Houston, we have a problem
While the world reels from the unexpected election of Donald J Trump to the US Presidency, we in South Africa are reeling from something yet more insidious. This situation cries out for greater transparency in government, and what better way than rolling the blockchain out to government?
What the heck happened?
South Africa's government, the ruling African National Congress Party and the country's President, Jacob Zuma, have been caught out in a whopper of a corruption case which investigative journalists have been characterising as no less than an attempt to steal the entire state of South Africa...by one family, the Guptas, and our very own President, Jacob Zuma.
What we on the bottom tip of Africa are now calling "State Capture" is described in the "State of Capture" report produced by South Africa's now former Public Protector. The 355 page report's heading reads: "Report on an investigation into alleged improper and unethical conduct by the President and other state functionaries relating to alleged improper relationships and involvement of the Gupta family in the removal and appointment of Ministers and Directors of State-Owned Enterprises resulting in improper and possibly corrupt award of state contracts and benefits to the Gupta family's businesses."
One of South Africa's true heroines, Advocate Thuli Madonsela, past Public Protector. Source: SABC
The first of said functionaries to fall on his sword (we think; not sure if he was pushed) is the now former CEO of Eskom, South Africa's electricity utility, and before that the head of Transnet, our ports and rail utility, and before that, the Public Investment Commission - who resigned on Friday 11 November, within a week of the report's release.
Explosive.
When did we first realise something was rotten?
We've been living with the creeping certainty that "something is rotten in the State of Denmark" since shortly after 30 April 2013, when the Gupta family were able to land private jets for a family wedding at one of our Air Force bases. American friends, please imagine this lot, if you can -
Gupta wedding party at Sun City (photo courtesy of the Mail & Guardian)
arriving at, say, Edwards Air Force Base in a private jet. And not only living to tell the tale, but also getting IRS officials to process them in terms of customs regulations at a lovely resort in the San Joaquin Valley (but arguably nicer) where they're attending a family wedding. Not at the airport, at the resort. Farcical, perhaps?
That was just the beginning. The report, and our excellent investigative media, have told extraordinary tales of, among other efforts:
- how, last December, the President summarily fired our Finance Minister, Nhlanhla Nene, a capable and experienced man of integrity who was standing in the way of them capturing the National Treasury; this has subsequently been called "Nenegate"
- We learned more recently that the Deputy Finance Minister was offered R600 million plus a sweetener to take on the role, which he refused.
- The former Finance Minister, Pravin Gordhan, appointed by the President to replace the woefully inadequate Zupta appointee Desmond van Rooyen after just four days in office, has been the target of multiple attempts by our National Prosecuting Authority to charge him, bizarrely, with fraud for some human resources decisions he made while heading up the Revenue Service - again, an attempt to gain control of Treasury.
- This mad series of attempts on the Finance Minister has contributed to South Africa's precarious situation with the ratings agencies - we are staring down the barrel of a downgrade to junk status come December.
- how the boards of State-Owned Entities (SOEs) have been populated by "Zupta" cronies
- how the President's lady friend (she runs his foundation) has gutted our national airline as its Chairman
- how Gupta-linked companies have provided transaction advisory services for tens of millions of rands to Transnet through non-competitive processes (they used the international consultancy McKinsey as a Trojan horse, then dumped them) when Transnet actually had an internal treasury department perfectly capable of carrying out these services
- and possibly the biggest of all - the concerted effort to capture our electricity utility, Eskom, and force it down a 100-year path of nuclear dependency on the Russians.
There's plenty more, but that's why the report takes 355 pages. All of this was built on a modified Russian oligarch state capture plan, under which the oligarchs bailed out bankrupt SOEs, and if they defaulted on the debt, the oligarchs would take them over - knowing full well they would default. The Gupta approach is much cleverer - get the taxpayer to bail out the SOEs, knowing the captured board will do what the capturer wants, then take them over.
Where to from here?
Just as reams have been written about what a Trump presidency will look like, so too have reams been written about what will happen as a result of the Public Protector's report and what the ANC will do. The opposition have used this as an opportunity to hold a no-confidence motion on the President, knowing the ANC would not vote against him (he holds far too much power within the ANC for them to easily give him up to the law). However, forcing their hand by boxing them into a corner supporting him will effectively continue to erode their support base as the people become more and more disillusioned with the party of the struggle, already dealt a serious blow at our recent (3 August 2016) local government elections, where opposition parties took three additional metropolitan municipalities where previously they held only Cape Town.
A gratuitous photo of Cape Town, just because it's beautiful. Source: Cape Town International Airport
More profound than a change of government, we need a change of governance. Never has the time been riper for the kind of transparency that the blockchain can provide, and the kind of governance which is designed to support and drive the creation of sustainable value, through government and the private sector. And what's great: both of those options are now available to South Africa. More on governance and the intertwining threads with the blockchain in upcoming posts.