Lift Corporate Veil on Crime
Crimes committed by persons of respectability and high social status in the corporate sector in our country, otherwise known as white collar crime, seem to enjoy a somewhat permissive attitude by society.
Societal outrage and extensive media coverage of these crimes, as opposed to public sector corruption, are discernible by their relative absence. The perpetrators are hardly ever mentioned in public as they take cover behind the corporate veil.
Take for example the recent case of 17 banks – three South African (ABSA, Standard Bank and Investec) – which have been implicated in price fixing and market allocation in the trading of foreign currency. The latter sounds like a sophisticated practice but what it boils down to is that the banks engaged themselves in corruption, proving what some of us have been warning against – the collective baptism of corporate South Africa in a hall-full bucket of innocence. Corruption is not an exclusive preserve of the public sector.
There is no doubt in my mind that the collusion by the banks has harmed society and a full report of the economic damage caused should be the next step in this sorry episode. Our economic experts should perhaps focus their analysis in that direction instead of feeding us the “bad apple theory” which pretends that only public sector or even one individual responsible for our economic woes. Attempts to prevent corporate stigmatism, especially on this particular matter, must be exposed for what they are.
Critically, the white collar criminals in the banking sector who committed these acts must not be allowed to get away with their crimes. While theirs are not as dramatic and headline grabbing as acts of corruption in the public sector, their financial impact is much larger. I don't have any empirical evidence but I would hazard a guess that this particular crime caused the South African taxpayer far more than other crimes that are being reported.
And yet, few if any of the financial executives involved will be named publicly or prosecuted, much less convicted. It has happened before. Some construction firms colluded in the building of infrastructure a few years ago and the public does not know who those scoundrels were. Their faces were never paraded in the media and one doubts if they ever will be criminally prosecuted. The lack of enthusiasm by the media to pierce through the corporate veil and reveal the identity of these white collar criminals leaves an already skeptical and cynical public with lots of questions about media impartiality.
The silence by civil society organizations on this matter has also been greatly disappointing. Except for a few voices here and there, civil society has not said much about the collusion by the banks in particular and the increasing number of collusion cases in South Africa in general. Just last week we heard about three job advertising firms – Human Connection, Kone Staffing and Jobvest – having been involved in price fixing, market division and collusive tendering. Earlier this month Unilever SA was charged for cartel conduct.
One must warn that our outspokenness as civil society on certain issues on the one hand and our perceived muteness on others, especially those that affect corporate SA, will take away from our legitimacy and credibility.. We must speak truth to power and mobilize against wrongfulness irrespective of who wields the power and who is on the wrong. Marches against the powerful must be aimed equally against the abusers of political and of corporate power.
But what is even more damning, and a dent on our criminal justice system, is the lack of consequences for white collar crime executives. At best, they get away with light sentences (if the ever get convicted at all) which see them out after spending two or three years in jail. Yet, an armed robber staging a cash in transit heist which nets him little compared to white collar crime beneficiaries would get upwards of ten years in prison. Anyone can perform the simple arithmetic involved in that crime formula. And then we sit and wonder why we are currently facing the crisis of trust in governments, business, the media and institutions of all kinds that are instruments of power.
In conclusion, I want to commend the Competition Commission for the great work it is doing in uncovering corrupt practices by the powerful in corporate SA. In the past few years, it has heightened our awareness about collusion and cartel practices. Together with the Competition Tribunal, they have proven to be an effective vehicle to hold corporate power accountable. If I can strike a blow on their behalf I would plead for more resources so they can increase their capacity. Also, give them more teeth as opposed to current maximum penalty of imposing a 10 percent fine of the guilty firm’s annual turnover. I have a suspicion collusion in our economy is much wider than we think and requires increased capacity and sharper teeth from these two institutions.
PASTOR RAY McCAULEY IS THE PRESIDENT OF RHEMA FAMILY OF CHURCHES AND CO-CHAIRPERSON OF NATIONAL RELIGIOUS LEADERS COUNCIL (NRLC)
