Crotty,+Star,+05-06-08,+is+graft+the+price+of+growth



=State must decide whether graft is the price of growth=

Business Report, Johannesburg, June 8, 2005

 * By Ann Crotty**

How sad and how ironic that just weeks after President Thabo Mbeki urged the country to debate the applicability of the Irish model to the South African situation we should be faced with a high-profile court case in which the issue of the corruption of politicians is placed firmly on centre stage.

As an aside, it should be noted that whatever model we investigate in our bid to spur desperately needed growth, one thing is certain - the whole messy issue of government, business and corruption has to be clarified.

The government must send out an unambiguous message as to what is acceptable in the potentially enormously profitable relationships that exist between business and government.

While most of us might think that this is unnecessary because surely we all know what is right and what is wrong, the sad reality is that, unless a clear and specific message is sent out, the slick sophistry of people on the make will define what's acceptable.

Equally sad is that given the sorry state of corporate governance and the frenzied drive for short-term profit, the onus is on the state to define what is and is not acceptable in its various and complex business dealings.

And for those of an amoral inclination, the important thing to remember about corruption is that not only does it make a mockery of the democratic process, it generally results in a suboptimal outcome for the broader economy. In a word, it is inefficient.

As the single largest spender of money in any economy and with control, through the various regulatory processes, of even more, it is crucial for most companies to get on with government.

This power has been one of the major driving forces behind the implementation of black economic empowerment in this country, just as it was the impetus behind Malaysia's bumiputra policy.

Application of that model in Malaysia has, of course, degenerated into crony capitalism, but has not prevented the country from notching up quite impressive rates of economic growth.

But getting back to Ireland, for those South Africans who tend to take a perverse pride in the belief that our corruption levels are unique and will appal international investors, the fact is that corruption between businessmen and politicians has been a significant characteristic of the Irish model for decades.

For those who do not wish to trawl through the coverage of the many tribunals that investigated this activity in the nineties, a recently published book by Diarmaid Ferriter called The Transformation of Ireland 1900-2000 will fill in some of the gaps.

According to Ferriter, the sixties saw the emergence "in political circles of unabashed capitalists, who were prone to use their political affiliations and connections to become richer".

The major political party at the time "attempted to institutionalise the connection between rich business and politics with the formation of Taca, in which businessmen were given access to ministers in return for contributions to party (and personal) coffers".

However, towards the end of the sixties the younger party members were becoming increasingly resentful about the huge wealth being amassed by the then minister of finance, Charles Haughey, chiefly through corrupt property speculation.

Ferriter describes Haughey, who went on to serve as prime minister for several years, as "undoubtedly an exceptional minister in various portfolios", but adds: "He was also to become the most polarising, controversial and corrupt politician of his generation."

It was only in the nineties that the wide-scale political corruption that had prevailed for so long in Ireland became a topic for open discussion. "Money and the abuse of power in its pursuit came to dominate the headlines in the second half of the 1990s."

However, as Ferriter notes, the wrongdoers who were being investigated by the many tribunals that had been set up "could take comfort in the fact that the tribunals were not courts of law".

He also argues that tribunals were an indictment of the earlier lack of investigation.

A BBC producer who investigated the beef corruption case in 1993 concluded: "There was far too much indulgence in Irish society of unethical behaviour and malpractice ... A culture of silence prevailed."

Amazingly, the full truth of this particular case could never emerge because the Irish supreme court ruled that the interest of government confidentiality took precedence over the public interest.

What our government must decide is whether the corruption that seemed so much a part of the growth of Tiger economies, including the Celtic Tiger, is a requirement of that growth or whether it might have delayed or restrained growth. One thing is certain: in a corrupt society the benefits of growth are severely skewed towards the corrupt.

And for the Afro-pessimists among us, it's important to take note of the judicial process we've just witnessed as well as the unrestricted coverage it received.

Meanwhile, it would be great to hear Jacob Zuma's version of this case and even greater if that version allowed scope for the continuation of what is, by most accounts, an outstanding political career.


 * From: http://www.busrep.co.za/index.php?fSectionId=553&fArticleId=2549667**