The narrative of corruption in South Africa is one sided with a focus almost solely on the public sector. Organisations such as Corruption Watch have tried to shine the spotlight on the private sector to a limited extent. The various commissions of inquiry, such as the Mompati Commission that probed the arms deal and the State Capture commission, primarily unveiled public sector corruption on the surface, but it is trite that for every corruptor there is a corruptee.
It is no exaggeration that private sector players in these and many other corruption scandals over the last three decades got away with murder, and were beneficiaries of ill-gotten gains. There is something even worse — corruption in the private sector has been normalised and a blind eye is turned by regulatory bodies that ought to keep shareholders informed.
The corruption at Steinhoff that continues to unravel has shown there is almost an inertia in governance in the private sector. The state capture report revealed nefarious activities of companies such as Bain, which closed operations this week after the corrupt activities they were involved in and their role in hollowing out the South African Revenue Service — crimes that should really be regarded as treasonous given what the revenue they destroyed could have been used for in the current depressed economic state.
Companies such as Tongaat, KPMG, Tegeta Exploration, Trillian and BHP Billiton that were caught up in the Gupta web of lies underlined the fact that corruption that is said to have cost the country over a trillion rand was never the fault of government or the public sector alone. It can be argued that the private sector’s corruption is worse as it ferments on its own as well as partakes in public sector corruption.
Who can forget the notorious Fidentia scandal that exposed the lapse of financial oversight and governance? The scourge of tender manipulation and collusion has been exposed by the Competition Commission on numerous occasions, with many private sector companies being fined millions of rand for these practices. This of course has not deterred them — they have taken these measly fines into their balance sheets so they can carry on with business as usual. Inflated commissions and bonuses allow executives to bribe their way into underhand dealings with corrupt government officials.
All of this begs the question — where is the JSE management with its stringent rules? How did these companies, many of them listed, get away with this kind of corruption under the nose of the JSE? How did the innocent shareholders suffer billions of rand of losses in Steinhoff?
The JSE's conflict with Mantengu Mining began to shed light on the culpability of the JSE in corrupt practices in the private sector. When you read the court papers of Mantengu's case it launched against the JSE last week you will be shocked to realise that a totally parallel standard applies to private sector corruption monitoring. The standard of accountability seems to be lower. While public sector agencies are hauled before parliament or summoned by the public protector and the Competition Commission, the private sector is living its best life under a JSE that seems to have lowered it guard completely in the face of fraudulent practices including share manipulation and insider trading.
Mantengu is the first company to challenge the JSE head-on in court, to determine who is ultimately responsible for the contents of the Stock Exchange News Service (Sens) announcements. Though the legal step is inherently adversarial, Mantengu’s intention in so doing is to constructively challenge the JSE’s ability to effectively censor directors by controlling the content of Sens announcements, specifically those relating to price-sensitive information. The JSE has disclosed, in opposing papers, the reasons it believes it can control the content of subjective price-sensitive Sens announcements.
One can argue it is this culture of secrecy that has led to what happened in the case of Steinhoff International, where shareholders were kept in the dark though whistle-blowers raised alarm earlier on before the scandal got out of hand.
Mantengu’s stance is clear: the JSE’s Listings Requirements (LRs) clearly outline the need for price-sensitive information to be released without delay (an emphasis on urgency). The LRs contain a Practice Note (2/2015), which clearly and unambiguously outlines the process directors must follow as the nexus between urgency and accuracy. The practice note itself references the obvious fact that, ultimately, the determination of what constitutes price sensitivity must be left to the board’s subjective discretion, an entirely sensible stance because the board knows the business best. The practice note is clear: “If in doubt, publish.”
From the cursory reading of the court papers and the interview conducted by The Money Show last week it seems apparent that that the JSE blocked the intended Sens announcement because the content provides significant credence to Mantengu’s fronting and share manipulation concerns that have happened while, at best, the JSE has been asleep at the wheel.
The intention of the JSE was clearly to censor Mantengu because the JSE now knows full well that Mantengu will make full transparent disclosures to its stakeholders in due course on the share manipulation issues. It is easy to speak of whistle-blowers in the public sector, but here is a glaring case where corporate whistle-blowing is being suppressed to avoid another Steinhoff scenario.
The impending commission of inquiry is probing allegation of syndicates that have penetrated the public sector, but white collar crime happening under the nose of the JSE suggests something sinister is happening in the private sector. Mantengu’s story has clearly linked the manipulation to syndicate bosses and their “puppet” investigators, who are attacking the reputations of various South African Police Service generals.
The syndicate is run by a bunch of bullies who are fundamentally cowards. In light of recent developments in the public sphere regarding allegations that certain members of the state are aiding and abetting criminal syndicates operating in South Africa, it’s clear that once again our public discourse removed the spotlight from the private sector in pushing back against corruption. One wonders what else lies hidden in the corridors of the JSE. Surely the JSE should now introspect in light of the numerous anomalies highlighted here.
* Tabane is adjunct professor of media studies at the University of Botswana and editor of Leadership Magazine.
For opinion and analysis consideration, email Opinions@timeslive.co.za
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