Gordhan warns against kleptocracy

Former finance minister Pravin Gordhan has warned that South Africa could “move dangerously close to becoming a kleptocratic state” unless the character of the economy is changed, a new moral authority is instilled in the country and those engaging in corrupt practices are held to account.

Speaking at a leadership seminar at the University of Johannesburg, Gordhan again called on South Africans to “connect the dots” to gain a holistic view of state capture.

“Let us all tune our minds to this phenomenon called state capture – what does it mean, how does it operate, who are the beneficiaries, what are we being deprived of as a society and as a country, where is this money going?” he said.

Since being fired as finance minister in a midnight cabinet reshuffle by President Jacob Zuma in March, Gordhan has encouraged citizens to question the alleged rent extraction by the few at the expense of the many.

He said that the skewed benefits of globalisation have, in part, given rise to extractive state capture in South Africa.

“Far more dangerously, what we are also having is the capture of key institutions in the state machinery, which either helps you to influence policy direction so that it benefits a few. Or, it in fact ensures that a small clique can actually extract – in our case – billions of rands without being noticed too much… and [that] the national resources are in fact being utilised for the benefit of the few,” he added.

The former minister also pointed to attempts at large scale policy capture elsewhere in the world, such as attempts to roll back the Dodd-Frank regulation on Wall Street reform and consumer protection in the United States. Republican lawmakers are currently backing a proposal to repeal the Dodd-Frank Act, which was signed into law former US President Barack Obama after the global financial crisis in a bid to end abusive financial services practices.

He said the emergence of left- and rightwing populism globally has also “infected” politics in South Africa. This, he said, is evident through the “whipping up of emotions under the guise of and inspired by radical sounding slogans”, which don’t match the reality that will be delivered to constituents.

Gordhan, a proponent of inclusive economic transformation, also appeared to fire shots at advocates for radical economic transformation, including Zuma.

“Economic transformation must be for the benefit of all 50 million people in SA,” he said of this viewpoint. “The others would actually articulate it in a way in which it is designed to mislead people that if we do these extremely so-called radical things they would benefit but ultimately it’s the small elite that actually benefits”.

According to Gordhan, it is critical for South Africa, one of the most unequal societies in the world, to tackle inequality, promote financial inclusion and accountability. He said that a lack of accountability, transparency, discipline and the rule of law would result in growing inequality and economic exclusion as only few would benefit from economic growth.

He also implored South Africans to play an active role in ensuring that the country’s hard won sovereignty is not lost.

“We have a great country to look after. We’ve got to keep reminding ourselves each morning as we get up, ‘this is my country’ – it doesn’t belong to one family living somewhere – ‘this is my country, I have a stake in it, I have a stake in ensuring that it remains true to the constitution of this country’. And all of us need to become active in one way or another to ensure that the sovereignty of our country, which was hard won [and] hard fought for something that we keep in our hands as the people of South Africa,” he said.

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