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Corruption and fraud Africa's weapons of mass economic destruction

Oct 26 2017 13:04
Nceku Nyathi

Institutions and broader society have a crucial role to play in terms of encouraging and promoting ethical behaviour to boost business and the economy, says Dr Nceku Nyathi.

ALMOST every day we read about politicians and business executives involved in acts that show a lack of integrity, morality, and ethics.

In South Africa, a string of corruption scandals involving President Jacob Zuma and graft allegations implicating state-owned enterprises continue to dominate the headlines. Evidence of graft has also been piling up against multinational companies implicated in the leaked Gupta emails, notably KPMG and McKinsey.

It seems that ethics is a casualty in the pursuit of financial gain. But this Faustian trade-off has implications for the long-term health of business, the economy and the country.

It has been estimated that SA loses between R25bn and R30bn each year to corruption, incompetence and negligence in the public service, never mind the reputational damage that deters foreign investors.

According to the South African Business Ethics Survey published in 2016, a majority of corporate SA is still not serious about integrating ethical behaviour into their culture, but remains focused on regulatory compliance.

Ethics Institute CEO Professor Deon Rossouw noted, during the release of their survey, that SA’s poor economic performance as well as the general slump in the world economic environment were factors facilitating unethical behaviour.

“Our study shows that businesses typically have ethical codes of conduct … but the pressure to meet unrealistic financial targets is probably another reason for many unethical decisions and actions,” he said.

Auditor general Kimi Makwetu has challenged this point of view, stating: “[True] ethical leaders do not compromise their standards for material gain.”

This begs the question: Can we make bad people good by teaching them about moral conduct or moral theories?

Over 2000 years ago, the philosopher Socrates argued that ethics consisted of knowing what we ought to do, and that such knowledge can be taught.

Morals, honesty, integrity are generally constant throughout society. It is the conduct of individuals that changes. The behaviour of individuals tells us about their level of morality and their moral standing.

Speaking at the Allan Gray Speaker Series at the UCT Graduate School of Business (GSB) in October, Michael Louis, the director of the Louis Group International and a founding member of the African Christian Democratic Party (ACDP), said ethical standards differ from one individual to the next.

Wrong is wrong and right is right

“Every one of us has a different ethics standard… It is about your standard, not somebody else’s standard. Set your own standards, [but] wrong is wrong even if everybody is doing it and right is right even if nobody is doing it.”

Speaking at the same event Graham Power, founder and executive chairperson of the Power Group of Companies and the Unashamedly Ethical campaign, pointed out that ethical considerations are key to the success of any business.

“I am of the view that when doing business deals you have to ask yourself: ‘How will this make me feel if it is published on the front page of the newspaper and my wife and kids found out?’…that, for me, is the true test of whether something is a grey area or not in terms of ethics.”

He said that people know what’s going on in the country. “It’s Gupta leaks, it’s Eskom, it’s bribery, it’s corruption and collusion, back and forth. I believe we will get to the point where it will no longer be fashionable to do whatever is necessary to drive the nicest car, to live in the best house.

Power added that placing greater emphasis on developing ethical leaders would help eradicate corruption, which is holding the county back.

“Corruption and fraud is the largest weapon of mass destruction. We will not eradicate poverty in Africa unless we eradicate systemic corruption.”

While there is no instant solution to addressing corruption and developing ethical leaders in business, civil society, and government, there is no doubt that educational institutions have a crucial role to play in terms of teaching and promoting ethics, good character, courageous stances and moral choices.

Marcus Tannenberg, one of the authors of the Poznan Declaration, a formal statement aimed at mainstreaming ethics and anti-corruption in higher education, said that universities need to use their influence to address “the causes behind the causes” – that is, the determinants of corrupt behaviour, which likely has its roots in the value systems of decision-makers at various levels within the public and private sector, many of whom have been educated at universities.

The broader society and the home also have important roles to play. In a 2010 article published in the Journal of Values-Based Leadership, Joseph Hester and Don R. Killian argue that we cannot speak about ethics and moral behaviour without talking about community and the home. They claim that moral values are learned early in life and direct our purposes, beliefs, and values as we mature.

“The financial debacle of 2009 confirms that many in leadership positions feel that this is a ‘me-first’ world and are apt to live by principles of greed rather than the moral principles they have sworn to uphold. There is an urgent need to dig deeper, to ensure that children first grow up with a proper understanding of right and wrong through a study of morals and ethics.

"If we expect our children to grow up with a respect for the rule of law, which needs to be seen as fair and equitable for all, then we need to teach them about making moral choices and having a value system as a basis for their decision-making,” Hester and Killian pointed out. 

Without proper ethical considerations, they argued, we are in danger of society becoming increasingly fragmented and unstable as self-interest overshadows the public good.

“We cannot put everyone in a single moral universe but we can teach them about cause and consequence, about the value of charity and community and about having values that are not able to be measured in material terms alone.”

  • Dr Nceku Nyathi is a Senior Lecturer in the Allan Gray Centre for Values-Based Leadership at the UCT Graduate School of Business.



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