The past few weeks have been an uncomfortable period for the South African business community. But whatever these instances show, they are not representative of broader business conduct, nor do they collapse the differences between the overwhelmingly honest behaviour of the business community and the industrial level corruption going on at all levels of government.
First, we have seen the country’s largest company, Naspers, drawn into controversy around the behaviour of its subsidiary MultiChoice, amid allegations of State Capture.
More recently, we have witnessed the spectacular collapse of Steinhoff, not only one of the country’s largest companies, but also, seemingly, one of the most successful.
The combination of these events with the politicking in the run-up to the start of the ANC’s 54th national conference has had an emotive and flammable impact on the public discourse. Once again, business is in the dock. The air is thick with loose accusations of “theft” and the mistakes of the few are taken as licence to tarnish the good name and motives of the many. The unwelcome spectre of White Monopoly Capital, subdued in the aftermath of the Gupta leaks, has enjoyed a new lease of life.
It is no surprise, of course, that there should be public disquiet when such prominent companies, albeit for very different reasons, are embroiled in controversy. We have justifiably high expectations of our leading companies. We expect them to set the tone and when they fall short there should be no surprise at the consequences. Even more so at the end of 2017 which has seen other prominent names – notably McKinsey, SAP and KPMG – caught up in the smelly web of State Capture.
Even so, it does nobody any favours to use these episodes to darken the name of business more generally. Business is the critical enabler, the key to unlocking the country’s economic potential. Every social goal that we wish to pursue requires the health and success of business. The country does not have an alternative route forward. If we damage business, we all suffer.
This is not to say that these instances of bad business behaviour do not deserve censure. Quite the opposite in fact. But it is to make the point that cool heads need to prevail at a time of high emotions. And why the voice of business needs to be heard loud and clear at this time.
Let us start with what is before us. In the case of MultiChoice and Naspers, we have troubling allegations of improper attempts to influence government policy. Whether the line between legitimate lobbying and underhand attempts to foster influence was crossed, we do not know, and judgement should be deferred until the full facts are available. Business Leadership SA (BLSA) has initiated discussions with MultiChoice, and we await the outcome of investigations currently under way.
The Steinhoff saga is clearly one of the most serious corporate collapses this country has ever witnessed. It will take time for the full ramifications to unfold. But there shouldn’t be any doubt – witness the summary departure of the chief executive – that there has been wrongdoing.
Business failures are painful and can cause widespread collateral damage, often to innocent parties. That is why we have developed corporate governance regimes that can try and minimise these instances. But no matter the protections installed, there is no risk-free investing, as many have been painfully reminded.
In due course, we will understand the Steinhoff situation more fully. Maybe we will be reminded that if it feels too good to be true, it probably is. Or how hard it is to resist the crowd. Or the power of greed. And we will also know more about Naspers/MultiChoice. Perhaps here we will be reminded of the lengths business will go to protect their competitive position. These issues will always be with us, and that is before you get to the peculiar South African overlay of state-capture.
But whatever these instances show, they are not representative of broader business conduct, nor do they collapse the differences between the overwhelmingly honest behaviour of the business community and the industrial level corruption going on at all levels of government.
For avoidance of doubt, let us be clear about how BLSA thinks about corporate misbehaviour.
First, anyone who breaks the law should be prosecuted, and that includes any business people, whether in their own right or in the course of their dealings with government.
Second, while the law must indeed take its course, it is not enough for companies to say they have not broken the law. If they wish to sustain their licence to operate, they also need to satisfy the standards of behaviour expected by society. This is captured by BLSA’s Integrity Pledge, which all our members are signatories to, that sets out a standard that we believe all businesses should adhere to. Breach of the pledge is not consistent with continued membership.
To those critics who think that only the sanction of the law matters, diminishing the censure of civil society, they should know that it was precisely this censure that brought down Bell Pottinger, and which is also evident in the flight of clients from businesses like KPMG and McKinsey.
And be in no doubt: BLSA is not a supporter of business, come what may. To the contrary, we hold no brief for those businesses who break the law or who violate our ethical compact, the Integrity Pledge. They do not share our values, and we reject them. They damage the valuable reputation of business, and we all pay the price.
At the same time, however, BLSA cannot allow isolated instances like MultiChoice or Steinhoff to tarnish the broader brand of business. We need to remind people of the social value of business; that it is a critical component of a successful society, not some constituency that stands apart. Business is society at work and to denigrate business is to denigrate a large part of the population. That is why a key pillar of our strategy is to promote the value of business as a national asset – not as an article of faith, but because it is business that will deliver the growth and transformation, without which the country has no future worth thinking of.
Let us be clear on the point of departure: BLSA has been absolutely clear that our country is failing its people – too many people are unemployed, there’s too much poverty, and levels of inequality are too high. And that business has a critical role in helping address this moral stain. That is why we embarked on our #BusinessBelieves campaign, and the Contract with South Africa published this year, where our members showed that they understood the key role business could play in helping address the social challenges the country faces. In short, we need a growing economy that creates jobs, fuels transformation and poverty reduction and hastens the transition to a more normalised society.
As we have also made clear, business cannot do this work alone. We need a supportive government and a supportive policy backdrop – something sorely lacking in recent years. That is why we are so focused on the critical ANC conference that takes place in the coming days.
The leadership decisions taken there will be a critical determinant in the future trajectory of the country, in determining whether business is allowed to deliver its potential, or whether we are going to see a continuation of recent years where a combination of policy incompetence and corruption have helped derail the economy.
Whoever that leader is, business stands ready to roll up its sleeves and participate, at short notice, in an urgent programme of national renewal. That willingness and ability is in no way diminished by events at MultiChoice and Steinhoff.
Businesses make mistakes and make bad judgements. It is part of the corporate condition. As appropriate, they must be held accountable. But we must not throw out the baby with the bathwater. You cannot be pro-poor and anti-business. The schadenfreude at business’s discomfort over these episodes raises questions about whether these people seriously want to address the country’s pressing social challenges.
Published on Daily Maverick (15 December 2017)