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Capturing the state

The abrupt end of the apartheid system and the advent of demo­cracy in 1994 posed many challenges for the incoming ANC as custodians of the state and its people. The larger part of the history of the state in South Africa thus far had been that of a state constituted to exclude the majority of the population. With the collapse of apartheid, the ANC had to consider the question of how the party ought to relate to the state, and the entities and people within it. The ANC often maintains that during its fight against apartheid, the party was simultaneously preparing to govern and thinking about the necessary institutional framework to achieve this.1 Quite often, the party refers to its 1992 policy document ‘Ready to Govern’2 as evidence that the party had reflected on the challenges of governing even while engaged in the armed struggle against the apartheid government. It is important to reflect on whether the party’s idea, that it has always been ready to govern, has been realistic, and what governing would entail as the party sees it.

Governing involves a systematic way of relating to institutions of authority, and of directing those institutions to achieve a set of goals. If a governing party fails to direct institutions to attain a set of agreed-upon goals, the institutions will take on a life of their own, and can be vulnerable to takeover by the powerful. The contest for state control would be one of the daunting tasks for the new ANC-led government. Here was a party with no experience of peaceful coexistence with the state, and then suddenly the party had to move the state in a desired direction. This exercise could have resulted in the ANC either being fully in control of the state, and therefore achieving its desired policy goals, or in the party constantly fighting to influence the direction of development within the state. That the ANC could capture the state did not necessarily mean that the party would direct that influence towards the public interest. The ‘Ready to Govern’ document does not see the possibility of the ANC itself being used to hijack the state towards the interests of the few. The document sees a benevolent ANC, acting mostly in the public interest. This suggests that the ANC sees the detractors to its policy objectives as coming from outside the party only, and not from insiders. Perhaps this explains why the party has not demonstrated any real plan to deal with internal problems.

During the Zuma presidency it has become clear that the ‘enemies’ of the ANC could well be nested within the party. Zuma has demonstrated that it is not only outsiders and right-wingers who are interested in capturing the state; it is at times ANC insiders, such as Zuma himself, who have become proxies to attempts by interest groups to capture the state. Yet, the news that the Gupta family has been running the state from the sidelines, through their influence on Zuma, has invoked only denials from the ANC. It is evident that the ANC’s idea of state capture is framed in the context of colonisers and those aiming at regime change. This is a very narrow perspective.

The ANC has always had the suspicion that one of the challenges the party could face in the post-apartheid dispensation would be a business community that remains nostalgic about apart­heid.3 The idea that ‘apartheid capital’ was no longer comfortable with the continuation of the apartheid system did not convince the ANC that it would welcome ANC-led democratic governance. It was the ANC’s perspective that apartheid capital only became concerned when apartheid policies began to pose limitations to access to the cheap labour required by the private sector. Historians such as Hermann Giliomee4 have documented how the continuation of apartheid was becoming an inconvenience for the private sector. Further, international sanctions meant that South African companies could not trade freely outside the country. That the apartheid system denied the majority of the people an opportunity to earn a good livelihood by fully participating in the economy also implied that only a small section of the population could financially support local companies producing goods to be sold in South Africa.

There are those who argue that one of the reasons why the apartheid system collapsed was because the private sector was no longer willing to support the apartheid state. The ANC noted this point, but the party also realised that it would have to wrest control of the state from the private sector, to ensure that the party controlled the state in terms of the delivery of public goods, such as education, health, safety and security. From the ANC’s point of view, the economy remains a crucial factor for the capture and control of the state. Therefore, influence on the private sector is of critical importance for the ANC. Lack of influence on the private sector is a frustration that is littered all over the ANC’s policy documents, with the party calling for ‘the second phase of the transition’.5 How, then, did the party seek to retain control of the state apparatus, including the economy? This is an interesting tale with remarkable twists that indicate the strength of the law of unintended consequences.

Convinced of the idea that the inherited apartheid private sector could not be trusted, the ANC sought to build an alternative private sector, otherwise referred to as the Black Economic Empowerment (BEE) project. This project started to take shape under Thabo Mbeki, whose administration sought to transform the economy, dominated by the white private sector, through the creation of new black capital that would fundamentally sympathise with the state’s objectives. To the ANC, this new private sector would wrest control of the state from supposedly hostile forces, and would lodge control in the hands of the ANC. This was a straightforward transition, at least as far as the ANC was concerned. Needless to say, it did not work, for reasons the ANC could not have anticipated.

Transferring influence from the old private sector to a new, more sympathetic private sector was a key policy focus for Thabo Mbeki6 and an essential element of the African Renaissance. From a moral point of view, there is an undeniable need for the transformation of the economy, to ensure that historically black, Indian and coloured South Africans get to play an active role. The original thinking behind BEE might have been altruistic, but the manner in which it was pursued opened opportunities for those with sinister motives to loot the resources of the state under the guise of empowerment. In the end, as is often remarked,7 ordinary people seem not to have gained much from the empowerment policy. But, most importantly, uncritical pursuit of black empowerment exposed the state to capture in a way that it is not yet completely acknowledged.

While the first group of beneficiaries of BEE emerged during the tenure of Nelson Mandela, a sizeable part of the black empowerment community came into being and thrived under Thabo Mbeki’s regime. With some level of sophistication, and taking a jibe at the idea of continued domination of white capital in South Africa, Mbeki’s project of creating a generation of BEE beneficiaries was well defended and did not spark outright public opposition. Mbeki was implementing ANC policy, a policy of normalising capital by ensuring that the black community is also reflected as a beneficiary. Today we can point to the likes of Patrice Motsepe and Cyril Ramaphosa as some of those who benefited from the first phase of the BEE project.

The idea of using government policy to create a sympathetic class of business has failed, and has left a legacy in which the capture of the state has become the motivator for accumulation by interest groups. When the ANC policies under Mbeki created a community of BEE beneficiaries awash with money and eager for further accumulation, it became clear that for this process of accumulation to be intensified, it was necessary that the state be under the control of ANC policy-makers who would then set new targets. The first generation of BEE beneficiaries showcased that it is possible to accumulate through capturing the state bureaucracy and then redistributing resources in line with desired goals. The appetite for this pattern of accumulation, as generated from the Mbeki era onwards, also brought with it the realisation that state capture is a powerful political ideal.

‘State capture’ is a euphemism to describe a situation in which the narratives, the direction and the value system of a society, including patterns of accumulation, are under the control of an elite group. A World Bank discussion document defines it as ‘[t]he efforts of a small number of firms (or such groups as the military, ethnic groups and kleptocratic politicians) to shape the rules of the game to their advantage throgh illicit, non-transparent provision of private gains to public officials’.8

The ANC’s policy of BEE under Mbeki was carried out in a way that sought to exert control on the state, its value system and its grand narratives. One cannot just accumulate and push for a project such as this without adopting the necessary narrative through which such projects are justifiable and defensible in the eyes of ordinary people. For the political elites to continue to have a chance to wrest control of the state and its narratives, they also need a strong entry narrative to open the way for their initiatives. Transformation is a legitimate objective, and transformation of the private sector into black hands is a more specific way of going about this. The rhetoric of transformation was amplified by ANC policy thinking under Mbeki. Transformation is a genuine objective for a democratic South Africa. After all, it is essential that the end of apartheid actually meant the end of domination by a small section of the population in the economy and other areas of life. In practice, however, for the ANC ‘transformation’ means capturing the state by creating a sympathetic business elite who will assist the party to further influence the direction, values and also the narratives within the state. A reading of Marxist theory9 shows that business elites within the state often behave in the same way, even if they were created for a different purpose.

For example, by creating new black elites through state apparatus, the ANC ended up with the classic problem of a class of business people whose creation does not benefit ordinary people or the country as a whole. Even worse, the creation of the BEE class increased the appetite of interest groups to capture the state for their own interests, and not to further the ANC’s transformation imperatives.

When Thabo Mbeki’s administration came to an end, a new group of elites came to dominate the ANC, and just like those before them they wanted a turn at the feeding trough. As their predecessors showed, the state is important in order to sustain a pattern of accumulation that seems to benefit only a few.

By the time Zuma took over as president of the ANC, perceptions of BEE were changing. The suspicion was setting in that BEE might not improve ordinary people’s lives. Many South Africans were waking up to the dim reality that politicians often do not deliver on promises. While Thabo Mbeki rode the wave of Mandela euphoria,10 and used it to his advantage, Zuma had to deal with an angry and disillusioned nation.

Thabo Mbeki presided over state capture; however, his style of engaging with the public did not push the ANC onto the defensive about who was attempting to capture the state and for what purpose. Mbeki himself would probably have pointed out that the state was already subject to capture from foreign and white capital. Thus, Mbeki would defend his project not as state capture but as the freeing of the state from the control of interest groups. Zuma has tried this explanation, but it has not worked for reasons that have to do with his personal lack of credibility and not-­so-convincing skills as an interlocutor. His shot at state capture has merely ushered in a less sophisticated and more abrasive episode of a phenomenon that was underway long before he took over as president. Mbeki the centrist did such a crafty job at this that there was not even a public debate about state capture. Instead, the issue was that he centralised power in his office and was not consultative.

Under Zuma’s leadership, however, it has become clear that the state is being captured to further the interests of his family and his friends, including the Gupta family. The ANC, at least under Mbeki’s leadership, and also perhaps while the party was preparing to govern, probably did not foresee the possibility that its attempts to retain control of important parts of the state in order to achieve its policy goals would be an initiative that could be interrupted by other forces. The Zuma years, particularly the manner in which Zuma has related to the state bureaucracy, have highlighted the reality that the ANC could be used to capture the state in the interests of a few connected individuals, such as the Gupta family. Previously, the idea of state capture was seen as something that could only be perpetrated by Western businesses acting in the interests of foreign powers, such as the United States and Great Britain. This idea has preoccupied the ANC and its alliance partners (e.g., the SACP)11 to a point where it has blinded them to the reality that the ANC itself can be subject to state capture.

The ANC’s suspicion about the role of the private sector in post-­apartheid South Africa is genuine. Also genuine is the party’s naivety about the real threat of state capture from within the party itself. The party will have to wake up to the idea that its own members are potential proxies for state capture, as demonstrated by Zuma’s relationship with the Gupta family.

Having had to confront the reality that there are indeed attempts at state capture, and that the perpetrators are not the usual suspects backed by Western powers, the ANC has resigned itself to the standard explanation that the party is under siege by corporations with the aim of undermining Zuma’s administration in particular, and the ANC government in general. This is how the party managed to find its way out of Zuma’s blunder in replacing Finance minister Nhlanhla Nene with the ‘little-known’12 Des van Rooyen, in December 2015. The decision sent the markets into free fall, with the rand crashing.13 Realising that his decision was disastrous, Zuma capitulated and a few days later appointed former Finance minister Pravin Gordhan to replace Van Rooyen. (At the time of going to print Gordhan was still Minister of Finance, but there was speculation that he might be charged by the Hawks and forced to resign.) Then the spin began as to how to clean up the fallout from a decision that was quantified as having cost financial markets an estimated R500 billion.14

Questions were immediately raised about what could have been Zuma’s reasons for taking such a drastic – and clearly disastrous – decision. It emerged subsequently that the Gupta family had earlier ‘offered’ Nene’s job to deputy Finance minister Mcebisi Jonas.15 Jonas confirmed in a statement, which he read on live television, that the Gupta family had indeed approached him, and offered him the job of heading the National Treasury. With allegations mounting that the Guptas had been deploying ministers to key government positions, the media started zooming in on the issue of state capture. The ANC switched into public relations mode, with the party’s secretary-general, Gwede Mantashe, angrily making public remarks about the danger of state capture and its negative implications for democracy.16

It is very interesting how the Gupta saga reformulated the state capture debate. Some people17 were bold enough to say that there has been state capture since the end of apartheid, and that the main concern with the Guptas is that they do not represent the traditional face of capital, meaning they are neither white nor Western. The concept of state capture then became more abstract. As the debate raged, Zuma gained a reprieve regarding the extent to which the Gupta family have him in their pockets. The ANC initiated an inquiry into state capture, and asked those with evidence to submit it to Gwede Mantashe’s office. In my opinion, it is impossible for the ANC to investigate a case in which the party is itself the main player.

If the ANC was serious about investigating alleged state capture, the party would have opted for an inquiry to take place outside the party. In order to capture the state, it requires that the party be influenced. It is pointless to expect the party to investigate how it has been influenced, particularly if the influence seems to come through the party leader. Even more challenging is the reality that the state does not belong to the ANC, so it cannot be the ANC that investigates state capture. Only credible institutions within the state itself can carry out such an investigation. But from the start it was clear that the ANC wanted to do the investigation itself in order to control the outcome.

It was therefore no surprise when the ANC secretary-general announced that the investigation into state capture had not yielded any results;18 effectively, state capture was not underway, at least not as far as Zuma and the Gupta family are concerned. The SACP was not happy with the results of the inquiry; the party stated that there is a clear case of influence on government by the Gupta family. The leader of the Young Communist League said that under Zuma corruption has been ‘institutionalised and legalised’.19

The closing of the ANC’s inquiry into state capture did not lay to rest the question at hand. The question is, why is the control of the National Treasury so important for the project of Zuma and his allies? It is also necessary to confront the reality of competing interests at the centre of state capture. First, the ANC seems to believe that the party ought to control the state, and that this can be achieved by creating an alternative capitalist class – progressive capital. If this is still the ANC’s belief, it is important to probe the ongoing attempts to bring the Treasury into line. Whose interests are actually served by control of the National Treasury?

Thabo Mbeki shielded the National Treasury from direct political threats or interest groups. An indication of this can be seen in the way Mbeki repelled Cosatu’s and the SACP’s populist criticism of the Treasury for pursuing fiscal discipline. Mbeki’s pursuit of the Growth, Employment and Redistribution (Gear) macroeconomic policy required that the Treasury be shielded from public assault by the left-leaning labour movement.20 This is also because the Treasury was not hostile to any of his projects, including Gear. Even more beneficial to Mbeki was that, during his tenure as president, the general public had lower expectations of accountability, which meant less disruption when it came to implementation of public policy. The idea that a leader and his cabal could squander public resources was not understood as a reality at that time. This was in the wake of the glorious Mandela years, and the government and the political elites were still basking in Mandela’s glory. Under such circumstances, the Treasury was not at a point where it saw the need to aggressively protect public resources from the very political elites responsible for governing.

Under Zuma the picture changed dramatically, and there arose a heightened sense of the need to protect public resources against the dominant political elites. Zuma’s administration ushered in a deep suspicion about the motives of the political elites. This is not to say that Zuma was the first leader to do wrong things. It did mean, however, that his ascension coincided with rising suspicion of political elites. Perhaps this suspicion would have emerged with or without Zuma. Perhaps Zuma was merely unlucky in the sense that his administration coincided with the end of the Mandela glory days. This could also mean that Mbeki’s administration, its policy implementation and worldviews about politics, including race relations, accelerated the end of the glory days, and created the space for the emergence of a brand of politics dominated by suspicion and lack of trust of politicians.

What can be said with certainty is that Zuma’s conduct in government has justified the public suspicion of politicians, and has consequently raised people’s demand for accountability on the part of government. If that is the case, and I believe it is, Zuma’s administration – particularly his aggressive distaste for accountability – naturally drove institutions such as the National Treasury to define themselves against the looting of state resources by Zuma’s cronies. Under Zuma’s administration, the brazen nature of corruption and the violation of rules of accountability have resulted in a situation where state institutions have to take a stand either against or in support of his project. Under Mbeki, the battle was not as openly declared, and Mbeki’s diplomatic nature and evasive stance on issues allowed for institutions to remain relatively neutral towards his project, while effectively not opposing his plans. Under Mbeki, the National Treasury could afford to stay out of the ‘politics of the belly’, because it and other state institutions were not expected to take a position in relation to the president’s plans.

The recent debacle over the control of the National Treasury indicates that the situation regarding state capture has become brazen and transparent, such that many institutions of state have been forced to pick a side. The courts have taken a strong stance by stating unequivocally that corruption is a real scourge, and the Public Protector’s office deserves praise in this respect.21 On the one hand, the prosecution authorities and the police – the crime prevention cluster – have taken a position in support of Zuma, and investigations into matters that could implicate Zuma have been thwarted. On the other hand, the National Treasury has taken a position against Zuma22 by raising the alarm about the high level of corruption, and by questioning proposed expenditure that is blatantly in the interests of the few (read: Zuma’s allies).

This is the reason why Zuma sees it as important to bring the Treasury back under his control. Zuma inherited Mbeki’s Treasury, and he is working hard to convert it. This has pushed the Treasury to take a position, with Finance minister Pravin Gordhan accelerating his crusade against Zuma and corruption in general. Zuma’s attempt to rein in the Treasury in December 2015 by appointing his ally failed, and he was forced to make a U-turn by bringing back Gordhan, who seems to enjoy a good relationship with the markets. It is naive to think that Zuma would give up in his attempt to install a different minister at the Treasury. The president is aware that perseverance is required to complete his project of capturing key government institutions, such as the Treasury. Gordhan’s position as Finance minister is untenable, given that the minister is openly at war with the president. Ministers serve at the pleasure of the president. It seems that Zuma feels the markets hold him ransom when it comes to exercising his executive privilege to decide who serves in his Cabinet; Gordhan is a market minister, and Zuma wants his own man in that position.

Realising that his return to the Finance portfolio has propelled him to stardom, Gordhan has used his position to his advantage. Unlike Zuma, Gordhan has the markets in his corner, and he is also an expert in using the media to build the image of someone who is protecting state resources against the depredations of Zuma and his allies, including the Gupta family. Zuma’s strategy is clearly to isolate Gordhan, by giving him a long rope to hang himself with. By resorting to press conferences and speaking of himself as an ‘activist’, Gordhan has broken the code of allegiance to the ANC. His enemies in the ANC can use this to accuse him of airing the party’s dirty laundry in public, and of being captured by corporate interests.

It is untenable for Gordhan to continue in his position when he is openly defiant towards Zuma’s project. He has raised concerns about the decision to proceed with the nuclear deal with the Russians, openly stating that the deal is too expensive and may not be in the best interests of South Africa.23 He has also sought to deal with rampant maladministration within state-owned entities such as South African Airways.24 Further, he is a nuisance to local government tsars, who are often corrupt and who fail to deliver services for communities. This is too big a mandate to be shouldered by a single department within the executive. Ministers are generally prone to spend more in their departments, and increasing their budgets is a sign of importance. Wastage is part of the commotion. Therefore, one way or another, Pravin Gor­dhan’s Treasury will have to keep on saying ‘no’ to other government departments, since the minister’s return to Treasury is solely justified by his ability to say ‘no’ to maladministration. If Gordhan lives up to expectations from the general public and accountability activists by continuing to say ‘no’ to government departments who waste money, he will eventually find himself isolated even from the moderates within government. This could mean that he will find it difficult to secure backers in government, and it could make his position as Minister of Finance untenable. Zuma has been fighting Gordhan indirectly through the investigation of the minister’s role in the so-called rogue unit within the South African Revenue Service (SARS),25 which allegedly illegally gathered intelligence on targeted individuals. Even if Zuma’s tactic does not work, it is quite possible that Gordhan will eventually tire of the battle against Zuma and resign. The ANC tradition is such that mavericks are not to be tolerated, even if they take a principled stance. The collective wins, one way or another.

The main reason why Gordhan continues to hold as one of the remaining obstacles to state capture is because Zuma does not want to upset the markets in the way he did when he fired Nhlanhla Nene. The concern within the ANC, despite divisions that may exist within the party, is that it is too risky to engage in fights on too many fronts at the same time. The party is struggling to convince ordinary South Africans that, despite the noise made by the opposition, the ANC has a legitimate right to make decisions and govern. The party is concerned with the reality of unemployment, and it has to convince the masses of unemployed youth that it has a solution. There are also the many scandals around Zuma himself, which raise concerns about the credibility of the leadership the ANC provides. All of this dictates that a direct confrontation with the markets is political suicide. Hence the party might wait and fight one battle at a time. In the meantime, the ANC has resorted to the classic explanation that the Treasury is a stumbling block to transformation. It has allegedly been captured by interest groups, the so-called Stellenbosch mafia, who want to maintain their grip on the state through control of key institutions, such as the Treasury. This is flipping the script, but Zuma’s hold on the ANC will ensure that this script gains resonance within the party.

Through his capture of the ANC, Zuma has a good opportunity to reformulate the debate on state capture, and to ensure that the ANC appears to be a victim in an environment dominated by foreign capital and local collaborators. The party’s compliant auxiliary bodies – the ANC Women’s League, ANC Youth League and Umkhonto we Sizwe Military Veterans’ Association – do not need to be convinced of this idea; they are already propagating it. In his route towards ensuring the capture of the state, Zuma first had to capture the ANC, a task he accomplished well.

In order to capture the state, it is necessary to bring key institutions into alignment. Capturing a political party ensures that there is no political recourse against those who seek to capture the state. Capture of the criminal justice system ensures there are no meaningful investigations into corruption and the diversion of state resources. This is a complex project that involves different battles along the way. Zuma’s efforts in this regard began with the capture of the ANC, a necessary step on the road to state capture.