International expert Daniel Kauffman, an economist and social scientist from Chile, gave evidence on the impact of state capture. Kauffman and another academic colleague, Joel Hellman, have for decades, studied and researched the state capture phenomenon across the world. Kauffmann said that state capture came in many forms and had many people from the private sector who “shaped the rules of the game”.
Recession, high unemployment rate and a negative credit rating were some of the catastrophic results of state capture on a country, the commission of inquiry into state capture heard on Wednesday.
“They can shape the rules, policies, institutions and regulations that could make the State function or not. State capture in its extreme form, is when it becomes the State itself,” said Kauffmann.
Possible persons that could be captured include a State president, ministers, government officials, councillors and the judiciary. Kauffmann said there could be many state capture enablers and intermediaries that are not easy to identify.
“These are important ‘facilitators’ of state capture and can include finance and tax advisers, private accountants, international traders, lawyers and so on. It is not easy to identify as the challenge is one of doing a proper, in-depth diagnosis of every country, if that is done – a proper investigation processes accompanied by political will and resolve – it should be possible to identify those facilitators.”
In some countries, the captors control facilitators and can ultimately seize the State. The mafia, drug traders and powerful illicit economic interests can play a role, said Kauffmann.
Potential sectors that can be captured include energy, industries such as mining, communication channels and the military. Kauffmann added that sudden sponsorships and donations, establishments of charities and foundations, illicit political finance and financial benefits for dependents and family members and the members of the executive, are the red flags for potential state capture.
The dire results of state capture can be seen in a country plunging into a recession, the erosion of the economy which can also affect a country’s borrowing capacity and economic competitiveness, increase in unemployment and social grant dependency, and the devastation experienced by the poor.
Commission chairman Deputy Chief Justice Raymond Zondo asked Kaufmann for his views on what can be done to create a regulatory framework to protect bureaucrats such as director-generals if they do not follow instructions to do something wrong from their “political master”, referring to a minister, and risk losing their jobs.
“Is there a framework that can encourage director-generals to say no to any instructions that directs them to do wrong or to say no to state capture and corruption without being vulnerable to being transferred to another department or losing their jobs?” asked Zondo.
Kauffmann said one mechanism, that of the use and protection of whistleblowing, can be easily implemented but would not always bear intended results.
“Even if there may be the good intention on paper on whistleblower policy, the person [whistleblower] might have serious doubts on whether he or she will be fully protected. One would not want that undue pressure from his or her masters, but there should be a situation where the director-general is able to say ‘do you know that I could end up in jail if I do that?'”
“A deterrent would be to make sure there are serious sanctions, allowing the director-general not to think twice about doing anything wrong on instructions.”
He added that even after investigations are completed and findings made, impunity continues to rule if the captors are not brought to book.
Source: IOL News