Issue: July/Sept 2010


Hang ’em high

Rules to counter corruption are lax. Until public officials face criminal sanction for not disclosing actual and potential interest conflicts, codes of conduct are merely nice to have.

Jan Mahlangu

Mahlangu...a drive too far

What precisely did Jan Mahlangu, unceremoniously suspended from his powerful job at Cosatu as its national policy coordinator on retirement funds, do wrong?

Can it be bribery? No, because bribery is a felony. A charge hasn’t been laid, and evidence hasn’t been submitted, that he steered favours to retirement-fund consultancy SA Quantum in exchange for the Audi motor car it gave him. Maybe the suspect hadn’t got around to the reciprocity side of the equation – innocent intent beggars the imagination – or maybe Cosatu has found a way to avoid him and itself further embarrassment.

Can it be a conflict of interest? No, unless there was an arrangement for Mahlangu secretly to swing his considerable weight behind SA Quantum. Without this, the conflict is potential and perceived. That’s bad enough, not only in so far as it concerns a single service provider but it also taints his retirement-fund policy inputs on both the union and Nedlac levels. At best for Mahlangu, the most charming and toughest of negotiators, his integrity is now compromised. But pristine ethics aren’t an established prerequisite for high public office.

Can it be receiving a gift? No, because there’s nothing wrong with that. Many employee-elected trustees of retirement funds aren’t exactly strangers to a practice that Cosatu has hardly shown signs of attempting vigorously to prevent.

Can it be the size of the gift? No, because size doesn’t necessarily matter. Little presents for some can be big presents for others. Hospitality such as soccer tickets from a service provider for shop-steward trustees, who’re unpaid at Cosatu’s behest for their additional duties, can be as corruptible as R300 000-worth of generosity for a remunerated Cosatu official. When no policy is applied, it can’t be contravened.

Can it be non-disclosure of the car? No, because it wouldn’t be relevant unless Cosatu actually keeps a publicly-accessible register of its officials’ interests. Such disclosures are required of MPs and company directors, and of retirement-fund trustees under the Financial Services Board’s good-governance circular PF 130 that paradoxically met with Mahlangu’s approval.

Challenged on the accountability of Cosatu officials, related to retirement-fund matters generally and Mahlangu particularly (TT Sept-Nov ’09), Cosatu spokesperson Patrick Craven responded in Business Report: “Neither Cosatu officials nor its affiliates are accountable to the likes of Greenblo or to business forums and conferences.”

This was in a spirited defence of Mahlangu that Craven and the Cosatu head office might yet regret. A few chickens have since arrived home to roost. They’re apart from Mahlangu’s crime in having been caught out, not by Cosatu supervision procedures but by Mail & Guardian investigative journalism.

There are broader and bigger issues that the Mahlangu episode highlights. They illustrate policy flaws, if not unmitigated hypocrisy, and the need for a wake-up.

Start with Cosatu’s head office. So long as it adopts the arrogant stance on public accountability that Craven set out, for so long can it mislead.

In the retirement-fund arena alone, questionable is Craven’s claim that Cosatu (Mahlangu) was in the forefront of lobbying for recognition of black fund members in the dti’s good-practice empowerment codes. If it was, it was kept terribly quiet from union members who’d have benefited handsomely from this ownership initiative. For all Mahlangu’s pressure on financial institutions to increase their direct black shareholdings, there still hasn’t been a single empowerment scheme where indirect black shareholders have participated via their retirement funds.

Similar is Craven’s contention, in defence of Mahlangu, that “Cosatu does not dictate to elected fund trustees or to union affiliates on investments except for policy to provide guidance. This is an issue for fund trustees.” That’s ingenuous. At the least, on the example of the Chemical, Energy, Paper, Printing Wood & Allied Workers Union (Ceppwawu), Cosatu fails to inhibit affiliates from attempting to undermine the independence that trustees are required by law to exercise.

Then there’s the heat on Cosatu general secretary Zwelinzima Vavi for proposing ‘lifestyle audits’ on government officials. Were he implementing them for Cosatu officials, he wouldn’t be displaying a double standard. He’d have found out earlier about Mahlangu. He can still find out, if he wants, whether those under him are as clean as he expects of cabinet ministers. But viva Vavi anyway, for putting the political independence of SA Revenue Services to the test.

Further to rock the boat is the disclosure of gifts in cash or kind. There are commonsense guidelines, produced for instance by the CFA Institute, on cut-offs between amounts that differentiate between say a bottle of scotch and an overseas trip. The former is assumed not to introduce bias and interest conflicts whereas the latter can; as such, it should be disclosed. Parliament has more rigid rules, and retirement funds must have codes of conduct similarly endorsing disclosure.

But disclosure to whom? Where disclosures are made to colleagues scratching one another’s backs, or not available for outside scrutiny, or unpenalised for non-compliance, they’re tick-box formalities.

The purpose of disclosure is to minimise opportunities for corruption. Where disclosure is required but avoided, let the non-disclosure be criminalised. And, since it takes two to tango, let not only the receivers but also the givers of gifts be compelled to disclose them; not merely for recordal in minutes of meetings seen by an inner circle, but out in the open where anybody who wants can read them. Like on websites that service providers (givers) usually do have and pension funds (receivers) certainly should have.

Okay, so these suggestions are fanciful. There’s too much vested interest in perpetuating our merry ways. Mahlangu’s parting gift is inadvertently to have exposed systemic defects. Thanks, Jan.

Allan Greenblo,
Editorial Director