"The Firm": South Africa's Governing Oligarchy

Sometimes, in moments of lapses in the shields of pretense, the ideology of “Billionnairization” of the South African economy is openly expressed. It is the strange economic theory based on the idea that the success or failure of economic transformation must be measured in terms of the number of Black billionaires.

Broad-Based Black Economic Empowerment Commissioner Tshediso Matona has said it is necessary to “dispel the myth” that black industrialist multimillionaires or billionaires should not exist because of the large and growing gap between the wealthy and the indigent.

Now’s here the amazing thing about the South African government’s vision of “a Black billionaire’s club”: These super-rich must not be created through innovation, creativity and value-adding economic activity, but by redistribution; taking from (mostly the White population) and giving to (mostly the identified Black beneficiary group). Well, in reality, that wealth does not exist in the source of its origin, so it cannot actually be “resituated.”  White billionaire has long either left, or transferred most of their health to foreign markets. Farms generally belong to banks, rather than commercial farmers. Even so-called “state support” is based on redistribution, like the Black Industrialist Fund, and the proposed “Empowerment Fund.”

But politics is about perceptions, not reality, and the perception is that there is endless White wealth just waiting to be distributed to connected Black interests. All the rhetoric about the National Democratic Revolution, about redress and the legacy of colonialism, and about land being stolen through the centuries, are not really about empowering the masses of South Africa; it is about retaining the structure and privilege of The Firm, the oligarchy, the crime syndicate carefully constructed over 31 years, and, I suspect, even longer, while the ANC was still in exile.

No doubt, the anger is partly Ideological. There is an expectation among the Revolutionary Left in South Africa that everyone in the country, including (and perhaps especially) White South Africans, must accept their “wisdom”; you know, the repeatedly used and self-fulfilling rhetoric of “the leaders of society”. Ya, well, it was the same wise men that regard themselves as the “leaders of society” that have stolen us rotten, and stripped the country of its fat.

The ANC’s economic ideology is not only socialistic and quasi-communists, but also highly exclusionary and irrational. It is socialistic because of the influence the main policy drivers thereof, which is to its core a communist theory, namely the National Democratic Revolution. The capitalism remaining in the country is a necessity required to serve the greed and self-enrichment aims of The Firm. It is exclusionary because it excludes everybody and anyone not entrenched in The Firm. It is irrational because it is not based on the rationality of modern, or any recognised workable economic theory, but on the pillars of social engineering, including black economic empowerment, employment equity and blind idealism where economic growth will be achieved even if (or perhaps precisely because) all the proven realities of economic rules governing the world today are persistently breached.

“The Firm”

Have you ever watched the 1993 Hollywood movie titled “The Firm?” Tom Cruize plays the role of a brilliant, yet young and innocent law student that are head-hunted by a prestigious law firm, with the promise of huge financial benefits and career prospects. He eventually discovers that the firm is heavily involved in tax fraud and other criminal schemes on behalf of its clients and to the benefit of its partners. Also, it is representing some of Chicago’s most notorious crime families.

But the firm is also a law unto itself, with connections in the judiciary, government, and the criminal underworld. The few elites allowed into its sacred innr0cicrle are extremely rich and influential. And their connections with the bigger, broader regime supporting it, keep it in business and protect it against the implications of its criminal activities.

Anyway, in the film, in the world of make-believe, the hero eventually, through cunning screaming, in collaboration with the FBI, managed to beat the dark underworld on which he was strapped.

The ANC and its tentacles is such a “The Firm”; it is an extended regime of collaborators that operate across political parties, Parliament, the judiciary, the business sector, the security cluster, and the criminal underworld to collect and protect thill-gotten gains. And, if you want to take me on about this comparison and conclusions, go read the reports of the Zondo Commission, and go look at the video of the police commissioner of KwaZulu-Natal.

It will be grave mistake to think that “The Firm” in South Africa is the ANC; it is not. Despite bitter personal infighting, there are beneficiation of collaborators in the criminal regime across political parties. Also, different from the fictitious idealism of the film “The Firm”, in South Africa, The “FBI” will not be one the side of the crime-fighters. Law enforcement institutions, such as specialised police units, the National Prosecuting Authority and powerful state apparatus, are implicit in the activities of “The Firm”. More than 30 years of cadre deployment has led to the creation of a vast network of regime enablers. And these structures spread its wings far beyond the narrowly defined “ANC”, as a political party. It could theoretically be argued that it can be broadly defined within the scope of the “original ANC”, the ANC of 1994, the “broad church” of the ANC.

The Firm monopolises all meaningful economic activities in South African in the narrow confines of its regime and structures. Without the approval of The Firm, you will struggle to get access to the benefits of the country’s economy. Black Economic Empowerment policies are the mechanisms used to establish and exercise control, but, in actual effect, it is about much more than Black advancement. I have noticed through the last 31 years, how privilege in the ANC has shifted, together with regime changes in the party; from Mbeki to Zuma, and from Zuma to Ramaphosa. Every time the dominant faction in “The Firm’ changes, beneficiation patterns changed. Black entrepreneurs (and even tenderpreneurs) that were looking forward to state tenders worth millions of rands, security in the knowledge that they were in the warm embrace of their beloved ANC, all of a sudden found themselves out in the cold, cut of from beneficiation, because the regime has changed, and so has their time “to eat”. Then, for all practical purposes, they are dealt with on equal footing with “non-designed groups”, in terms of BBBEE policies. Obviously, if they have proven themselves to be loyal and useful collaborators, even White South Africans are allowed to benefit; perhaps not (easily) into the inner-circle of The Firm (or not easily anyway), but into the circle of befitting collaborators.

The benefits of being allowed into “The Firm” are enormous. Not only are their untold riches to access, but you are virtually protected from negative consequences against anything you may do, good or bad. The police services will not investigate you for wrongdoing, and if enormous pressure from civil society force them top do so, the second layer of protection will kick in: The prosecuting authorities will take years to prosecute, and do such as bad job, that the courts will dismiss the case. Let me reminder the reader: The final part of the Zo0ndo report was released in June 2022; that has been three years. Nobody in jail, nobody meaningful prosecuted. Several of the accused sits in Cabinet, and even more in Parliament. The Arms Deal scandal broke in 1999; only Shabir Shaik was hold to account and jailed; just to be released after serving two years and four months of a fifteen years sentence. I don’t make this stuff up, it is reality.

There’s another major benefit of membership of The Firm: Monopolization of government tenders and contracts. Government tenders are only given to BBBEE “Level 1” (and maybe “Level 2”) contributors, especially if these tenders exceed, o-well, if I must guess, I would say more or less five million rands. Get one thing about the comrades of The Firm: They are not satisfied to think in thousands of rands; even millions are increasingly being frowned upon, they paly the serious game: Hundreds of millions, and even billions of rands. Actually, doing the work is a secondary concern, which only became part of the equation if forced into it bit too much public scrutiny – and when the original tender-price can be elevated a few times to make good for the inconvenience suffered by the comrade (and perhaps also to recover losses because now The Firm must subcontract another firm, more or less [but better] qualified to do the work). Tender specifications are there for manipulating the adjudication process, and steer the process towards The Firm collaborator (in case the media get hold of it), Dummy, not as a mechanism to evaluate actual performance of the appropriately connected service provider. That we’ll leave exclusively for the few, preciously few, not-connected service provider that actually manage to slip through the cracks – probably mostly in the Western Cape.

The Lack of Value-adding

I had a colleague that use to say about the corruption of cadres, that the reason why it did not lead to the visible collapse of the South African economy, was because the money stolen were circulated and invested in the South African economy, and not shipped outside the country. This was in the years of Zuma administration, soon after the end of the Mbeki Presidency. I must say, at the time, it made sense to me. Even now it does.

However, there is another dimension to the effect of The Firm on the South African economy, and that is a lack of value-adding. Money was channeled to cadres that have monopolised it, and did not invest it productively. Billions and billions of rans were handed over to ANC bigshots since 1994, mainly as an unspoken “agreement” between the South African capitalist class and ANC leaders, as part of the 1990 political settlement (in essence, it boiled down to this: “We will allow you to keep most of your wealth, but the counter-expectation will be that you share it with us”). The recipients of these huge pots of gold handed over, were not businesspersons, not really, they were AMC cadres, nothing more, and mothing less.

At least ten to fifteen new billionaires were created in the South African economy since 1994. How many of them were not beneficiaries of the “redress” taking place in the country since then? How many can be associated with a specific, economic value-adding company or business venture, a new initiative they launched that created additional wealth and job opportunities? I can think of one, which is Herman Mashaba (Black Like Me).

Thing is this: I don’t think that The Firm can care too much about economic growth; what is important, is to grab as much of the available assets; therefore, the demand for “economic transformation”.

The result is, among other, that the Minister responsible for mining does not issue new mining licences, because the non-negotiable is that any participation in the country’s mining sector, must be shared in The Firm, and with the approval of the firm’s hierarchies of preference. Increasingly this net of beneficiation is spread wider and wider, to more-and-more sectors.

In short: The Firm is monopolising wealth and national assets in own midst. In the process, it is withdrawing, or extracting, it from the wider economy. This leads to economic stagnation.

Employment equity is not the primary policy for economic monopolisation by The Firm; Black Economic Empowerment is. Employment equity is an instrument for cadre deployment, and for building the structures of loyalty to The Firm. It is like the fictitious scenario in the film “the Firm”, where the character played by Tom Cruize was lured into the criminal activities of The Firm through personal bonification. In order to be able to do this, The Firm must have control over economic opportunities.

The Firm and the Ideological Circles

The firm operates in a specific context, and not in a vacuum. That context is that there is always the broader population to contend with. On the one side, this population is enablers, because they are consumers, voters, potential supporters, or possible enemies. It is therefore vitally important to get the population on your side. A primary way of doing this, is through ideology.

The broader ANC church has been a socialist movement for the better part of its existence. A large part of its identity, and, importantly, its support among the population, is vested in socialist ideology and racial rhetoric. This, both elements of the pillars of its ideological identity, have been strongly rooted in the history of South Africa, which was racist, and (on the opposite side) support from traditional socialist and communist states. It makes sense; it is not illogical. But it is dangerous. For the purposes of The Firm, it is an ideal instrument to gain and retain support, and therefore “protection” among the population.

The thing with ideology is that it is illogical; it transcends the boundaries of logic and reality. It is primarily emotion-based. You can tell a proponent of socialism a thousand times that the theory of socialism and communism have not worked anywhere in t6he world it has been practiced. Yet, because you will probably also speak to someone belonging to the poor and marginalised in the population, they will simply ignore you. They have been indoctrinated into socialist thought. The intellectuals among them will probably respond with arguments that sounds very well-formulated and ethical, but that have no workable track record at all. But socialism and communism, practical impossibilities, are excellent theoretical constructs.

It’s like trying to convince a scientist in the 12^th century that the earth was not the central point of creation, but the sun. Today, we all know it is true, but then you would have been thrown into jail for heresy, like Galileo Galilei. Community at large simply accepted, deeply rooted in the religious ideology of the time, simply believed that the theory of the Central Earth was the truth and reality. To some extent, that is the case with a sizable proportion of the South African population todays, in terms of a believe of the centralism of the state in one’s prosperity. Basically, it is passive acceptance of the paradigm of “the ANC is the (unquestionable) leaders of society.”

The protagonists in the population are dominated through cohesion and co-option. This is where ideology became crucially important, and the single most important instrument available to The Firm to retain control. Obviously, in a system based on enormous self-enrichment and personal beneficiation, you cannot really practice socialism. What you can do it in the broader population; it cost a lot, yes, in term of the portion of potential loot you must surrender, but it is better than the alternative, which is the loss of control, wealth and privilege.

Co-option is also important. In the language of the ANC, “everyone must get a chance to eat.” Through co-optation, a large portion of the population can be kept more-or-less satisfied, perpetually living in a world of hope and expectation, ever expecting that “my time to eat” will arrive. However, here’s the thing: At the very top of the Firm’s hierarchy, there is a precious small group that never rotate in the feeding cycle, they are continuously feasting. And they have already been enriched to the level beyond loss. (What I mean what that is, regardless of what happen in the future, they have been taken care off).

The problem with this model, is disillusionment. Through time, and gradually increasing disillusionments, those that never get an opportunity to “eat”, gradually loss hope, and turn against the regime. Not only them, but also those that were removed from the feeding trough, mostly because of regime changes. These are the real dangerous revolutionaries, because they are actually experiencing extreme resentment against the members of the replacement regime. And they understand the working of The Firm.

When The Firm started its journey towards total dominance and security in the South African system, its most important antagonists where those that were labelled as “the enemy” from the start, and even from before the transition that put The Firm in position of power. These sections of, and individuals in, the population never had any real hope of benefitting from The Firm. In the case of South Africa, initially, in 1994, this group was permanently White South Africans, and then more specifically White South African males.

However, over time, the ranks of the antagonists swelled continuously, partly because of disillusionment, and partly because of resentment. This certainly does not mean that the antagonists are a unitary group with a common aim; certainly not. For instance, in South Africa the “resentfully” in the uMkhonto weSizwe Party are even more passionately appose to another section of the Antagonists, which are White South Africans, than most in the inner-circle of The Firm. However, the point here is how The Firm will respond to antagonist. There is only one way: Through force, because antagonists endanger the structure and hierarchy; that is, the longevity, of The Firm.

The Firm’s networks are important in two respects, namely it offers protection, such as the co-optation of the security forces. In Zimbabwe, for instance, the support of the Defence Force was crucially important for ZANUPF to retain power. Secondly, networks provide capacity, which may be money, knowledge, or logistical support. Networks are collaborators, not permanent participants in The Firm. They are co-opted through beneficiation, and therefore became sort of “service providers to The Firm”. Generally, you will have to move through the Protagonist cycle, into the Networks cycle, before you will even be considered to join The Firm. And you don’t join by application or desire; you join by invitation.

The State Economy

To think about the South African economic ideology, and policy, as “socialism” will be technically wrong; or rather, not “wrong”, per se, but incorrect.

Consider my thinking about this matter:

“The Firm” stands central. In order for the core membership of The Firm, and its collaborators, and the beneficiation of the networks required to maintain it, to retain their privilege, they are dependent on capitalism. Real socialism will imply that these cadres cannot get access to any riches other than the salaries and state support paid to government officials, based on their formal positions. That is not what they want, not even remotely.

But The Firm need socialism, and then specifically race-based equity rhetoric, to ensure the loyalty of the Propagndsists, and to make sure that this layer of support remains the largest in the population. This provides legitimacy and supress revolt against The Firm. The only way to do that, is socialist ideology. So, for the population, a socialist regime will be implemented. For The Firm, capitalism will be retained. The population collect wealth and assets. The state monopiles assets and resources through centralism and socialism. The Firm controls the instruments of the state. Beneficiaries of The Firm then distribute state assets and resources internally in The Firm in a capitalist manner.

However, there is one condition for this model to work: The state must retain monopoly. This means that the state, as instrument of The State, must have absolute control. This is not entirely true in South Africa. Two of the greatest antagonists of The Firm are the result of this lack f total state control, namely Organised Civil Society and Private Business.

The problem for The Firm is that in the late 1990s, in order to gain state power, the ANC had to agree to a constitution that protects the rights and freedoms of Civil Society. That institution has since produced multiple offsprings that are particularly aggressively guard over, and protect the interests of the pluralism of cultural, social and economic interests in the country. This includes the media and counter-corruption NGOs.  It is very difficult for The Firm to break the power and counter-revolutionary impact of these institutions without breaching the Constitution, which can only be done with extreme potential negative risks to the interests and position of the core of The Firm. The less risky approach applied, was for The Firm, through the state, to gradually eroded Constitutional guarantees and freedom, using rhetoric and ordinary legislation. The problem with this approach is that it requires a rather long-term perspective, because, among others, it must co-inside with gradual “narratification” (or then legitimization) of such actions. In other words, the ideological, and even the allowed narrative in the country, and even internationally, must make it virtually impossible for Civil Guarantees to effectively resist.

The there is also a lesser problem that The Firm experiences, and that is Private Business. Private companies and individuals not directly under the control of The Firm control a large proportion of the country’s national resources and assets. The Firm demands these resources.

Business is not really a major risk to The Firm in so far as its mere existence is concerned. Business in South Africa has largely surrendered to government, and implement purely Firm-based policies of the state, such as Black Economic Empowerment and Employment Equity.  They do so under the mistaken believe that such an attitude will calm down government, and convince it to leave them alone, Besides, all they want to do, is to make money for themselves and their shareholder, and not to challenge government. In my viewpoint, the point they are missing, is that state want that money, and the asset generating that. Because The Firm demands it. You cannot satisfy them, except to join them. That means surrender to them.

The point is this: What has gradually been established in South Africa, in terms of an economic model, is not socialism; it is a theory and practice where all economic activity will run through the state. This does not mean that the state will take over all economic activity, which is typical of a communist state, but that the state will tightly control all economic activity. And everything in the economy will be subjected to Black Economic Empowerment, because that is the instrument for getting and retaining state control. Supporting networks are established and manipulated through secondary monopolizing policies, such as Employment Equity. If the state controls, The Firm can control.

Image source: 123RF