Where There's a Will There's a Way: How the Corrupt Arms Deal Could Have Been Avoided

By Ebrahim-Khalil Hassen · 25 Aug 2011

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Picture credit: Radio Netherlands Worldwide
Picture credit: Radio Netherlands Worldwide

Two successful bidders - SAAB and Ferrostaal – have provided damning evidence of corruption in South Africa’s arms deal.  

As South Africa focuses on the unfolding evidence of possible corruption, we must however pause and ask how it came to be that we not only entered into deals with these companies, but how it was possible that the decision was taken to spend our nation’s money on the most expensive deals on offer during a period of excessive fiscal restraint. 

It is an issue that may allow us to tackle broader challenges that are euphemistically referred to as “tenderpreneurhip” and “careerism.” Careerism as a concept can be applied to describe those within the ranks of the African National Congress - and other political parties - who attain political positions with the aim of dispensing patronage. The tenderpreneur refers to the recipient of such patronage. 

Fortunately, the outcome is not yet at the level described as the “Effendi Express” by Clem Sunter, which refers to the wholesale capture of public resources. Sunter argues that one of the routes to a “low road” scenario for South Africa would be the complete capture of public resources by corrupt public officials. There are, of course, worrying signs highlighted by Cosatu in its recent report to the Central Committee, which indicates the need for leadership in the fight against corruption.

From Sunter to Cosatu, we should take comfort in the fact that there are good people across the political spectrum from diverse perspectives that share a common concern. There has also been a welcome legislative response, which focuses on ensuring that qualified public service managers are appointed. This is complemented by attempts to interrupt the sometimes-rapid move of employees from the public to the private sector via a measure that can best be described as a “restraint of trade” clause – our government has referred to this as a “cooling off” period.

Sadly though, this legislative response lacks political reinforcement where our government should be building a wide, diverse and strong coalition against corruption, which ensures that public funds are not captured by special interests. The arms deal provides a salient warning of the need for such coalitions.

To sketch the scene - in 1996, Minister Trevor Manuel tabled the controversial Growth, Employment and Redistribution: A Macroeconomic Strategy (GEAR). The strategy entailed extensive and excessive fiscal restraint to bring the deficit below the 3% mark, ostensibly to avoid a debt trap. The impacts were felt in schools, police stations, hospitals and even in private sector employment, as the state didn’t play a strong enough role stimulating the economy.

During this period, government departments undertook complex negotiations and were meant to motivate for additional spending through processes managed by the National Treasury. In some senses this was the heyday of the National Treasury (then called the Department of Finance), as it relished the role of national saviour. Unfortunately, Treasury slashed rather than carefully cut spending, leaving important social programmes poorly funded or unfunded.

Treasury received extensive and lavish praise from organised business, the media and large sections of academia for meeting its targets. In this regard, the question has to be asked, if it was able to curtail social spending, why then was Treasury unable to stop excessive spending on the arms deal?

This question is of great importance because the advantage of the fiscal space created by GEAR, was swallowed up by arms procurement, while other more vital projects with significantly better multipliers were shelved. 

One of the more skilled performances by a government department was the Department of Social Development (DSD). Under the leadership of Minister Zola Skweyiya, the department was able to provide leadership on the need for a comprehensive social security system, even in a tight fiscal environment. Importantly, it developed the argument for an improved pro-poor agenda and found a ready constituency in trade unions, non-governmental organisation, churches and other organisations. Ultimately, it resulted in the extension of the child support grant and the possible introduction of the National Health Insurance.

For all the differences in strategy, there was a shared central concern in Treasury and the DSD - making public expenditure work for the poor. In both sets of fiscal strategies, an expensive arms deal would scupper the realisation of the fullness of their potential.

Taken together, why was a powerful coalition around the National Treasury and the coalition around the expansion of social security unable to make a tactical alliance to put a stop to the excessive spending on arms? There is some corridor talk that has emerged from the process surrounding the arms deal, which indicates that both Ministers Manuel and Skweyiya argued against the proposed arms deal, raising principled objections to it.

Yet, the minsters failed in another respect, as they should have created bridges between their constituencies and mobilised them for a coherent and effective campaign against the arms deal.  

The significance of this issue increases if one considers that fact that over the lifespan of the arms deal, The People’s Budget Coalition provided workable alternatives to redirect spending away from arms expenditure, while still meeting the goals of a functioning army capable of executing its mandate.

Today, as important questions of nationalisation and land reform are being debated, there is a similar danger that faces us. The nature of the debates are such that they will polarise society and due to the unequal nature of our society, powerful coalitions will be built on either side, supporting or rejecting a specific idea.

The economic debate is vital to our society in so many ways, but carries a deep danger. As passion and political work is focussed on these important questions, the ensuing divisions will be utilised by tenderpreneurs to extract whatever it is that they can.

There are several possible responses to guard against such an eventuality, but it requires a difficult tactical posture to implement – it would see robust debate on questions of redistribution with a fluidity to regroup when interest groups see the need to channel public resources in the right direction. 

Otherwise we may just find that the debates are moot, because the tenderpreneurs have taken over.  

It is thus vital, as we deepen the debate on inequality, that it includes a substantive discussion on the capturing of public spending by special interest groups. Most obviously, let us be certain that the shadowy connections between politicians and corporations never again trump the public interest. 

Hassen is the founder of Zapreneur and Proposal Desk, both websites aimed at answering the question, "Can the Internet help South African small business?"

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