Graft shakes South Africa's vaunted ANC party

Several high-profile corruption scandals within the ruling party are weakening South Africans' confidence in the postapartheid government.

If money is the grease that makes democracies function, then South Africa should be one of the most well-oiled democracies in the world.

In the past few months, South African newspapers have reported manifold scandals that reach deep inside the ranks of the country's ruling party. This perception of lavish corruption – including bribery over arms purchases, misuse of government travel money, pension-fund embezzlement, contract kickbacks, and even insider trading – is straining many South Africans' faith that their government is still acting in the interest of the common man.

The trend worries many South Africans that their country is following the flawed examples of other African nations, where postcolonial leaders let personal wealth trump the ideals that first led to independence from colonial powers.

"The impact of corruption on a society as poor as ours is devastating, because what is stolen could be better used to help the poor," says Patricia De Lille, leader of the Independent Democrats, an opposition party in Parliament. "People are no longer prepared to accept excuses that we don't have money, not when we see the extravagance of their leaders. We created a lot of expectations after liberation [from minority white rule in 1994], and now people want these things to be delivered."

South Africa remains a country where the vast majority is unspeakably poor. But by most measures, it is still the exception on the African continent. Its schools, hospitals, roads, electricity, and water still function, and second-class citizens can have first-world expectations. But a growing white-collar corruption trend may be costing South Africa some 50 billion rand (about $7 billion) a year, according to some estimates.

"This rot [of corruption] is across the board," said ANC General Secretary Kgalema Motlanthe in a recent interview with the Financial Mail newspaper. "Almost every project is conceived because it offers opportunities for certain people to make money. A great deal of the ANC's problems are occasioned by this."

Corruption now a top priority

South African President Thabo Mbeki, whom most South Africans believe is personally clean, has also made tough speeches about the need to crack down on government corruption. But at a global conference against graft in Johannesburg last week, Mr. Mbeki struck a more defensive tone.

"The anticorruption discourse ... is inseparable from broader goals of socioeconomic development," said Mbeki. "In the era of globalization, when vast wealth and asset gaps exist among individuals, regions, and nations, the fight against corruption must be rooted in common understandings across borders. It must go beyond the rhetoric of perceptions and blame."

The very fact that Mbeki finds it necessary to speak out against corruption is itself a step forward, many observers here say, and South Africans have reason to be optimistic.

The country's Constitution provides a legal framework that is leaps and bounds ahead of the notorious crony capitalism of the apartheid years. Its enforcement agencies, such as the new financial-crimes unit called the Scorpions, and the independent auditor general's office, as well as its laws protecting whistle-blowers, are among the strongest and most progressive in the world.

"We didn't go to the bush as the ANC so that when we are in power, we will plunder," says Vincent Smith, an ANC parliamentarian and member of a committee assigned to study corruption. "Corruption impedes the liberation and its goals. Nobody I know of would have sympathy for someone who is misusing the system for his personal benefit."

Such strong words might be reason for hope. But some newspaper columnists call this rhetoric a double standard and ridicule the president's own corrupt officials as the "Xhosa Nostra" – a play on the mafialike cabal of Xhosa-speaking officials in Mbeki's cabinet.

"This, in my mind, is the beginning of the decline of this country," says columnist Rhoda Khadalie, herself a former ANC stalwart from Cape Town.

"It's about double standards," she continues. "You have ordinary citizens, people convicted of stealing a chicken at a supermarket, sitting in jail, but people within the cabinet involved in the theft of hundreds of millions of rand of public funds getting off scot-free. This selective use of the law encourages criminality. People are saying to government: If you can do this accumulation of wealth, we can do it, too.' "

Not improving fast enough

As bad as things are now, they are an improvement over the apartheid government, in which white politicians gave white businessmen contracts and favors in the name of national security.

"It's not that things are getting worse; it's that they are not getting better against the context of the higher standards of the new South African Constitution," argues Colm Allan, director of the Public Service Accountability Monitor, a private watchdog over government finance in Grahamstown, in the Eastern Cape Province.

"The problem is that the laws won't implement themselves, and when it comes to the capacity of the central government to monitor provinces, where 60 percent of the government funds are spent, that is very weak."

The heavy load of corruption cases appears to have overwhelmed South Africa's investigative agencies. Among the notable cases:

• In a bribery scandal over arms purchases this past year, ANC deputy president Jacob Zuma was removed from his job, but ultimately cleared by a court for allegedly receiving a bribe of 500,000 rand (about $70,000) from French defense contractor Thomson (now renamed Thales). The government ended up paying Zuma's 8 million rand (about $1.1 million) in defense attorney bills.

• In late March, 12 members of parliament (11 of them from the ruling ANC) were publicly reprimanded for stealing or defrauding up to 241,000 rand (about $33,000) each by using official parliamentary travel funds for personal travel. The parliamentary members were fined, but they will be allowed to keep their seats.

• In February, auditors revealed that an 800 million rand (about $112 million) loan by the Land Bank, a government institution established to help farmers, had gone sour. The loan, given to a company whose shareholders include ANC General Secretary Motlanthe, amounted to nearly one-third of the Land Bank's total assets, and apparently cannot be repaid. The government has since fired the Land Bank chairman and agreed to inject 700 million rand to keep the Land Bank operative.

Perhaps most troubling is the revelation that the popular program of Black Economic Empowerment is being used by government officials for personal enrichment. According to a recent auditor general report, some 50,000 government officials are running private businesses on the side, many of which rely on government contracts in fields that fall under their own regulatory authority.

Even some of the ANC's own coalition partners have begun to criticize its pro-poor policies, such as Black Empowerment, as a boondoggle.

"In this part of the world, we have a tradition of extremely strong executives starting off ruling in what they believe to be in the greater interests of society, like a benign dictatorship," says Mr. Allan. "This ends up more malicious than benign, as we see in Zimbabwe. That should raise the concerns over the long term."