Perspectives #01/2019: Robbin’ the Hood: Inquiries into State Capture

The term “state capture” is enjoying a renaissance. In the late 1990s, it was coined by World Bank analysts to characterise the transitional democracies from the former Soviet Union. Today in South Africa, “state capture” is used to characterise the nine-year presidency (2009–2018) of Jacob Zuma. It has been an important rallying point in public discourse and has also focused the efforts of multiple stakeholders to discover the extent of corruption and to hold Zuma and his collaborators accountable. In 2018, following the recommendation of former Public Protector Thuli Madonsela, President Cyril Ramaphosa appointed Deputy Chief Justice Raymond Zondo to lead a judicial inquiry “into allegations of state capture, corruption and fraud in the public sector, including organs of state”.

Zuma is said to have been “captured” by the Gupta family, three brothers who reportedly fixed the appointments of cabinet ministers and board members of state-owned companies, who then channelled lucrative contracts their way. As the Zondo Commission grinds through week after week of excruciating testimony, ordinary South Africans are losing their capacity to be outraged. Indeed, the spectacle of grand villains and their scandalous “shenanigans” can overshadow important questions about the capture of state institutions – including intelligence, prosecution and revenue-collection authorities – and the consequences over time.

What exactly is state capture? Even in South Africa, it’s hard to pin down. Following the World Bank’s example, academic Tom Lodge defines it in a narrow technical sense as “efforts by very particular private concerns, individuals even – not business in general or broad sectoral groups – to shape the regulatory domain that affects their commercial operations”. Colloquially, it takes on a broader sense, as the subversion of state institutions to benefit powerful interest groups while compromising the state’s ability to realise itsconstitutional social and economic commitments. Consequently, competing ideological and political actors can accuse each another of state capture. Those in Zuma’s camp argue that the former president’s tenure was actually a disruption of the historical “capture” of the South African state by “white monopoly capital”, and was done in the name of “radical economic transformation”.

This edition of Perspectives tackles questions of state capture, and how the concept can contribute to understanding and strengthening democracies across Africa. Our contributors also open the possibilities that emerge when “state capture” is released from particular institutional settings and national boundaries.

In the opening article, Tracy Ledger provocatively asks whether a different version of state capture could be a good idea in South Africa. She argues that the allocation of public resources is never a neutral affair and motivates for a bias towards social justice and economic equity. Here, the state-capture framework draws attention to the nature of the democratic state, its powers and its relationship with private interests and dominant groups, as well as to the need to understand and utilise these to serve the people, particularly those who are most marginalised.

From Kenya, Gladwell Otieno explains how the state-capture lens helps to clarify why multiple efforts at reform have yielded few real gains in accountability. In her estimation, “state capture” enables a more systemic analysis of the strategies of corrupt elites, and consequently shifts our understanding and the terrain for potential responses.

Such systemic analysis would also shine light on Nigeria’s oil industry, as described by Mark Amanza. In this case, as in South Africa, the veil of “indigenisation” was used to enrich the connected few, many of whom then cynically sold their shares to foreign oil companies.

Likewise, El Hadji Malick Sy Camara draws attention to the complex and symbiotic relationships between Senegalese political elites, state agency officials and private media that enable grand corruption and consolidate their political power, even as theypresent themselves as champions of the fight against corruption.

Other contributions address the long tentacles of state capture in both execution and impact. Crispian Olver describes the web of corruption that captured the city of Port Elizabeth, demonstrating that state capture in South Africa is a much more decentralised phenomenon than most believe. Systemic features, including unregulated party political funding, allow patterns of capture to emerge at varied locations and levels of state power.

Niren Tolsi tells of South Africans who tried to do the right thing for themselves and their communities but eventually gave up and gave in to the cutthroat culture of business and politics. The attitudes and practices that were entrenched in the Zuma era killed the aspirations of many decent business people and civil servants.

From Kenya, Jerotich Seii testifies to the ruinous impact that the capture of Kenya’s electricity sector has had on the general public. Ironically, Kenya was held up as a positive example during the South African debate on liberalisation in the energy sector. According to Seii, however, the sector has been captured by cartels of private and public actors who shape policy, rig tender processes, and collude to ensure their continuing dominance and impunity.

Critically, as emphasised here by Mamello Mosiana and Michael Merchant, any analysis of state capture is incomplete if it fails to understand how it is enabled by private sector institutions. In particular, banks, lawyers and accounting firms provide the financial infrastructure to divert, launder and conceal dirty money. While the World Bank’s analysis of state capture focussed on national economic structures and political transitions, this piece exposes the fundamentally international nature of the enabling infrastructure, which is often based in the leading developed countries. This important truth often disappears from analyses of state capture, thereby concealing important corrective actions that must be taken. In July 2019, for example, activists staged a protest at the German consulate in Cape Town to draw attention to the German rail technology company Vossloh AG, whose subsidiary is alleged to have fraudulently secured a tender worth EUR200 million.

In these expanded forms, the concept of state capture grounds a more systemic analysis that takes in the local and international actors, networks and strategies that conspire to loot and immobilise states, thereby creating devastating consequences for people, economies and natural environments. We hope that this edition will work towards the emergence of thinking and approaches that will prove effective against the Hydra of state capture.

Jochen Luckscheiter
Programme Manager

Keren Ben-Zeev
Deputy Director