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15 February 2022 | Story Prof Sethulego Matebesi
Prof Sethulego Matebesi
Prof Sethulego Matebesi, University of the Free State

Long before delivering his fifth State of the Nation Address (Sona), concerns reverberated in the political and social corridors surrounding President Cyril Ramaphosa, urging him to make conclusive statements, to have the heads roll of those implicated in corruption, and to report on achievements and challenges. However, the somewhat overwhelming dismissive responses from prominent opposition party leaders may seem as if they are not eager to engage with the Sona constructively. Thus, it seems that no matter how well the Sona is delivered, there will always be those who dismiss it as a trivialisation of South Africa’s challenges.

There were times during one or two of the ‘family meetings’ – live broadcasts by the President, addressing the nation on the status of the COVID-19 pandemic and the regulations to be amended – that it was vividly evident that Ramaphosa was taking strain. However, all this was gone when President Ramaphosa delivered the Sona like a true statesman, without any visible signs of the ambush he was facing from within and outside his own political party. In fact, the need to be bold and resolute about the government’s stability has never been stronger after recent attacks on several national key points across the country.

Assumed power of reports from commissions, advisory panels, and advisory councils

In a recent Reading Group Session of the Department of Sociology, we discussed the assumed power of documents when conducting research. The emphasis was on the need to avoid an over-zealous reduction of a research question to documentary evidence without considering the document’s terms (or context). Similarly, it is interesting to note that since 2018, President Ramaphosa has established 24 advisory panels, advisory councils, task committees, and commissions. While it may seem rather obvious that some of these panels have been designated by statute for a specific purpose, the assumed powers of the reports produced are sometimes the most difficult to unravel.

One such instance is the report of the Zondo Commission of Inquiry into State Capture, which was viewed as a magic wand that would root out corruption and strengthen the rule of law. In the face of the complex set of interlocking challenges that are hampering structural growth and change in South Africa, reports from committees may provide an in-depth examination of issues. However, there are at least two problems with policy makers who invariably think that these reports, including national addresses such as Sona, are solutions to the country’s myriad challenges.

First, a recent publication of Transparency International highlights how some governments are trivialising the results of its Corruption Perceptions Index (CPI). The trivialisation mainly happens when leaders who have come into office with a strong anti-corruption narrative, fail to make inroads against this scourge. For example, in South Africa, pronouncements on corruption – one of the leading causes of the state’s failure to deliver on promises – have been so subtle that those involved in corrupt practices may not even notice the seriousness of their acts.

The other problem is the reluctance to change non-performing accounting systems that are susceptible to abuse. South Africa has been trying to fix the puzzle of corruption long before the arrival of the Zondo Commission. Therefore, acknowledging that public institutions and state-owned enterprises (SOEs) have been infiltrated by a criminal network intent on looting public money is merely a starting point but not a satisfactory explanation in its own right. Moreover, it does not account for the government’s glaring failure to act upon the Auditor-General’s annual findings on irregular and unaccounted expenditure. It would have been more desirable for the government to insist on better financial accountability than its over-reliance on commissions or advisory panels.

As the nation waits with bated breath to see how corruption is tackled ‘once and for all’, as the President announced, a further qualification needs to be made regarding the proposed disposal of the government’s non-strategic SOEs. Estimates of global trends in privatisation indicate that privatisation activities are on the rise. In South Africa, there is a great deal of evidence that a handful of politically connected individuals often benefit from the privatisation of government assets. This raises important questions that are beyond the scope of this contribution, for example, how SOEs will be further weakened to hasten the process of privatisation.

Victorious we can emerge, but only if …

President Ramaphosa made a bold statement through his promise and commitment to revitalise the country’s weak economy, deal with Eskom’s unreliable electrical supply, and bring about changes to security agencies, among others. The extent, urgency, and sincerity with which the government will implement these and many other commitments, will determine whether we will ‘emerge victorious’, as Ramaphosa announced.

Mr President, we know the road ahead will not be easy. But in many ways, there has been an improvement. One possible solution to continue this trajectory of accountability and improved service delivery is to take full advantage of the benefits of the digital age. A digitisation drive underscored by a consequence management approach may assist in implementing the Sona promises and commitments in a more efficient, flexible, and sustainable manner. In this way, South Africa will begin to ‘walk the talk’ against poverty, unemployment, and inequality.


News Archive

The failure of the law
2004-06-04

 

Written by Lacea Loader

- Call for the protection of consumers’ and tax payers rights against corporate companies

An expert in commercial law has called for reforms to the Companies Act to protect the rights of consumers and investors.

“Consumers and tax payers are lulled into thinking the law protects them when it definitely does not,” said Prof Dines Gihwala this week during his inaugural lecture at the University of the Free State’s (UFS).

Prof Gihwala, vice-chairperson of the UFS Council, was inaugurated as extraordinary professor in commercial law at the UFS’s Faculty of Law.

He said that consumers, tax payers and shareholders think they can look to the law for an effective curb on the enormous power for ill that big business wields.

“Once the public is involved, the activities of big business must be controlled and regulated. It is the responsibility of the law to oversee and supervise such control and regulation,” said Prof Gihwala.

He said that, when undesirable consequences occur despite laws enacted specifically to prevent such results, it must be fair to suggest that the law has failed.

“The actual perpetrators of the undesirable behaviour seldom pay for it in any sense, not even when criminal conduct is involved. If directors of companies are criminally charged and convicted, the penalty is invariably a fine imposed on the company. So, ironically, it is the money of tax payers that is spent on investigating criminal conduct, formulating charges and ultimately prosecuting the culprits involved in corporate malpractice,” said Prof Gihwala.

According to Prof Gihwala the law continuously fails to hold companies meaningfully accountable to good and honest business values.

“Insider trading is a crime and, although legislation was introduced in 1998 to curb it, not a single successful criminal prosecution has taken place. While the law appears to be offering the public protection against unacceptable business behaviour, it does no such thing – the law cannot act as a deterrent if it is inadequate or not being enforced,” he said.

The government believed it was important to facilitate access to the country’s economic resources by those who had been denied it in the past. The Broad Based Economic Empowerment Act of 2003 (BBEE), is legislation to do just that. “We should be asking ourselves whether it is really possible for an individual, handicapped by the inequities of the past, to compete in the real business world even though the BBEE Act is now part of the law?,” said Prof Gihwala.

Prof Gihwala said that judges prefer to follow precedent instead of taking bold initiative. “Following precedent is safe at a personal level. To do so will elicit no outcry of disapproval and one’s professional reputation is protected. The law needs to evolve and it is the responsibility of the judiciary to see that it happens in an orderly fashion. Courts often take the easy way out, and when the opportunity to be bold and creative presents itself, it is ignored,” he said.

“Perhaps we are expecting too much from the courts. If changes are to be made to the level of protection to the investing public by the law, Parliament must play its proper role. It is desirable for Parliament to be proactive. Those tasked with the responsibility of rewriting our Companies Act should be bold and imaginative. They should remove once and for all those parts of our common law which frustrate the ideals of our Constitution, and in particular those which conflict with the principles of the BBEE Act,” said Prof Gihwala.

According to Prof Gihwala, the following reforms are necessary:

• establishing a unit that is part of the office of the Registrar of Companies to bolster a whole inspectorate in regard to companies’ affairs;
• companies who are liable to pay a fine or fines, should have the right to take action to recover that fine from those responsible for the conduct;
• and serious transgression of the law should allow for imprisonment only – there should be no room for the payment of fines.
 

Prof Gihwala ended the lecture by saying: “If the opportunity to re-work the Companies Act is not grabbed with both hands, we will witness yet another failure in the law. Even more people will come to believe that the law is stupid and that it has made fools of them. And that would be the worst possible news in our developing democracy, where we are struggling to ensure that the Rule of Law prevails and that every one of us has respect for the law”.

 

 

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