Why public sector corruption is more worrying than its private sector counterpart

A few weeks ago, Transparency International published its annual Corruption Perceptions Index, which reported that South Africa has fallen to 72nd out of the 177 countries surveyed, sliding far from the 43rd position it held a few years ago. With corruption costing the country billions of rands, it’s clear that more must be done by public officials to curb this scourge. Perhaps the most interesting point that Cynthia Schoeman of Ethics Monitor makes in this interview is that there is a reason why it is more appropriate to focus on public, rather than private sector corruption. As she points out, when a particular private company is corrupt, its clients and suppliers can usually go elsewhere. But in the case of government, taxpayers and citizens cannot rely on other organisations to provide the services government is meant t, like healthcare or public safety. That, she argues, makes corruption in the public sector much greater menace to society than private sector corruption. – FD

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ALEC HOGG: Corruption eats into the wealth of our country – any country, indeed – and since 1994; South Africa has lost 675 billion rand due to corruption. I’m not sure how they work that out, but it’s a big number. The country is now ranked 72nd on the league of the most corrupt countries in the world. We were 43rd only six years ago, 43rd being better than where we are at the moment. In the studio with us today, is Cynthia Schoeman from Ethics Monitor. It’s interesting, the position of our country is at 72nd out of 177, and that was put together by Transparency International, where do they get their numbers from?

CYNTHIA SCHOEMAN: You know it’s an index that they’ve run for many years now…I forget. I’ve looked back to 2001 and in fact, it is quite an extensive survey that is conducted within constituencies within the country and that particular index – the corruption perception index – measures the perception of public sector corruption, which is why it’s of such particular interest. The scale is zero to 100. One hundred is perfect; zero is obviously dreadful, so below five is really moving into the more corrupt end of the scale.

ALEC HOGG: Below 50…

CYNTHIA SCHOEMAN: Below 50 or course, and South Africa, regrettably, has consistently been below. As I say this year, out of 177 countries…as you can see, we are 72nd and that is our lowest ranking relative to other countries over the period. We have consistently gone down in terms of that ranking.

ALEC HOGG: How much of that is real? Remember that it is a perceptual index. How much of that is because we have a free press and we can talk about these things?

CYNTHIA SCHOEMAN: I’m sure that’s a factor, but I would argue that certainly, in many other countries, the growth of free press has not been dissimilar to ours, so I don’t in fact think that this is a huge differentiator.

ALEC HOGG: So we are sliding…

CYNTHIA SCHOEMAN: I really believe we are sliding yes, unfortunately.

ALEC HOGG: We have someone special like Thuli Madonsela – a public protector. Maybe she can help reverse this trend.

CYNTHIA SCHOEMAN: Honestly, if we could clone her it would be an incredibly good idea. We need public high-profile figures like these, who are visibly acting to make a difference. However, for all the difference that it makes, unfortunately; for evey high-profile figure who is seen to get away with something, for whom the law doesn’t fully apply, for whom the conviction doesn’t actually follow through, it really is ‘one step forward and two steps back’. I’m afraid we certainly have high-profile figure’s who are countering that effect.

ALEC HOGG: We had our day of prayer and reflection on Madiba’s life yesterday, and if you think of his values and you think of the values that are reflected in this corruption index they are not congruent.

CYNTHIA SCHOEMAN: Indeed, for me the issue is of integrity, and the issue of reconciliation that is so much a part of that legacy, is very much about taking into account the views and the needs of others, and accommodating that. For me, the essence of the ethical leadership that Madiba so embodied, is really that he was a leader for the people. He was truly…the term ‘servant leaders’ is used, sometimes the term ‘being a steward’ is used. Those are really leaders where one is not leading for self-gain, where one is not leading for one’s own status, but one is truly using that leadership capacity to provide and empower others. That to me is truly ethical leadership, which he certainly did embody.

ALEC HOGG: You mentioned that the index is to do with the public sector.


ALEC HOGG: How is the private sector doing?

CYNTHIA SCHOEMAN: You know there was a wonderful column written recently about the private sector and the particular journalist was accused of only focusing on the public sector – great article, as I say. The reply was ‘of course there’s private sector corruption’ and went on to list it. However, the really excellent point that was made was if we look at private sector corruption versus public sector, the investors/the clients in the private sector can actually choose to go elsewhere. They can say ‘we’re not investing in that company. We’re not dealing with them’. The analogy in the public sector is really that the investors are in fact, the taxpayers and the clients are the citizens, and there’s no choice. You don’t get to choose not to pay your taxes because you think, as you say, that they’re being wasted to a huge extent. Therefore that lack of choice – if you want – in the public sector, really is a sound argument for saying ‘we’re not disregarding private sector corruption’, but being locked into the government when it’s happening at that level…the impact is just massively more.

ALEC HOGG: I think we can all buy that, but also, when you scratch the surface in the private sector…I’ve just seen too many examples of a mindset of ‘let’s just sweep it under the carpet and no one will know about it’, so that never really gets publicised. The private sector has the best spin-doctors that money can buy – public sector…not so, and that’s really the thrust of my question. Is the private sector doing any better than the public sector in this area of corruption, or is it kind of endemic throughout society?

CYNTHIA SCHOEMAN: I wouldn’t like to pass the judgment that it is throughout society. However, the other perspective to take into account is if we look at the high-profile incidents corruption around Tenders…the other side of that part is almost always the private sector, so I think we shouldn’t be naïve to that – that it really does extend, in each case, to both parties. I think that the issue of looking at ethics is something that is starting to take greater ground, if you want, in the private sector and it is prompted by King 3. The new Companies Act, with the Social and Ethics Committee, is making some further requirements of businesses that is raising the profile of ethics. I certainly find in my work, that the level of real insight into workplace ethics is still quite low, but I am seeing an increasing intention to say ‘what should we do here?’ Arguably, it is driven by the very high cost of ethical failure that is very visible for organisations

ALEC HOGG: Cynthia: thank you as always, for those wonderful insights. That was Cynthia Schoeman, Managing Director of Ethics Monitoring & Management Services