ’Bank Panic’ of 1907.

FED – decentralized central bank : http://www.federalreserve.gov/
chair Paul Volcker raised interest rates dramatically in 1979, quickly reversing South Africa’s trade surplus and causing a debt crisis. Private fixed capital reinvestment fell from 19% of GDP in 1980 to below 14% (i.e. at a level merely replacing depreciated machinery) by 1990, staying there ever since (aside from a 2006–2014 commodity super-cycle upturn primarily in the mining sector). From the mid 1980s to the mid 1990s, a combination of overaccumulated capital in the core manufacturing sectors and class struggle, overlaid by anti-apartheid social mobilisation and international sanctions, had lowered business confidence dramatically. Although the profit share (between remuneration of labour and of capital) was stable from the 1960s to 1990s, the organic composition of capital (the capital/output ratio) rose persistently from the early 1960s to the mid 1980s. The rate of capital accumulation (private sector gross fixed capital formation) fell from 19% of GDP in 1980 to 11.5% in 1993. Various ways out of capitalist crisis – through capital flight, financialisation and accumulation by dispossession – would be necessary to restore the main corporations’ rates of accumulation (Bond and Malikane 2019).

From the 1960s to 1980s, the decline in South African capital’s rate of profit was evident (Nattrass 1989) and could be considered a symptom of classical overaccumulation of capital (Meth 1991; Bond and Malikane 2019). On the one hand, the crisis left the (English-speaking) dominant fractions of capital so vulnerable to the mid 1985 financial sanctions and debt crisis, that their leaders at Anglo American Corporation flew to Zambia to meet the ANC in exile. That was a vital moment in the rupture of white capital and (Afrikaans-speaking) state leadership unity. In turn, it set the stage for negotiations that established a one-person, one-vote democracy in 1994. Such an ‘elite transition’ was permitted by white state rulers, white capital and the imperialist powers, thanks to ANC leaders’ decisive shift towards neoliberalism from 1990 to 1994 (Bond 2014).

The commodity super-cycle from 2002 to 2014 reflected a new opportunity for reinvestment, with a focus on the extractive industries but also those that benefited from the dramatic rise in black middle-class (often civil service-based) borrowing and consumption. However, the underlying disarticulation between the mass base whose incomes were under constant threat – with merely tokenistic welfare support (Bond 2014) – and the tiny group of over-consumers, generated insurmountable contradictions. Investment recovered for the commodity super-cycle until two crashes – 2008 and 2014–2015 – prevented the extractive industries from restoring the rate of capital accumulation.

Starting in 2015, the rate of capital accumulation collapsed, as did the share valuation of the world’s main mining houses, most very active in South Africa. From peak highs, Lonmin’s London listing was down 99.4 per cent from 427 800c per share in 2007 to just 41c in early 2016; Anglo American Corporation fell by 93.6 per cent from a 2008 peak (3540c per share) to a 2016 low (227c); Glencore fell 86 per cent from its 2011 initial London listing price of 532c per share, to a low of 74c; and BHP Billiton, fell from its 2011 peak of 8452c/share by 78%, to 1787c/share in early 2016. Then came a recovery in prices starting in 2020 as a ‘Quantitative Easing’ monetary stimulus boosted economies out of the Covid-19 crisis. Again, in part due to unjustified speculation in financial markets, and then with Russia’s February 2022 invasion of Ukraine, the global commodity price index soared again – though from mid 2022 subsided.

 The role of FDI in primitive accumulation through resource depletion and pollution

What is rarely recognised, though, is that as commodity prices rise, so does the intrinsic value of natural wealth that is being extracted from supplier economies, especially a South Africa facing permanent depletion of minerals that are not properly compensated for. The GDP calculus measures income from sales of platinum, gold, iron ore, coal and manganese. But there is no formal debit for depleted resources, which in Marxian terms is a ‘free gift of nature’ to capital but which can be considered – as did Rosa Luxemburg (2003) in 1913 and Samir Amin (2018) – as a form of capitalism’s appropriation of the non-capitalist realms (Bond 2021). In short, multinational corporations engage in a form of plunder-based theft.

Luxemburg (2003, 349) wrote about environmental degradation when capital arrives, citing “land, game in primeval forests, minerals, precious stones and ores, products of exotic flora such as rubber, etc.” For “the communist peasant community no less than the feudal corvee farm,” she suggested, “the most important of these productive forces is of course the land, its hidden mineral treasure, and its meadows, woods and water, and further the flocks of the primitive shepherd tribes” (ibid, 350). For Amin, the ecological implications of super-exploitation emerged both from differential rates of surplus-value extraction, for which his 1974 Accumulation on a World Scale was the most famous expression, and also from capitalism’s abusive contact with non-capitalist relations:

Capitalist accumulation is founded on the destruction of the bases of all wealth: human beings and their natural environment… historical Marxisms had largely passed an eraser over the analyses advanced by Marx on this subject and taken the point of view of the bourgeoisie – equated to an atemporal ‘rational’ point of view – in regard to the exploitation of natural resources (Amin 2018, 159, 86).

A rare few bourgeois economists do address the depletion problem, including Robert Solow (1974) and John Hartwick (1977). During the 1970s they began to calculate ecological destruction partly through an asset-measurement lens, asking whether shrinkage of ‘natural capital’ due to exploitation of natural resources can be offset by new resulting investment in productive capital and ‘human capital’ (education expenditures). They insisted that if pollution or shrinkage of ecological wealth (e.g. minerals extraction) were to occur, it should only be permitted if benefits (profits, taxes and wages that can be counted up and down the value chain) flow into the expansion of productive or human capital. The point, here, is to protect the interests of future generations who have a notional ‘right’ to also draw down a society’s natural resource base, the way ‘family silver’ is considered the basis for responsible stewardship and sometimes even formal trusteeship (Bond and Basu 2021).

A net positive outcome (termed ‘weak sustainability’) assumes the substitutability of these various capitals: the lost forms of nature are offset by reinvestments of profits into machinery, infrastructure or schooling that makes capitalism more productive. Such calculations about what the World Bank (2021) terms the ‘changing wealth of nations’ – i.e., the natural capital dynamics within a broader ‘Adjusted net savings’ for each country – occur within a national state as the unit of analysis (Lange et al 2018). To be sure, this unit is inappropriate due to the transnational scope of both unequal ecological exchange and ecocide, given that localised pollution and greenhouse emissions do not respect borders, but World Bank data are otherwise the most comprehensive available (Bond and Basu 2021).

Since a vast amount of underground natural capital in the form of minerals exists in South Africa, measured conservatively at $2.5 trillion by Citibank in 2012 (

I-Net Bridge 2012), it is vital to address changes in that wealth when assessing economic policy. It is important to stress that the World Bank (2021) dramatically underestimates South Africa’s mineral wealth, because its methodology does not include platinum group metals, manganese and chrome (where in all three cases, South Africa has led the world for most of the period under discussion), nor zirconium, vanadium and titanium (where South Africa is the world’s second highest producer), nor diamonds. (The Bank counts bauxuite, copper, gold, iron ore, lead, nickel, phosphate, silver, tin and zinc.)

Even without counting several valuable minerals, South Africa is revealed as a major net loser of non-renewable resource wealth (World Bank 2021, 204). Only three African countries suffered a higher level of depleted metals and minerals wealth than South Africa (Botswana, Zimbabwe, the Central African Republic). Of African countries that export natural resources, 88% are net losers in the process, according to a World Bank study (Lange et al 2018) relying upon natural capital accounts. Extraction of non-renewable resources has been done with no regard to wealth effects, especially the sustainability of mining and the needs of future generations to retain natural wealth, since current conditions leave the society much poorer, given that mining revenues are not reinvested in productive capital or education but instead externalised to foreign-headquartered mining houses.

In parts of South Africa, such as the second-most important gold-mining province, attention to depletion was finally recognised, in a 2023 report by PwC (Erasmus 2023):

Based on reserves declared, the gold industry is expected to exist in SA for about another 27 years, the report shows, with many of the mines coming to an end in fewer than 20 years. In the Free State, where there are five gold operations and one project in development, current depletion rates suggest there are only six years of gold mining left in the province.

Not only is uncompensated depletion a major source of multinational corporate plunder, but pollution and greenhouse gases also result from the extractive industries, in what represents uncompensated income drawn from local victims who suffer emissions, but also future generations who will inherit a degraded environment. The problems are evident in a series of four World Bank charts drawing on (partial) natural capital accounts (exceptionally conservative when it comes to South Africa because depletion is far worse if missing minerals are included).

The first shows ‘Natural resource rents’ as a share of GDP, indicating the ebb and flow of income from what in South Africa are mainly depleting sources of wealth. Second, in the rest of the world, natural resources – with a much larger share of renewable components (e.g. agriculture, marine and timber) – recover at a much higher rate. But in South Africa, the (current-$) measure of mineral depletion (associated with Adjusted net savings) is substantial, albeit variable given the volatility in commodity prices. Third, there are specific coal resource rents which – measured as a % of GDP – reveal the South African economy’s comparative addiction to fossil fuels, both for burning in Eskom coal-fired power plants and for export.

But such rents do not capture the damage of pollution and greenhouse gas emissions. So, fourth, if natural capital depletion, pollution and emissions are combined with (positive) educational funding (human capital investment) and the (net negative) depreciation of physical capital, the Bank’s full Adjusted net savings measure reveals that the South African economy has been dis-saving, especially over the past decade, a time the rest of the world recorded relatively high rates of positive saving (9%–11% of GDP).

Natural resource rents (% of GDP), 1970–2021: South Africa (top) and the world (bottom)

Source: https://data.worldbank.org/indicator/NY.GDP.TOTL.RT.ZS?locations=ZA-1W&view=chart

Adjusted net savings: mineral depletion (current US$), 1970–2020: South Africa

https://data.worldbank.org/indicator/NY.ADJ.DMIN.CD?locations=ZA-1W&view=chart

Coal resource rents (% of GDP), 1970–2021: South Africa (top) and the world (bottom)

Source: https://data.worldbank.org/indicator/NY.GDP.COAL.RT.ZS?locations=ZA-1W&view=chart

Adjusted net savings (% of GNI), 1970–2021: world (top) and South Africa (bottom)

Source: https://data.worldbank.org/indicator/NY.ADJ.SVNG.GN.ZS?view=chart&locations=ZA-1W

What all this represents is a form of accumulation by dispossession in which multinational corporate capital takes advantage of South African opportunities for shifting, stalling and especially stealing – i.e., uncompensated resource depletion, pollution and emissions. This process is not yet considered a ‘crime’ in South Africa. But elsewhere it is: for example in Goa (India) where prohibitions on mining have been imposed because resource depletion is not compensated for properly (Bond and Basu 2021), and even more explicitly, when the Pacific island nation of Nauru, as early as 1993, compelled Australia, New Zealand, the U.S. and Britain to compensate for a similar plunder, of phosphate. The reason, as Ramon Reyes (1996, 53) summed up, was that “accelerated mining in the face of eminent depletion and inevitable rehabilitation provides evidence of the breach of the duty of diligence and prudence.” Extending that jurisprudence is one of the tasks ahead. In sum, these are further aspects of primitive accumulation that transcend the apartheid era, when a crime against humanity raised profit rates to such high levels. After apartheid ended, both the labour super-exploitation and resource-depletion systems continued and indeed were amplified, given that features of the existing system were further deregulated. But so too did resistance also rise.

 Conclusion: Against corporate economic crime, fraud, corruption and plunder

What is being done against the various kinds of corporate corruption, including in areas where state capture is obvious, and areas where accumulation by dispossession is so obnoxious that it generates social resistance? NGOs and good-governance campaigns abound – e.g., Trust Africa’s “Stop the Bleeding,” Global Financial Integrity, Tax Justice Network, Publish What You Pay and Eurodad – but usually are stymied by lack of state political will. This is not only a local problem but also reflects lack of will in hot money centres (Henry 2012) and global corporate headquarters, as Lord Peter Hain discovered when working against Bain’s abuses in the South African tax system.

One revealing case concerned 2006–2013 currency-trading
Market activities
trading
Buying and selling of financial instruments such as shares, futures, derivatives, options, and warrants conducted in the hope of making a short-term profit.
abuses in South Africa by 28 major banks – many successfully prosecuted in the U.S. starting in 2015 – in what the Competition Tribunal (2023) finally ruled was “conduct considered the most egregious in competition law. Furthermore, the alleged conduct relates to fixing and manipulating the rand:dollar exchange rate, which has a central and crucial role in the South African economy” (Phakathi 2023). Yet four years earlier, then Finance Minister Tito Mboweni had publicly argued that since “the currency market is a deep and liquid market, and it is difficult to determine any material or long-lasting impact of any one transaction on the level or value of the currency,” the manipulation charges against the banks should not be taken too seriously: “The investigation before the Competition Commission appears to be related more to the conduct of bank traders towards clients, rather than providing evidence of their affecting the actual value of the rand” (Phakathi 2019). (The debate continues, because in 2024 the Constitutional Court will adjudicate mixed rulings about which banks were party to the currency manipulation scheme, in addition to those that pled guilty.)

The problems identified above are not only local in nature, but also reflect lack of will in hot money centres and global corporate headquarters. But local conditions are dire, given how readily ANC leaders led by Ramaphosa have refused to follow Zondo Commission prosecution recommendations, e.g. against ANC chairperson Gwede Mantashe for petty corruption by the Watson family’s Bosasa outsourcing firm. Zondo and others had at least partially documented corruption by not only the Gupta brothers but also enablers of their and others’ graft in major accounting, legal and consultancy firms (Thompson 2020, Open Secrets 2023, Thaker and Pillay 2023). British Ambassador Robin Renwick’s (2018, 1) book How to Steal a Country is a classic example of neglecting corporate-profiteering causality, asking all too innocently in its third paragraph, “How is it that internationally reputable companies such as KPMG, McKinsey, SAP and HSBC are so easily drawn into such a web of corruption?”

Given such international capitalist collaboration and state regulatory sloth – e.g. the lack of apparent willingness by Treasury and the Reserve Bank to clamp down on Illicit Financial Flows even after the February 2023 grey listing (especially by better enforcing and also tightening exchange controls) – South Africa’s many civil society campaigns against economic crime and fraud are worth briefly recounting:

• Anti-apartheid sanctions were wide-ranging but in 1985 they hit particularly hard in the financial sphere, where social acceptance grew that banks were criminal for providing loans to the apartheid state, its agents and even companies operating in South Africa, leading to that year’s ‘run’ on the South African economy. In this period there were additional campaigns waged against corporate criminality, including the most famous: Thor Chemicals for its fatal toxic pollution and occupational health violations in Cato Ridge (Durban).
• The late 1990s witnessed Arms Deal criminality, including a new awareness that ANC leaders like Jacob Zuma were easily bribed (in that case by Paris-based Thales), which contributed to the “Zuma Must Go!” movement in 2016–2017.
• From 2000–2006, there was a major community battle against European and UK companies (Suez, Veolia and Biwater) because of a general sense in townships that commercialisation, pre-payment water meters and a low ‘Free Basic Water’ allocation would lead to human rights violations – a perception confirmed by a Soweto-based case in the High Court and Supreme Court in 2008–2009 (before defeat in the Constitutional Court in 2009). The Johannesburg Water commercialisation deal was reversed in 2006 after massive protests by social movements (Communities Against Water Privatisation and Anti-Privatisation Forum), and the service was returned to municipal operation (as were others briefly run by Biwater and Veolia).
• In 2017, the London public relations firm Bell Pottinger was pushed into receivership after a global campaign against what were generally perceived as criminal acts during its South African contract with the corrupt Gupta brothers, who had state-captured Zuma’s government (and who in turn soon fled to Dubai).
• In 2018, the Amadiba Crisis Committee won ‘Right to Say No!’ to extraction in a High Court judgement against MRC Resources (from Perth) over sand dune mining for ilmenite;
• In 2020, a World Bank financial-technology (22%-owned) subsidiary Cash Paymaster Services (based in London under Net1), which distributed social grants to 17 million South Africans, was forced into bankruptcy by the welfare-rights NGO Black Sash. It had imposed absurd debit-orders on millions of the poorest South Africans who in the process lost much of their monthly grant (e.g., six-year old girls getting microfinance and funeral contracts). One part of their conviction in the courts related to corruption.
• In 2022, activists in the Organisation Undoing Tax Abuse won their campaign against Vienna-based Kapsch Trafficom’s irrational e-tolling of SA National Road Agency highways in Gauteng, partly because the tolls were economically biased against distant working-class residential areas.
• Also in 2022, climate and environmental justice activists on the Wild Coast protested offshore drilling and won a Makhanda High Court judgment against methane gas exploration by Shell (and its powerful local ally, media/hotel/casino mogul Johnny Copelyn) – in spite of both being major donors to ANC electoral coffers. The judges ruled not only against potential ecocide due to the resulting greenhouse gases, but primarily in favour of maintaining the integrity of the Transkei shoreline and Xhosa traditions, against devastation associated with the global circuit of fossil capital. The Supreme Court provided a disappointing appeal judgement (because it allowed Shell/Copelyn to reapply) but the Constitutional Court will make a final judgement.

In all these respects, the particular targets were either formally guilty of corruption or widely perceived to be. What is critical in the period ahead, is the ability of the large disaffected movements in South African society – labour, community, anti-racism, feminist, student and youth, public health advocacy, gender identity and many others – to unite and consider forces beyond individual corporations. The ones identified above are crucial to that process, given the systemic nature of private-sector corruption in South Africa, as seen in the three categories reviewed above.

• First, the race–class fusions of interest reflected in BEE and associated procurement scandals, which should lead to an ‘insourcing movement’ (such as was prefigured by #FeesMustFall at universities, where students successfully united with low-paid workers in 2015–2017).
• Second, the characteristics of capitalist crisis formation that lead corporations in South Africa through shifting-stalling-stealing processes, witnessed in many features of deregulatory neoliberalism, financialisation, Illicit Financial Flows and predatory activities – as well as all the illegal acts that lead them to such a high PwC ‘economic crime and fraud’ status.
• Third, extractivism by which mainly multinational corporations deplete non-renewable mineral resources from South Africa in a manner that does not fairly compensate workers, the society and state – and which should be considered as economic criminality.

These are the challenges ahead, and if South African civil activists build on their record of winning victories in particular struggles, and jump scope and scale, then a genuine eco-socialist project can take root and prosper. To be sure, civil society has often attacked corporate malfeasance (putting to death – by barnkruptcy – the likes of Bell Pottinger and Cash Paymaster Services). And major firms are indeed occasionally capable of self-correcting. The clearest case was when software supplier EOH – set up by Israeli entrepreneur Asher Bohbot in 1998 – was cut off by Microsoft in 2019 due its by then blatant role in state capture, thus reducing the firm’s share value by 99 percent from peak to trough (Gelb 2023). (In 2021 EOH’s remnants included new directors who sued Bohbot for R1.7 billion, but apparently had no success.)

There are both traditional South African white monopoly capital and Western multinational corporations – both sometimes termed ‘WMC’ – which take advantage of such procurement opportunities. But it is also important to acknowledge how, in the spirit of Frantz Fanon’s (1961) Wretched of the Earth chapter on ‘Pitfalls of National Consciousness,’ limits to black capitalist class formation in the post-apartheid economy in turn create dependency on accumulation via the state. Together these corporate forces prevent a productive capitalism from emerging given the initial ease of simply serving as middle-man to accumulation by dispossession.

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