South Africa is a land of stark contrasts, and one of the most visible examples is how legislation is applied differently across various sectors of the economy. The financial services industry is one example where the screws are tightened inexorably as time goes on, and the end is nowhere in sight. For others, and particularly where the government is in control, a separate set of rules seem to apply.
Unfortunately, both under- and over-regulation are threatening to strangle the geese that lay the golden eggs.
Two kinds of people
In the sixties, as a schoolboy, I could safely catch a train to Cape Town to watch movies. My scant pocket money did not allow for luxuries, so I watched repeats of old movies in a bio-café where, for R1, you could watch the movie and get popcorn and a cold drink thrown in.
One movie I can still recall watching three times in a row (it just kept repeating) was The Good, the Bad and the Ugly. In one of the early scenes, Eli Wallach, on horseback, leads Clint Eastwood, on foot, into the desert. When Eastwood is about to pass out from the heat and thirst, Wallach throws him a shovel to dig his own grave.
“In this world there are two kinds of people; those with loaded guns and those who dig. You dig.”
It was heartening to read that one of the aims of the FSCA’s current survey is to determine the impact of financial reporting requirements on the sustainability of financial advice practices. This was also a consideration when the Retail Distribution Review was first mooted, but it appears that, just like some of the RDR proposals, it evaporated in search of more ways to regulate an industry that was quite capable of toeing the line, in most instances.
Sophisticated schemers who understand how to bypass rules and regulations to feather their own nests will always be with us. Some of the biggest financial swindles were transacted under the noses of the authorities. By the time they were uncovered, the damage had been done.
Nonetheless, administrative penalties were at least issued, which was a much quicker way of meting out justice in a country where abuse of the legal system allows crooks to get away with serious crimes by exhausting all the avenues available to them. Although the calculation of these penalties appears to be cloaked in mystery, at least something is being done.
The other side of the coin
Legislation does not prevent crime. Nowhere is this more evident than in what came to light in the Zondo Commission of inquiry into state capture. Regulations relating to procurement were simply ignored in the gold rush to self-enrichment of self and cronies. Political murders are being committed in order to get into positions of power from where the state’s coffers can be ransacked, with little fear of being caught, or if so, being successfully prosecuted.
But this is not the only leak in the dam wall. Take a simple example such as what happened when the government tried to assist the poorest of the poor during the Covid pandemic and resultant unemployment.
According to a BusinessTech report, the Department of Social Development said that 1 174 people were suspected of having unduly benefited from the social grant system, leading to cases referred to law enforcement. Most of those identified were from the department itself, with 761 officials implicated in fraud and corruption.
A December 2021 report from the Office of the Auditor-General identified that at least 5 812 public servants fraudulently applied for and received the R350 Social Relief of Distress grant, at a cost of R5.8 million.
The country waits expectantly to hear what the president is going to say about the recommendations of the Zondo Commission. Whether it will cause a commotion or just be another “shocked” whimper, the biggest challenge does not lie in dressing the criminals in orange overalls, although it will provide some semblance of relief.
The tail wagging the dog
The current dispute between the transport sector and the trade unions is yet another example of the lack of insight or concern for the welfare of the country and the economy.
No doubt bolstered by the capitulation at Eskom, when the government caved in to demands by the unions for unrealistic salary increases, the same outcome is expected here in view of the massive impact on the economy, particularly at a time where the mining industry, specifically, is prevented from benefiting from the boom in commodity prices by Transnet’s utter failure to provide the required infrastructure. Typical of this “loaded gun” attitude is the response by a senior official at Transnet when confronted by the mining industry about this, something like: we don’t tell you how to run your mines; don’t tell us how to run our railways.
What to do?
What is needed is a moral compass recalibration, but with important elections coming up in the next few months and years, the question is whether the political will is there. As when the ruling party previously held its conference to elect a new leader, the dirty tricks departments of various factions are launching an all-out attack, particularly those who have already benefited from dubious deals and now face exposure.
Projections are that the impact of the lack of service delivery will be reflected during the upcoming elections.
Until then, the best approach is possibly to follow the example of the guy who said he was so shocked when he read about the ill effects of drinking that he gave up reading.
Well said, cannot agree more!