Nkandla-style wealth creation explained: Zuma only one of many ‘opportunists’

President Jacob Zuma has been criticised widely for allowing taxpayer-funded multi-million rand refurbishments at his Nkandla homestead and is at the centre of allegations of state capture – in essence accessing state money. But Zuma is only one of many people who can be accused of taking advantage of state resources, says brand reputation management adviser Solly Moeng. Look at the people around you and also look in the mirror, he says. There are many ways to carve up a country, ranging from rigged procurement processes to inflating prices for captive audiences. Even earning massive board fees without adding value is effectively theft, reckons Moeng. He sets out some of the shady business dealings that mean many of us are no better than politicians who are on the gravy train. – Jackie Cameron

By Solly Moeng*

Solly Moeng. Twitter profile picture
Solly Moeng. Twitter profile picture

One of my e-friends – I hadn’t checked at going to press if she has already unfriended me following our recent exchange – became very upset with me the other day for initiating an online discussion about an events company that seems to be allowing itself to be used as a regular vehicle for laundering public funds.

It wasn’t the first time that the said company has been accused of this sort of conduct. On a previous occasion, a Cabinet minister lost her job, ostensibly for her involvement with the same events company to which she had attached her boyfriend as a subcontractor who subsequently walked away with millions of rands in public and sponsor funds.

Some of that money was reportedly spent on presents for the said minister.

The same events company made it into the news again recently, after it was uncovered that the R18m it paid to a politically connected subcontractor was used to buy luxury cars and other goodies, and for a cash donation to one of the presidents’ wives, with no cent paid in taxes.

The events company had been paid – wait for it –  a whopping R39m from government coffers to organise memorial services for Nelson Mandela in Mpumalanga! The only explanation by the owner of the company, who is an ex-soapie actress and highly successful tenderpreneur, is that she genuinely thought she was doing business with legitimate people and that she paid them for services rendered as per her agreements with them.

But her arrangements with some of her subcontractors tend to raise immediate suspicion. In one of the cases, the said subcontractor had been given direct access to the bank account into which government money was paid, enabling him to transfer millions of rands to himself within days of the money coming in.

Shady dealings

This is how the process seems to work; the events company in question gets awarded a multi-million rand event management tender on condition, it appears, that it subcontracts to some politically connected person(s) to whom it must pay millions for some obscure services, then look the other way.

Payments in such arrangements happen very quickly. The money is speedily paid to the events company and, within days, a portion of it gets transferred to the politically connected subcontractor for unclear services rendered.

The e-friend referred to at the beginning of this piece became upset by my putting the events company in the spotlight because, apparently, it wasn’t fair to discuss one company alone as – wait for this – the accusations against the company constitute common practice.

This is how business is done all over the place, she claimed, “So why isolate only that one company for discussion and not all the others who do the same thing?” I had to restrain myself from falling out of my chair.

Worrisome tendency to justify abuse of resources

We all know that there are always two sides to corrupt activities; one is the corruptor, and the other is the corrupted. The term “corrupted” is in fact somewhat of a misnomer, as it seems to suggest that one of the parties is a naïve victim who is being acted upon by the so-called corruptor.

It is not always so. If we go by the logic of victim and perpetrator, President Jacob Zuma and all his cronies would be the alleged victims of actions or persuasion, allegedly by the Guptas and their associates; but we know that this is far from the truth.

Zapiro's latest take on State Capture. More magic available at zapiro.com
Zapiro’s latest take on State Capture. More magic available at zapiro.com

We also know that while much of our disgust over corruption tends to be focused on highly placed individuals who are constantly under the media spotlight, and therefore visible to all, in truth they are probably just the tip of the iceberg.

In South Africa there seems to be a growing, worrisome tendency to justify the abuse of resources to benefit black friends, brothers and sisters. And this is not to say there is no corruption in the private sector, or among white people.

What I’m discussing is often done on the basis that white people have been doing it for a long time and are already empowered, and that it is time for blacks to eat. The SABC’s controversial Hlaudi Motsoeneng might have ignored internal processes when he dished out pre-electoral sweeteners to South African musicians, but who can argue against that?

After all, these are people who have been abused for many years by recording companies who took them for granted while they earned millions from their talents.

Let’s look at the bigger picture

One of the most insidious methods of diverting public funds happens through a form of laundering using businesses owned by seemingly unsuspecting entrepreneurs. Such entrepreneurs, hungry for government business, allow themselves to be brought in through rigged procurement processes that come with conditions.

They get awarded multi-million rand tenders even when they clearly do not meet all the requirements for such tenders, on condition that they either subcontract some of the services to designated individuals or pay funds into bank accounts whose details are given to them later.

But there are also instances where seemingly naïve government procurement officials get taken for a ride by service providers who have become masters at inflating prices Nkandla-style. A number of years ago, we pitched for a rebranding tender for a public entity. Given the size of the entity, our total financial proposal came in at R3.5m. We learned later that the winning bid had come in at a whopping R15m! I still believe to this day that we could have done an excellent job at our price, or even less.

A general view of the Nkandla home (behind the huts) of South Africa's President Jacob Zuma in Nkandla in this August 2, 2012 file photo. REUTERS/Rogan Ward
A general view of the Nkandla home (behind the huts) of South Africa’s President Jacob Zuma in Nkandla in this August 2, 2012 file photo. REUTERS/Rogan Ward

Finally, there are the strategic inclusions of well-chosen persons on the boards of state-owned entities in order to get them to direct big tenders in pre-designated directions. Board directorships are also used as employment opportunities for politically connected individuals, who earn massive board fees without contributing much to governance except for serving as disruptors to favour invisible political masters.

So, while fascinated by headline-grabbing abuse of public funds by the usual suspects in high office, there is also no doubt a need to look at the bigger picture, and to ask ourselves what role we all play in stealing from the poor and in weakening our beloved country. All of this adds to weakening our nation brand.

* Solly Moeng is brand reputation management adviser and CEO of strategic corporate communications consultancy DonValley. Views expressed are his own.

Source: http://www.fin24.com/Opinion/many-ways-to-carve-up-a-country-20160920

For a deeper understanding of the world of money and greater financial control, upgrade to BizNews Premium.