Cry, The Beloved Country; Let’s Talk Corrupt Leadership
COVID-19 is the pandemic at the forefront of all our minds, but other far-reaching diseases lurk in the shadows, among which is a horribly contagious syndrome among global leaders: corruption. As I began writing this newsletter a week ago, cities across my beautiful homeland, South Africa, fell victim to looting, burning of buildings, vandalism and destructive protests. These riots were incited by the sentencing of former president, Jacob Zuma, to 15-months jail time for contempt of court. The reason for his initial summons before the jury? Mr. Zuma’s refusal to appear before a panel investigating alleged corruption (in addition to charges of rape, fraud, racketeering and more) during his presidency. The former president still maintains a strong base of supporters, who believe this sentencing to be unjustified and who took to the streets in violent protest, leaving more than 40 people dead, stores burned to the ground, and communities fearing for their safety.
While there is much cultural and historical context required to fully form an opinion on this situation in South Africa, the bottom line is that the fandom following this seemingly deeply corrupt leader was responsible for vaccination centers having to close, businesses and homes being destroyed, and the ignition of widespread opportunistic crime by citizens of a pandemic-stricken, poverty-burdened, and inequality-riddled country who are at the end of their tether. The deep irony is that the poor economic situation the country finds itself in could be considered, in large part, as a result of many an alleged misdealing of the former president during his 9-year tenure. While the country’s economic losses and the costs of damages to physical property escalate, they’ll never outpace the trillion Rand losses incurred through his misspending (example: R246 million / $17 million in upgrades to his personal homestead paid for by taxpayer money) and instances of outright government criminality.
South Africa is not alone in this epidemic of corruption. The level of this misspending on a global scale is more than horrifying and it exists across sectors and geographies. In the healthcare industry, the high market value of pharmaceuticals (and in this day and age, PPE) makes the market ripe for shady ethics, whilst in education, bribes for access to top institutions show that it’s not only the developing countries in the world where corruption threatens the very fabric of society. The World Economic Forum estimates that $455 billion is lost each year to fraud and corruption, while other estimates go well into the trillions of dollars. The IMF estimated that if all countries were to reduce corruption to the “average” level of the least corrupt countries (based on the Corruption Perception Index or CPI), $1 trillion would be regained in lost tax revenue per year, or 1.25% of global GDP. When compared to total global healthcare spending, which is in the region of $7 trillion, one has to wonder what problems this money could be solving, rather than creating.
Corruption is the gift that keeps on giving. It rewards unethical behavior and distorts free markets, making it more difficult for good actors to thrive in the face of unfair competition. It’s easier to think about corruption as an issue for the legal, compliance, and regulation professionals, when in reality it is a deeply entrenched and nuanced cultural issue — in countries, court houses, sports fields and boardrooms — which can only be beaten by those in leadership taking an uncompromising stance on integrity.
Hayley Mole, Senior Associate
Word of the Day: Kleptocracy. A government whose corrupt leaders (kleptocrats) use political power to appropriate the wealth of their nation, typically by embezzling or misappropriating government funds at the expense of the wider population. In the U.S., a new bipartisan Caucus has been established against Foreign Corruption and Kleptocracy, which could not be more timely in the face of grand-scale corruption in the wake many governments suspending anti-corruption enforcement mechanisms to focus on dealing with COVID-19.
Can blockchain stop corruption? The World Economic Forum views this technology as one of the most exciting tools in anti-corruption efforts, with disruptive features that can help “anchor integrity in bureaucracies, by securing identity, tracking funds, registering assets, and procuring contracts.” While there are still significant hurdles to adoption and implementation, the potential for blockchain to increase transparency, fairness and efficiency is undeniable.
SDG 16, the UN Sustainable Development Goal focused on Peace, Justice and Strong Institutions, is often forgotten in the colorful array of oceans, trees, buildings and people of the other SDGs. But this Goal speaks to the success of every other SDG and speaks to the also often ignored “G” (“Governance”) in ESG. Gracie Hart said it in Miss Congeniality, and I’ll say it again, what our society needs more than anything else is… world peace.
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