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Stopping moral decay in its tracks

07 May 2010 Gareth Stokes
Gareth Stokes, FAnews Online Editor

Gareth Stokes, FAnews Online Editor

What can we say about modern day South Africa? As we scan the daily news it seems the beautiful country is in the grips of irreversible moral decay. The death of strip club owner Lolly Jackson epitomises the ‘fence sitting’ morality of the average citizen

At this stage there are simply too many unanswered questions. Police investigators need to find out what Jackson was doing at the Kempton Park house on the night he was killed and find out what the men argued about. Joe Public needs information too. They’ll be wondering how Smith – in what’s best described as an emerging ‘high profile’ crime trend – had the number of a senior police commissioner on speed dial. Smith allegedly placed a call to the high-ranking policeman to admit to the shooting. The ‘man in the street’ will also want to know why so many ‘businessman’, crime lords and commissioners are so inappropriately linked. We expect this case will create a web of ‘association’ similar to the erstwhile Brett Kebble murder and the ongoing Jackie Selebi case.

The ethical mind and the corporate citizen

Pension Funds Adjudicator Charles Pillai has applied his mind to questions of ethics and morality for some time. In his previous career, as FAIS Ombud, he had to rule on numerous questionable practices in the financial services industry. Perhaps Pillai’s presentation at a recent Acsis event – a polished discussion titled: The Ethical Mind & the Corporate Citizen – can shed some light on South Africa’s moral dilemma. After defining ethics as ‘moral choice and the values backing such choices’, Pillai concludes: “We are failing to uphold our ethical and moral obligations as individuals and corporate citizens.” He singled out financial planners and trustees of institutional assets as individuals occupying positions where the concept of ethics and trust are inherent.

Ethics and morality are deeply rooted in concepts such as ubuntu and humanism, says Pillai. The Zulu greeting sawubona (I see you) and response ngikhona (I’m here) embodies the ubuntu principle. “Those two words – I see you and I’m here – until you see me I don’t exist – you bring me into existence by seeing and recognising me.” Humanism acknowledges all citizens of the world as a single family in which all should share peace and prosperity equally, without any distinction. “These systems don’t have need for complex agreements, regulations and code of conduct,” he adds. The need for laws and regulation stem from greed and selfishness, which originate in the modern construct, the corporation!

The Devil’s Dictionary describes a corporation as “an ingenious device for obtaining individual profit without individual responsibility!” A look at the big corruption stories since South Africa’s democracy suggest a complex mix of corporations, businesspeople and politicians hell-bent on maximising profit regardless of whose rights they trample.

No morality or ethics in financial scams

Financial scams are borne of individuals obsessed with generating excess profits in the shortest time possible. They think nothing of risking investor’s money in their drive for self enrichment. Pillai shared a number of examples of unethical behaviour in the financial services space, including the giant Madoff Ponzi scheme. How, asked Pillai, could an investment house purportedly managing $70bn of investor funds be run by a single accountant out of a one-room accounting office? International money managers with the reputation of Fairfields invested hundreds of millions of dollars without the slightest attempt at due diligence. And how could Madoff’s close relationship with the US Securities Exchange Commission not raise a ‘conflict of interest’ alarm? It seems people will take risks with clients’ money for as long as financial benefit flows to them!

South Africa has witnessed its share of financial scams too. Fidentia remains the largest in recent times. Almost three years since the scheme collapsed the ‘kingpins’ remain ‘free’ to go about the business of daily life. Corporate Money Managers (CMM) is under administration by curators after allegations of fund misappropriation and fraud. And Progressive Asset Management is going the same way, apparently unable to repay its pension and provident fund commitments. Greed is causing havoc for long-term savers. Dealstream – a contract for differences trading house – fraudulently created the impression that its instruments were regulated by the JSE.

An unlisted share scheme in a company called GAREK caused investors to lose millions more. Pillai reports that a broker, one Andre van der Merwe flogged shares in the scheme at R2.50 each with the promise they would trade a R20/share upon listing. Of course the promised listing never materialised and investors were left clutching the proverbial straws. “Of the R74m collected from investors only R299 000 remained,” says Pillai. Van der Merwe collected in the region of R4.5m in commissions!

Moral leadership required


Fraud, corruption, tender rigging and white collar crime is so rife at the moment you can be excused for thinking ethics and morality have no place in the ‘new’ South Africa. The country needs a strong leader to lift it from this moral wasteland. The moral regeneration campaign was a great idea; but it needed someone other than President Jacob Zuma at its head. Zuma’s chequered past means he has limited credibility. His latest transgression – rubber stamped by cabinet – was to violate the executive members’ ethics code by failing to declare his financial interests, assets and liabilities in time.

His party, the African National Congress (ANC), seems unable to stem the corruption bubbling in its own ranks either. Reports about Hitachi power, tender fraud, politicians with business interest and shocking corporate governance at state-run enterprises flood the papers daily. The latest moral slander is that a convicted hijacker was allowed to stand as an ANC candidate in a municipal by-election in KwaZulu-Natal. Despite being informed of the situation the party refused to withdraw their candidate – clearly votes and ‘seats in power’ are more important than a principled stance.

Editor’s thoughts: The outcomes of recent high profile prosecutions suggest there are elements in our society who are effectively above the law. The ruling party seems to be making a concerted effort to undermine the rule of law, or at least engineer a platform from which it can wield the law to its advantage, and opposition parties seem powerless to stop them. What do you think South Africa needs to do to restore ethics and morality? If you have strong views on the topic, please share them below, or send them to gareth@fanews.co.za

Comments

Added by Quinten Knox, 18 May 2010
Ethics and morality are deeply rooted in western philosophy. Since we are living in a rules bound financial services environment, what is the point of introducing concepts such as ubuntu and humanism? How, asked Pillai, could an investment house purportedly managing $70bn of investor funds be run by a single accountant out of a one-room accounting office? Well, how would a Zulu greeting prevent financial scams?, It certainly has not prevented the Zulu members of government from commiting chronic fraud and ceaseless corruption? The fish rots from the head...
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