Perspectives spoke to Crispian Olver, a former government official and author of How to Steal a City: The Battle for Nelson Mandela Bay – An Inside Account, to help make sense of the state-capture phenomenon in South Africa. Navigating the intersections of politics, governance and business while trying to “clean up” the Nelson Mandela Bay Metropolitan Municipality, which covers the city of Port Elizabeth, Olver provides striking insight into state capture at the local level.
What was the political context in which you were assigned to help “fix” the Nelson Mandela Bay Metropolitan Municipality?
The politics were quite important – because to undertake a major clean-up you need to have the political commitment and backing to do it.
The ANC [African National Congress] had known for many years that there was a problem in Nelson Mandela Bay. There had been stories of corruption taking place within the context of deep political factionalism within the ANC, and there were a number of media exposés around funds that were being looted. Even the municipality itself had done a whole string of forensic investigations. But what really woke the party up were the national and provincial election results for 2014.
Although 2014 was not a local government election, they could see the results for the metropolitan area. For the first time, party support had dipped down to around 50 percent in a historical context where they had been winning 70 to 80 percent of the vote. The metro used to be this dyed-in-the-wool ANC stronghold with deep historical meaning to the party.
That’s when the party decided to undertake a major intervention, one that involved cleaning up the internal party structures as well as the municipality. On the back of the intervention, they suspended the regional executive committee of the ANC and they appointed a caretaker structure. Then they also moved to replace the mayor and the chief whip and a number of key people on the mayoral committee. In addition, the then minister of cooperative governance and traditional affairs, Pravin Gordhan, brought me in to lead the administrative process of managing the clean-up, doing all the investigations and firing the staff. So, for almost 19 months, I was the point man – the axeman.
What kind of state did you find the municipality in when you arrived in 2015?
It took me a while to develop a full picture. My first three months were really about building the intelligence structures to gain that full picture. I deliberately set out to build links inside the administration, so I’d try and get people that I could trust in the different line departments and in treasury, etc. Then I built up links outside of the municipality – businesspeople, NGO activists. There were some activists in the Ratepayers Association. I even spoke to members of AfriForum [an interest group representing white Afrikaans-speaking South Africans] who had very useful intelligence which they had been receiving from disgruntled old officials in the administration.
The picture that emerged was that of a clique – a criminal clique – that had captured the party and the administration. It was run by ANC regional secretary Zandisile Qupe, who was working in cahoots with a morally devious businessman called Fareed Fakir. Fakir was essentially the banker to the faction. He would provide all of the funds needed for the faction to maintain its power base, with a lot of the money being used to pass down the patronage system. I asked him what it was costing him to run his operation and he said he was having to dish out about R10 million a month.
In capturing the administration, they had focused on three areas. They had effective political control in the council because they controlled the chief whip and had a critical mass of councillors on their side. They also had the mayor under their thumb. And they had a majority on the mayoral committee. In other words, they controlled the political sphere in the administration. Then, in the administrative core, they controlled the city manager. They had the director in the city manager’s office, the head of corporate services, supply chain, legal services and finance. So, they could move a contract quickly – through procurement and supply chain, up through legal services, into the city manager’s office, get it signed, then down to the chief financial officer and get payment effected. And they had people in all the different line departments who were not necessarily on their payroll. Some of them were “independent entrepreneurs”, but they were working with the syndicate. Every department had a scheme running. Human settlements – they were selling places on the housing list. They also worked with housing contractors. Sports and recreation – they were laundering money through the stadium. Finance was obviously where a lot of the stuff ended up, but there were also some schemes like the property rating systems. They were selling discounts to businesses on their rates bill in exchange for a bribe.
How did this clique assert its power?
It’s carrots and sticks. The clique would have numbered at least ten people. This was sort of the command centre of the so-called “Stalini faction” within the ANC. And their control was based on reward, fear and intimidation. The patronage system reached deep down into the party branches that were aligned with them – union members, Communist Party members. In terms of corruption schemes, it was fairly decentralised. So, there are a lot of people out there acting on behalf of the faction and raising money and taking something for themselves. But ultimate decision-making did rest with this core command. ANC ward councillors in Nelson Mandela Bay had a fair amount of patronage to hand out – not only hard cash but also jobs in the Extended Public Works Programme contracts and the like.
The sticks were big sticks. There was a string of enforcers in the municipality who were not averse to death threats or to killing people. A few months before I arrived, the human settlements MMC [member of the mayoral committee] had been about to expose a whole corruption syndicate around housing. He’d built a dossier. He took it to the mayoral committee, and he got a decision to act against the top officials in the human settlements department. Two days later, he was executed.
How important was the role of whistleblowers in your work?
The whistleblowers were integral to the success of the clean-up. It’s extremely difficult to get access to the relevant information without them because they are the most vital link in the whole process. It’s obviously extremely difficult for them to be whistleblowers because any of their colleagues are liable to intimidate them. And, as I pointed out, there’s a huge enforcement capacity attached to the syndicate, which can result in them not just losing their jobs but possibly being killed and their families gone after. So, there are huge disincentives for whistleblowers and very few incentives, other than doing the right thing. Because, if you’re a whistleblower, you’re always at risk of being found out. And if the case is going to go forward, you’re going to be called to testify.
How best can they be protected?
The first thing that I did with all my whistleblowers was guarantee their anonymity. You’ve got to protect them at all costs. You must never do anything without their consent because, first and foremost, they needed to trust me to act responsibly. Secondly, I had to build my reputation as someone who was going to take what they were saying seriously and be able to act on it. The real thing that unlocked most of the whistleblowers was when they could see us moving, taking action and being serious. It’s when the intervention really gets going that the rest of the whistleblowers will start to flock and give you information. That sense of momentum is very important and a little bit of a smoke-and-mirrors thing. We’d stage-manage a lot of our early interventions to create impact and build confidence in the commitment behind the intervention.
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How important are laws that protect whistleblowers?
Legislation that protects whistleblowers is important but has its real limitations in practice. I think far more important is the relationship between whistleblower and investigator. I know there are some legal provisions that say, if someone is a genuine whistleblower in terms of the relevant act, you can’t take action against them as a staff member. But once a manager wants to take action against you, they’re going to find some pretext. I have to say that I’m not fully convinced about legal mechanisms for protecting whistleblowers.
In what ways did state capture impact on service delivery in Nelson Mandela Bay?
The most prominent impact was how services and housing to ordinary citizens in the city broke down. There was this huge housing-delivery programme but, because they were skimming off the housing contracts by cutting corners during construction, the houses were falling apart within a year or two. They’d been skimping on the bulk infrastructure, too. Sewers blocked up and roads and houses would flood because of inadequate stormwater drainage. Due to very little maintenance, the infrastructure that had been put in was breaking down all the time. That encourages a level of informality and even criminality, with communities starting to do their own things. For example, connecting themselves to the electricity because no-one trusts the municipality anymore. It creates a vicious cycle because the municipality loses revenue due to lower electricity sales, so it stops maintaining electricity infrastructure. The losers at the end of the day are the urban poor because the urban rich just progressively buy out of the system.
What were the political consequences?
The political consequence was that traditional ANC supporters either didn’t vote or voted for the opposition in the 2016 local government election. This meant that, between 2014 and 2016, the ANC dropped another 10 percent. They were down to 41 percent by 2016. The Democratic Alliance became the largest party, but without having an outright majority.
How has your understanding of “the state of capture” in South Africa changed following your arrival in the metro?
What Nelson Mandela Bay taught me was how this phenomenon of state capture in South Africa is much more decentralised than we had been led to believe before. The people I was investigating in Nelson Mandela Bay were not part of the Jacob Zuma faction that, together with the business family of the Guptas, had asserted its control at national level. In fact, they were linked into other factions in the ANC. Suddenly, I realised that we’re dealing with a widespread systemic phenomenon which crosses party factions – and indeed it crosses political parties as well. There were a number of other parties in Nelson Mandela Bay that were involved in the corruption, including the United Democratic Movement and some of the other smaller parties. They were actively collaborating in Council. And that’s when I understood that the state capture phenomenon is much more widespread than I’d ever realised.
What are the systemic features that allowed this to happen?
To me, there are at least three systemic features. The one is that, when we started on this constitutional journey, we never really thought about how political parties were meant to fund themselves. As a country, we created a completely unregulated party-funding system. So, there is no obligation for parties to reveal who funds them and no limitation on the amount of hard cash they can receive locally or from overseas. And none of these donors are philanthropic. They’re all looking for some form of advantage. They will say they’re having a bit of difficulty getting this contract through the system, which they think they’ve legitimately won – and they want you to intervene. The unwary politician gets drawn deeper and deeper and suddenly you’re intervening to push a questionable contract through.
The second feature has to do with the slightly “morally agnostic” corporate culture in South Africa. I don’t want to say that all businesses are amoral but there’s a large well-established corporate culture in South Africa that believes the deal is paramount. Whatever it takes to do a deal must be done. That certainly applies to a lot of the property developers.
The third systemic feature is the way that we’ve conceptualised public administration in relation to politics. We were trying to transform an apartheid state bureaucracy and we believed that the vehicle for that transformation was political control. The state put all the power in the hands of the politicians and, as a result, it doesn’t protect senior civil servants who stand up against those politicians. All of our senior civil servants are on fixed-term contracts. At the stroke of a pen, a minister can just fire a director-general and, at the most, they have to pay them out for five years. In municipalities, in that five-year cycle, there’s a constant churn of senior officials who are just not being retained. This makes all your officials highly vulnerable. Plus, you’ve got councillors basically running the appointment processes of senior officials. We’ve developed an overbearing political set of interventions into the administration and what I would call an unhealthy political–administrative interface. In short, we’ve unnecessarily politicised the upper layers of our administration and made it very vulnerable to political whims.
But you also have to consider the broader political context. We talk about corruption and state capture in the modern era, but let’s not forget that the basis of wealth accumulation in the apartheid state was through rent accumulation on a vast and epic scale, which was justified by a racist and patriarchal ideology and defended by this huge military apparatus. So, we came from – I don’t think “state capture” would be the right term – but a shadow state in which the affairs of the state were run from this shadowy intelligence structure, and behind that intelligence structure this completely faceless and anonymous bureaucracy called the Broederbond. It was a morally repugnant and corrupt system. The state worked through all of these proxies, including black local authorities and the corrupt “black-led” homeland administrations. I don’t think you can use that apartheid extractive system as an excuse, but I think we need to be aware of where we come from.
What legal, political and societal changes are required to limit state-capture-type rent-seeking?
I believe that transparency and opening up these processes to public scrutiny has a healing effect – not least because it lets the people on the ground make up their own minds. The big reform, which is now law – although we still have to engage in its implementation – is making all party-funding public. It is going to be a very difficult transition for most of our political parties and I think it needs to be implemented cautiously. At least initially, the focus should not be on trying to expose how bad parties are. Let’s build it incrementally. It’s not going to happen in year one.
Following years of hollowing out under the Zuma administration, reclaiming our criminal justice system – particularly the National Prosecuting Authority – the intelligence services, and the revenue services is critical – not just for national state capture, but also because this is the machinery for ensuring consequences at a local level.
I also think there needs to be some real legal changes. We have to amend the Municipal Structures and Systems Act. This model of executive mayors seriously needs to be reconsidered. I would like us to go back to the old collegial executive-committee model. We also must do away with fixed-term appointments in municipalities. We should set up an independent local-government public-service commission which scrutinises and even takes charge of the appointment of senior managers.
On the more positive side, we do have a marketplace for political ideas that is effective. The 2016 local government elections that resulted in the ANC losing power in a number of key metros showed that we can have transitions of power that do not result in violence. The electorate was able to make some real choices. Although I’m a little bit worried about how the resulting coalition governments have been functioning, I think that good, proper democratic competition is important.
But it’s not just all about the state. It’s the moral economy that operates within the business community. I know these businesses get really desperate. These development projects get delayed and delayed and any further delays can make them go under. In the end, they would be willing to pay any sort of bribe. Hence, we need to free up the development process so it’s not so vulnerable to the discretion of officials.
In the end, I think the real question is: how can we make transformation happen that empowers everyone and not just a narrow elite by questionable means?
