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Umsebenzi Online

Volume 15, No. 42, 23 November 2016

In this Issue:


Red Alert

The "State of capture" report: What does this mean for the Constitution and Chief Justice Mogoeng Mogoeng?

By Alex Mashilo

We must combat corporate and all other forms of private capture of pubic power and resources. One space that we must safeguard is our Constitution, recognising that the Judiciary - and particularly the Constitutional Court or Con-Court - is the final arbiter on related matters. To this end, we must not leave our Constitution in the hands of constitutional experts alone because it applies to all of us with equal force. This view must be carried into future generations too and be taught to our children, who should master the Constitution by the time they complete schooling. It is within this context that we need look at the "State of Capture" report of the former Public Protector Advocate Thuli Madonsela.   

The report states that President Jacob Zuma could not institute a judicial commission of inquiry into the problem of the capture of state authorities and entities by private interests because the President was possibly a subject of investigation himself. This argument was premised from what he is attributed to have said. According to Madonsela, it was the President who said he could not carry out the evaluation himself lest he be accused of being judge and jury in his own case. She then prescribed that the Chief Justice must "solely" select a judge to head such commission.

The SACP was the first organisation to introduce the concept of corporate capture in our national discourse, expressing serious concerns about the influence or control of corporate interests in decision-making, policy and regulatory spaces. Ours was the first organisation to call for a judicial commission of inquiry into corporate capture, but made it clear, the commission would have to be established and work consistent with our Constitution. If the President had appointed the commission when the allegations first remerged, or when the call for the commission was first made, we would not be in the situation where the former Public Protector had to look to remedial action and set her own terms among others for how the commission should be appointed.

The synopsis of corporate-capture

Corporate capture occurs through the influence and control of public power or public organisations by corporations - essentially bourgeoisie organisations - in pursuit of private wealth accumulation interests of their owners. It can occur either in part, affecting targeted strategic levers or positions of power, or, as its logical conclusion, in whole. Corporate capture also occurs on the one hand through political and business connections created through proximity between decision-makers or those other decision-makers that they have either appointed or do influence directly or indirectly. On the other hand it is driven by corporations that seek to or do benefit from the decisions made by those decision-makers.

Corporate-capture also occurs through the creation of separate entities that are structured along the lines of "special purpose vehicles", or through business dealings involving at least one member of the respective decision-makers' families, relatives, their undisclosed interest holders, or "sleeping partners". Its avenues include corporate lobbying for or funding of certain individuals in contested decision-making processes such as tenders, elections or appointments for public office or public organisations. This is where the problem of opaque party, political and candidate funding as discussed by SACP First Deputy General Secretary Comrade Jeremy Cronin (Umsebenzi Online Vol. 15, No. 39, 3 November 2016 and Vol. 15, No. 38, 27 October 2016) constitutes an entry point for corporate capture. But corporate capture also occurs through foreign funding, with its influence, destined at public programmes or offices.

As a manifestation of capitalist competition and dominance through oligarchs, oligopolies or an outright monopoly, corporate capture finds doorways in outsourcing and privatisation, mining and other licences and tenderisation in general. All of these, including the use of the so-called service providers, are not limited to the state.  

On 30 November 2014, the SACP in its Augmented Central Committee statement said: "There are also widespread indications of money politics at play and even of business people having a direct hand into appointments into key positions within the state". This clearly describes one way in which corporate capture is manifested. The phenomenon is directly prohibited in our Constitution. In terms of Section 96 (c) of the Constitution, Cabinet members and deputy ministers "may not" - "use their position or any information entrusted to them, to enrich themselves or improperly benefit another person". This principle also applies to the President as the Head of the Cabinet and the Executive Authority of the state. It applies, too, to any person holding public office!  

In the statement, we warned that unless corruption and corporate-capture were dealt with severely, these two problems risked becoming systemic and difficult to reverse. There had to be "decisive state action including criminal prosecution of those allegedly involved in corrupt activities", said the Party. We then called for anti-corruption state intervention to be combined with active communities and a mobilised working class united in perspective and action. 

Others joined in by narrowing the concept of corporate capture to that of "state capture". But corporate capture and the tendency to exploit incumbency for private gain are not limited to the state. These problems are to be found in political and non-governmental organisations, trade unions and academic institutions, the media and other key sites of power.

Inquiry into corporate-capture

The argument by Madonsela, and apparently the President, that he could not appoint a commission of inquiry into corporate-capture because he was a possible subject of investigation, must be examined from the standpoint of our Constitution and the history of its implementation.

The President instituted the commission of inquiry, better known as the Seriti Commission, to investigate allegations of fraud, corruption, impropriety or irregularity into the arms deal (Strategic Defence Procurement Packages), and the Marikana commissions of inquiry, while he was a possible subject of investigation. There were allegations levelled directly against him in both cases in courts, Parliament and the public respectively. The selection and appointment of the judges who headed the two commissions by the President was never declared to be unconstitutional by any court of law. If Madonsela and the President are right on this matter, then there may be serious legal implications to both the arms deal and Marikana commissions!

Judges must act independently of the authority that appoints them. This is what we believe they have been doing all along - unless the Chief Justice later agrees with the logic shared by Madonsela and the President in suggesting that we were wrong to believe so.

It might later be proven to be unconstitutional for the Chief Justice to select a judge for a commission of inquiry. This function has after all been exclusively reserved for the President in our Constitution. In this regard perhaps Madonsela obtained a legal opinion saying it was not unconstitutional for the Chief Justice to select a judge to head the commission. We do not know.

What we do know is that, as the Con-Court has said this year in the Nkandla case, state organs must apply their minds thoroughly, not second-guess each other. And all their actions - not excluding the Public Protector's remedial action - must be consistent with the Constitution. It is doubtful that it is constitutional to institutionalise the idea that a Judge appointed by the President cannot act independently of the President. The Con-Court may find itself called upon to adjudicate should a dispute arise from the work of a commission of inquiry headed by a Judge solely selected by the Chief Justice.

There is another arm of state affected, and which would not be required to adjudicate on a report of a commission of inquiry if a dispute arises around its contents. That is Parliament. In terms of our Constitution, Parliament must exercise oversight of the President and the Executive. Why did Madonsela not prescribe, provided this is constitutional, that Parliament, or in addition after consultation with the Judicial Services Commission, should rather recommend a short-list of names of judges from which the President could appoint?

There is a legal concept of a point in limine, Latin for a preliminary point that could be raised before a case is heard. A potential or material conflict of interest could arise here, affecting the Chief Justice as the Head of the Con-Court if the argument by Madonsela and the President is followed to the letter. The President has a legal right to take Madonsela's report up to the Con-Court for review. Would the Chief Justice, should that happen, tell the President: "I have a legal right in terms of the powers vested in me by the Constitution, to select a Judge for you to rubber-stamp as head of a commission of inquiry?" 

If the Chief Justice were to say so, the President may be entitled to ask: "In terms of which provision of our Constitution, Sir, because whoever I appoint as a Judge is required to act independently in the same way as I appointed you? By the way, your appointment my Lord was made to appear controversial by those who alleged that you were going to pay allegiance to my person. Are you saying that you are not acting independently of me, my Lord, simply because I appointed you? What would this imply about the other cases you have already presided over affecting me?"

Noting the aforesaid, it is important to acknowledge the significance of a person holding an important position affecting a decision-making process to recuse themselves where there is a chance of a material or potential conflict of interest. The rules must clearly prescribe a mechanism that must take over when that happens. While this does widely exist, it appears not every office is appropriately covered as seen through the example of the President and Madonsela's report. This could in part be what brought us to the terms she set: that the Chief Justice should select and the President should merely give formal consent to the appointment of a Judge to head a commission of inquiry into corporate-capture. If this was to be proven to be constitutional, it would constitute a law-making precedence with a substantive contradiction: encroachment into the powers of Parliament!

It is however important, flowing from the above, to recognise that Madonsela prescribed as a remedial action that Parliament must review the Executive Members' Ethics Act to provide better guidance regarding integrity, including avoidance and management of conflict of interest, and that the President must ensure that the Executive Ethics Code is updated in line with the review of the Act. This could produce an important intervention in terms of Section 136 of the Constitution, which states that "Members of the Cabinet and Deputy Ministers must act in accordance with a code of ethics prescribed by national legislation".

Viewed holistically, the whole situation could be pointing to the necessity for a constitutional amendment. Except under the regulated instance of an Acting President, the Constitution does not provide for the transfer of the functions or powers vested in the President to another person. Sections 97 and 98 of the Constitution are limited to the transfer by the President, of the powers and functions of one Cabinet member to another. It is doubtful that it will be constitutional to use a piece of legislation or regulation to transfer to another person a function or power vested in the President by the Constitution.

Comrade Alex Mohubetswane Mashilo is SACP Spokesperson, and writes as Full-time Professional Revolutionary. A shorter version of this intervention was first published by Independent Media tittles on 18 November 2016.


Umsebenzi Online is an online voice of the South African working class