Corruption – an irrational seducer who hurts when you can least afford it
South Africa has improved slightly in the 2014 international corruption perception index, but still ranks poorly – and did a little better only because the research was conducted ahead of the Nkandla scandal. That together with news from Brazil last night that a lower level manager at State-owned Petrobras has volunteered to repay $100m in ill-gotten gains provides the foundation for today's Rational Perspective. AH
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ALEC HOGG: Good morning. I'm Alec Hogg and here's today's Rational Perspective.
In my newsletter this morning, I've written quite a lot about rationality and referred to the source (for me) of this concept: a man who lived 2000 years ago, one of the great Roman Emperors, Marcus Aurelius. Alternatively, as he's known on the bust over there, which we managed to pick up in Rome – Marco Aurelio. Looking over my shoulder, he's a great reminder (for me) that rationality applies as much today as it did 2000 years ago.
Today's subject though, is a very irrational one. It's all about corruption, primarily because Petrobras, the big state-owned oil company in Brazil is lurching from bad to very bad in its corruption scandal that has engulfed that business. The big story breaking overnight (and we have the Bloomberg Report on Biznews this morning) is the decision by a man who is a third-tier manager. Think this one through. You have the Chief Executive, you have the next tier, and then you have the third tier so he wasn't even on the Board and certainly not even in top management. He has admitted to being part of some of the corruption and he has agreed to repay USD100m. Over R1bn is what he, personally, at third tier, managed to squeeze out of the system through corrupt construction companies (in his case).
The concern one has here is that he said he progressed through the organisation because of his political connections and the recently, very narrowly reelected Brazilian President Dilma Rousseff was (for seven years) the Chair of Petrobras. The scandal apparently relates to hundreds of billions of Dollars that were siphoned out of the company for personal accounts and into the ruling political party, which of course, Rousseff leads.
It has all kinds of implications for the BRICS, of which Brazil and South Africa are members but it also has implications for those who are conducting the same kind of practices in South Africa because corruption is totally irrational. At some point in time, one of the links in the chain is going to break and it usually happens at the worst possible moment, as Rousseff appears to be discovering, to her cost.
On the subject of corruption, every year Transparency International conducts an Index, which it calls the Global Perception Index and that has just been released. It was in fact, released this morning. In it, South Africa ranks a sore of 44/100, where zero is totally corrupt and 100 is totally clean. It's an improvement from the 2013 rating; where South Africa had a score of 42 and it means that the country has moved from 72nd least corrupt in the world to 67th least corrupt – a step in the right direction.
David Lewis of Corruption Watch however, notes that the research was done before Nkandla and he says the timing is most opportune for this country. Had it been conducted subsequent to Jacob Zuma's R246m plundering of the public purse, David Lewis has no doubt that South Africa's score would have been much worse. Not just because of Nkandla itself but more, he says, because the Public Protector (the anti-corruption watchdog) has been attacked – viciously – by those close to the President and those in senior positions of the ruling political party, the African National Congress. A question there, of shooting the messenger, rather than the perpetrator.
This has been The Rational Perspective.