They Eat Money’: How Mandela’s Political Heirs Grow Rich off Corruption

Norimitsu Onishi And Selam Gebrekidan, New York Times, April 16, 2018

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In the generation since apartheid ended in 1994, tens of billions of dollars in public funds — intended to develop the economy and improve the lives of black South Africans — have been siphoned off by leaders of the A.N.C., the very organization that had promised them a new, equal and just nation.

Corruption has enriched A.N.C. leaders and their business allies — black and white South Africans, as well as foreigners. But the supposed beneficiaries of many government projects, in whose names the money was spent, have been left with little but seething anger and deepening disillusionment with the state of post-apartheid South Africa.

While poverty has declined since the end of apartheid, inequality has risen in a society that was already one of the world’s most unequal, according to a recent report by the World Bank and the South African government.

South Africa has a large, advanced economy, an aggressively free press and a wealth of independent organizations and scholars who keep a close watch on government malfeasance. But even with its vibrant democracy, in which the details of corruption schemes are routinely aired and condemned by the news media and opposition politicians, graft has engulfed the country.

The nation was governed for nine years by the scandal-plagued President Jacob Zuma, whose close ties with the Gupta family — three Indian brothers at the helm of a sprawling business empire built on government contracts, including the dairy farm — outraged voters. Their cozy relationship contributed to the A.N.C.’s recent electoral losses and helped lead to Mr. Zuma’s ouster two months ago.

Promising a “new dawn,” Mr. Zuma’s replacement, Cyril Ramaphosa, has said that he would make fighting corruption a priority as the nation’s new president. But he is also a veteran A.N.C. insider, and the early signs have not been encouraging.

Having become party leader by a razor-thin margin, Mr. Ramaphosa has tried to keep together a fractured A.N.C. by moving cautiously. He formed his first cabinet by appointing some well-respected officials, but also included allies — his own and Mr. Zuma’s — who have been accused of corruption by the Public Protector’s office and good governance groups.

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National prosecutors, often criticized for being servile to the sitting president, say they are trying to recover more than $4 billion lost to corruption related to the Gupta family’s undue influence on Mr. Zuma’s administration.

And that is just a small measure of the corruption that has whittled away at virtually every institution in the country, including schools, public housing, the police, the power utility, South African Airways and state enterprises overseeing everything from rail service to the defense industry.

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The endless scandals have also raised serious questions about the complicity of major Western companies, with multiple investigations scrutinizing the role they may have played in enabling corruption and weakening the country’s institutions.

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SAP, the German software behemoth, is being investigated by the United States Department of Justice and the Securities and Exchange Commission after it disclosed payments to intermediaries on state contracts that may have contravened the Foreign Corrupt Practices Act.

International banks have been ensnared in the scandals, too. {snip}

Many trace the deep corruption in the nation to a fundamental flaw in South Africa’s transition from white rule to democracy a generation ago. In the grand bargain struck between the apartheid government and the A.N.C., headed by Nelson Mandela, a transfer of power was carried out peacefully, disproving predictions of civil war and earning Mr. Mandela accolades as a visionary peacemaker.

But the deal was reached on what many South Africans today consider Pyrrhic terms: The black majority was allowed to control politics, but much of the country’s economic resources, including land, has remained in the hands of white South Africans and a small group of other elites.

In the early years of A.N.C. rule, Mr. Mandela and other top leaders, who had helped defeat apartheid but had no personal savings, received houses, vehicles and money from white business leaders — essentially bribes, critics say.

A smattering of influential figures, like the current president, Mr. Ramaphosa, amassed extraordinary wealth. They were allowed to buy shares of white-owned companies on extremely generous terms and invited to sit on corporate boards. They acted as conduits between the governing party and the white-dominated business world.

Some of the A.N.C. leaders who were left out of that bonanza quickly found a new road to wealth: lucrative government contracts. The public tap became a legitimate source of wealth for the well connected, but also a wellspring of corruption and political patronage, much as it had been for the white minority during apartheid.

Over the years, Mr. Zuma and his allies, while never admitting corruption, often played down its corrosive effect on society and emphasized the need to redistribute wealth to black South Africans. {snip}

While Mr. Mandela is still revered in the West, his legacy is regarded more critically in South Africa, especially by some young black people. To them, he sold out the country’s black masses to the white business elite.

Even some of Mr. Mandela’s longtime supporters struggle to defend the deal that he struck to bring democracy to South Africa. Ultimately, it left most black people in poverty while benefiting a small elite, including the chief negotiator during the talks, Mr. Ramaphosa.

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As in so many other townships, the level of local corruption can be quickly gauged by the quality of government housing for the poor. In one of the most common sources of corruption, money and building materials are diverted from a housing project, often leaving behind shoddy dwellings for poor residents who have waited years or decades to move out of shacks.

In a new outpost of the township, single-family government houses were so poorly built that many have collapsed, while new houses are being erected on shaky foundations and frames, with deep cracks spreading across extremely thin walls.

In many ways, the area is a microcosm of the enduring economic imbalance in South Africa. Nationally, black people make up 80 percent of the population, but most remain shut out of economic opportunities. White people, accounting for 8 percent, retain an oversize influence on the economy.

Nearly all of the commercial farmers around Vrede are white, as is the main government contractor. In the adjoining township, black people operate small taverns and basic carwashes. But in the town of Vrede itself, white people still own all of the faded buildings on the main street, where they — along with immigrants from other African nations and countries like Pakistan and Bangladesh — operate shops. Black people, who were not allowed to live in the town under apartheid, now own or rent only about 10 percent of its residences.

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In the late 1990s, officials were purged from city government and replaced by A.N.C. appointees with little experience. The purge, which occurred at all levels of government across the nation, contributed to the corruption that emerged toward the end of Mr. Mandela’s term.

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Taxes are mostly collected by the national government, and the money is redistributed to the provinces, where it is spent with little oversight. Free State — a rural economy where black people remain dependent on the A.N.C. for jobs and government contracts — has remained a stronghold for the party even as it has lost support among middle-class black voters in urban areas.

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In Free State, some who spoke out against public corruption were suddenly killed in circumstances that, even in a country with widespread violent crime, aroused suspicions.

Moses Tshake, a provincial government auditor who inquired about projects in the agriculture department, was killed in a carjacking in 2013. In Warden, a town where Mr. Zwane has a large home, Vusi Mlaba, a politician who had campaigned against corruption in public housing, was fatally shot a dozen times just outside his home in 2016. Police investigations resulted in no arrests in either case.

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Last December, A.N.C. delegates from all over the country chose Mr. Magashule, Free State’s longtime premier, as the party’s secretary general — one of the top four positions in the party. Mr. Magashule had been one of Mr. Zuma’s fiercest backers, along with two other provincial premiers who became known in the South African news media as the “premier league.” They had endorsed Mr. Zuma’s chosen candidate as the A.N.C.’s next president.

But, at the last minute, one of the premiers, David Mabuza, switched sides, handing a narrow victory to Mr. Ramaphosa. Afterward, Mr. Ramaphosa made Mr. Mabuza — whose province, Mpumalanga, became known for political killings and endemic corruption during Mr. Mabuza’s decade as premier — the nation’s deputy president.

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As Mr. Ramaphosa pledges to clean up the South Africa he has inherited from Mr. Zuma, this case will test his capacity to do just that. A spokeswoman for Mr. Ramaphosa said he was unavailable for interviews.

One of the would-be beneficiaries, Adam Khatide, 55, retired early from his teaching job believing that the Vrede dairy farm would take off. In the fallout, he lost faith in the power of his vote.

“It’s voting for nothing,” he said. “Just taking people, putting them in office, and then they eat money.”

When democracy arrived for black people in 1994, Mr. Khatide drove elderly neighbors to voting stations, where they elected Mr. Mandela as the first president of the new South Africa.

“We managed to bring democracy, which is not working for us now. It’s working for individuals,” Mr. Khatide said, laughing. “I cannot cry. When I’m crying, it’s just the same. It’s better I must laugh.”

[Editor’s Note: Many of the “snipped” sections recount details of corruption involving a dairy farm that readers may find interesting.]

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