SAFTU condemns Cabinet reshuffle
February 27, 2018
The land shall be shared among those who work it!
March 1, 2018

Economic crime is rife across all sectors of the economy

The South African Federation of Trade Unions has noted two recent reports which graphically confirm its view that economic crimes in South Arica are not confined to a few companies and individuals but are a plague infecting far more people and an integral feature of an inherently corrupt capitalist system.

The first report is PwC’s biennial Global Economic Crime Survey, which makes the shocking revelation that “Criminality is rife in South Africa across all forms of economic crime… Overall‚ South African organisations continue to report the highest instances of economic crime in the world with economic crime reaching its highest level over the past decade.

The number of South African organisations that have experienced economic crime, it says, is now at a “staggering” 77%‚ well above the global average rate of 49%.

Asset misappropriation continues to remain the most prevalent form of economic crime reported by 45% of respondents globally and 49% of South African respondents.

“Asset misappropriation” is a nice phrase to sound less serious than “theft”, but it cannot disguise the report’s conclusion that billions of rands of wealth initially created by the labour of the working class is being looted by criminals.

PwC found that 35% of South African respondents lost more than R1.2-million to what they regarded as the most disruptive economic crime to affect them‚ with 1% reporting losses of greater than R1.2-billion.

19% of organisations have spent between twice and ten times as much on investigations as the original amount lost to economic crime and that “economic crime continues to disrupt business‚ with this year’s results showing a steep incline in reported instances of economic crime”.

“This indicates that the entire supply chain in South Africa is fraught with criminality”. When combined with the high instances of bribery and corruption reported (affecting more than a third of organisations at 34%)‚ the report noted that the resultant erosion in value from the country’s gross domestic product (GDP) is “startling”.

The second report is that 28 South African media houses have been referred to the Competition Tribunal after an investigation into price-fixing.

All of them could face steep fines. They include Media24, the SABC, the Mail & Guardian, Primedia, Avusa, Tiso Blackstar (formerly Times Media) and Associated Media. Caxton, Independent Media and DStv, owned by Naspers, have already paid massive fines relating to the price-fixing allegations, after reaching agreements with the Tribunal.

The Competition Commission reportedly found that the media houses offered similar, larger discounts for bigger advertisers, or advertisers belonging to an industry body group, but non-members were offered smaller discounts. This restricted competition between the companies as they did not independently determine discounts offered to advertisers.

The companies could face paying as much as 10% of their turnover.

The Commission’s Sipho Ngwema said that, “Media companies are competitive so when they formed the company called Media Credit Coordinated, through that company, as competitors, they sat down and agreed on the prices and conditions for advertising agencies. When companies are competing, the law prohibits them to share and coordinate prices”.

This is just the latest of a many price-fixing cases, including in the food, dairy, construction, finance and pharmaceutical sectors.

It is however particularly concerning when such crimes are committed by the media industry, who like to be seen as guardians of public morality and are always quick to denounce crimes when committed by others, but not by themselves.

SAFTU has always been the harshest critic of the Guptas and all their cronies in government and state-owned enterprises, and has played an active role in bringing them to justice. We have a policy of zero tolerance to all forms of economic crime – corruption, fraud, money laundering and racketeering – but have always insisted that corruption spreads far wider than those already implicated.

This has already been proved by the role of the growing number of big global companies like McKinsey, KPMG, SAP and Bell Pottinger. It was further shown by the story of “accounting irregularities” at Steinhoff, a company with no known link to the Guptas.

Now the PwC report proves conclusively that economic crimes are a far wider cancer within the country. It demolished the myth shows that we live in a ‘free’ market economy where companies compete on equal terms and adhere to ethical principles.

Even if former president Zuma, all the Guptas and all their collaborators end up in jail, as we hope they will, that will not mean the end of corruption and other economic crimes. We shall still be living under a monopoly capitalist system that exploits workers and poor communities, damages the environment and does nothing to effect transformation of the economy for the benefit of the poor majority.

The Competition Tribunal case explains why the mainstream media are silent on this structural corruption within the capitalist system. They are quick to condemn strikes by workers and protests by poor communities, but never question the need for capitalism, because they themselves are an integral part of the ruling class, who will always defend the capitalist status quo.

It is surely no coincidence that the case against them concerns illegal fixing of the price of advertising, the revenue from which is their lifeblood. This makes them dependent on the big businesses who pay for the adverts. “He who pays the piper calls the tune”! The media are never going to demand the end of the corrupt capitalist system when its owners are themselves embedded in and financially dependent on that very system.

SAFTU’s Inaugural Congress resolved “to rapidly build a united mass force of workers, which will transform their lives and pave the way for the transformation of society as a whole from one based on the greed of a rapacious capitalist elite to one run for the benefit of the working class and all the people of South Africa and the world.”

The Freedom Charter’s call – for the national wealth of our country, the heritage of all South Africans, to be restored to the people – will never be achieved, while our economy is run by, and in the interests of, billionaire capitalists, who will go to any lengths, up to and including illegal practices, to maximize their profits.

Amandla ngawethu!