State capture is meant to benefit a few elite‚ analyst tells Zondo Commission

The state capture phenomenon manifests itself in different countries and has a devastating impact on affected countries. It is also shaped in a way that is meant to benefit a few elite.

Testifying at the Zondo Commission of Inquiry on Wednesday‚ international economist and analyst Daniel Kaufmann detailed how some countries experienced state capture in the oil‚ mining and financial sector while in some it would be drug traffickers involved in illicit trade having substantial influence on government.

Despite differing in its manifestation‚ the consequences of state capture are all devastating for economies‚ said the Chilean academic.

Kaufmann said it didn’t matter what form and shape the capturing took‚ at the heart of it was to “shape the rules of the games for the benefit of the few elite”.

Among the arms of the state that were targets for capture were‚ among others‚ the president‚ cabinet‚ judiciary and councillors.

But Kaufmann said the relationships between the “captor” and the “captured” were complex and developed over time.

“It is not just a relationship between two parties. It is a complex web‚” he said.

State capture could‚ possibly:

•  lead to erosion of the economy;
• cost the entire society;
• may plunge a country into a recession;
• may negatively affect poor members of society;
• destroy competition;
• affect countries’ borrowing capacity; and
• may lead to unemployment and an increase in state grant dependency.

Kaufmann said countries in transition were at a higher risk of state capture because their institutions were normally starting from a lower base to detect the phenomenon. However‚ even in well-developed countries‚ there would still be corruption or some form of influence exerted by elite individuals on the state.

Kaufmann said research which looked at state capture after the fall of the Soviet Union‚ showed that countries that accomplished a lot were those which had vibrant political contestability.

“The extent to which there is vibrant competition politically [was crucial]. Associated with that is civil liberties - the voice of civil society‚ the engagement of civil society…The other is economic contestability and competition – to what extent a vibrant medium‚ small business sector is allowed to operate‚ even if there are large enterprises.”

He added that what happened in each political party also had an impact on the environment in which state capture could occur.

“The extent not only of political contestability among parties but the extent to which there is democracy within each party…the whole notion of how political parties function being made public‚” Kaufmann said.

- SowetanLIVE