Opinion: Corruption is a Major Threat to the Rise of Brics
By Mzukisi Qobo
Posted on 30 March 2012
If Brics countries are to maximise their potential as global leaders, they should demonstrate seriousness in tackling corruption, writes UP Political Sciences lecturer and Business Day columnist, Dr Mzukisi Qobo.
THE idea of global leadership is an enchanting one for emerging economies such as Brazil, Russia, India, China and SA (Brics). With the exception of SA, these countries have earned the attention they have attracted in recent times. In addition to their impressive economic growth, they have fast-growing middle classes, some exercise visible influence over global energy markets and are home to dynamic global cities. They have become magnets for trade and investment, especially now that established economies are sluggish. This is the familiar story.
However, there is a dark side to the Brics that is often overlooked. Critics of the Brics, who always point out that these countries have little in common, ignore their shared underbelly: pervasive public-service corruption. Brics countries fall horribly short of Organisation for Economic Co-operation and Development standards, due to weak institutional mechanisms to combat graft. Companies from western countries are known for greasing palms to facilitate access to large-scale procurement contracts. Comparatively speaking, the Brics are the worst cases.
On a recent visit to India, which coincided with the Brics summit in New Delhi, I noticed that the most exciting point of conversation among citizens was not the summit but how to rid the country of corruption. In India, about 15 whistle-blowers have died since 2010. Sectors prone to corruption are real estate, construction, telecoms and social development. A common denominator in the corruption affecting these sectors is the government bureaucracy.
Russia is gaining notoriety as a mafia state. The cocktail of corruption and a web of incestuous relationships between government officials and big business make Russia an impregnable fortress for foreigners who want to do business there. Andrei Kostin, the CEO of VTB, Russia’s second-largest bank, said recently: "I think corruption and bureaucracy are much worse evils today", and noted it is much the same in China. Russia’s endemic corruption has prompted some western multinationals to cut back on expanding their activities in the country or consider pulling out altogether.
It is only recently that the Chinese political elite has started to take serious action on corruption. Addressing his c abinet this week, Premier Wen Jiabao remarked that corruption is "the greatest danger facing the ruling party. If this issue is not resolved, the nature of political power will change". The Chinese elite is grasping that the writing is on the wall and the masses are growing restive.
Last year, China’s central bank published a report, which it later withdrew, claiming that thousands of corrupt officials had stolen more than $120bn since the mid-1990s and fled abroad. Liu Zhijuan, the minister responsible for high-speed railways in China, was fired last year for receiving $152m in bribes and keeping 18 mistresses, according to a government document.
Although Brazil comes out better than the rest of the Brics countries in its crackdown on corruption, this problem remains intractable in its public sector. When President Dilma Rousseff took office a year ago, she was quick to fire two ministers, including her high-profile chief of staff, Antonio Palocci, whom she inherited from Lula da Silva, for corrupt activities. She has become an unofficial patron of the nascent anticorruption movement in Brazil. Despite these efforts, Brazil still has tolerance for corruption in the public sector. The country is yet to evolve a culture of sending the corrupt to jail, and not just removing them from office.
In SA too, corruption scandals involving public officials in provinces and the central government on the one hand and black economic empowerment tycoons on the other are surfacing. Large-scale corruption in most provinces has severely affected service delivery. The business practices of the African National Congress’s Chancellor House exemplify the ugly nexus between business and party funding, something that could set back the fight against corruption by decades. The ethical bar seems to be very low for a "progressive" ruling party.
Corruption dissolves the social contract between the rulers and the governed and casts their relationship in sharply antagonistic terms. If Brics countries are to maximise their potential as global leaders, they should demonstrate seriousness in tackling corruption. This should be one of the main areas of co-operation among these countries because, as the levels of co-operation between the Brics countries grows, so might cross-border corruption.
Corruption could trigger political and economic volatility. It can lead to widespread social unrest and discourage foreign investment. Menacingly, it facilitates the transfer of resources away from the poor to the pockets of politicians and their cronies.
This column appeared in the Business Day of Friday 30 March 2012.