Just how deep do price-fixing and collusion run in corporate South Africa? Is corruption a problem confined to government and the public sector? I asked myself these questions a week ago after reading in a Sunday newspaper that some of our big construction firms are alleged to have been involved in these practices.
The revelations were explosive for a number of reasons. First, they come from an alleged confession by one of the industry players. If the confession is true, then the adage that there is no honour among thieves is certainly valid. The truth always has a way of coming out.
Second, given the length of time these practices are said to have been going on, one wonders why it has taken so long to get to the bottom of this malfeasance. Not that we are anywhere near a proper understanding of what has been going on, but for a practice like this to continue undetected for years says a lot about the efficacy of our laws.
Third, the figure involved, R30 billion, is quite staggering. In cases where government projects were involved, it means taxpayers possibly paid higher amounts for these schemes. Money that could have gone towards basic services and other national priorities went to line the pockets of big corporate entities. That should outrage citizens.
Fourth, these revelations show that, despite the continual propaganda about the efficiency of private markets, they are in fact riddled with corrupt relationships and cartelised price-rigging.
A few years ago, Judge Willem Heath warned that corruption was more rife in the private sector than in the public. He stated that corruption is committed by greedy rich people in the private sector, some of whom take millions of rand out of the country to avoid paying taxes.
At the time, some thought he had a vendetta against the private sector, but we have seen too many instances of price-fixing and collusion in the recent past to simply dismiss his claim as unfounded.
Not so long ago, there arose the issue of bread price-fixing by some of South Africa’s largest and – up until then – most respected companies. That scandal, in particular, was the worst example of how the poor, given that bread is largely their staple food, can be abused by corporate power. The bread scandal, and others before it, were a warning to us as South Africans to strengthen regulators like the Competition Commission and build strong consumer groups that will challenge corporate power.
Even with regard to the construction industry, there were murmurs as early as 2009 of collusion being the cultural norm of businesses operating in that sector.
The country’s then Competition Commission head, Shan Ramburuth, told a Business Unity South Africa anti-corruption forum that bid-rigging is widespread in the construction industry. Firms, he said, collude with each other and they decide in advance who will win a tender determined by the manner in which they bid.
It does not take a legal eagle to see that price-fixing and collusion are ultimately a form of theft. When money is diverted from the national fiscus because of over-pricing, those who are doing it are stealing from us all.
Citizens, civil society, religious leaders and the media must express their outrage at such practices. The government must ensure those who do it are investigated and arrested. Our prosecution authorities and the courts must then ensure they are sent to jail.
The moral to draw from this episode is that private near-monopolies cannot be trusted, and a thorough review of our laws and the accountability of power – be it corporate, government and, dare I say it, religious – is needed to regain the stability, trustworthiness and integrity of our institutions.
But it is not all doom and gloom in the business world. We have corporations and individuals who display the highest sense of ethical behaviour and obligation to society.
I was touched recently when I read about Mr Patrice Motsepe and his wife, Dr Precious Motsepe, donating a significant portion of their wealth to social causes. Here is a family that has built wealth in a clean manner and is now donating part of that wealth to worthy endeavours. They go into my book of exemplary and worthy citizens.