/The political and economic instrumentalisation of the COVID-19 pandemic by the business and the political elite in South Africa: Profiteering from disaster – Mbasa Mvenene
english_Nr. 12April 24, 2024

The political and economic instrumentalisation of the COVID-19 pandemic by the business and the political elite in South Africa: Profiteering from disaster – Mbasa Mvenene

Mbasa Mvenene
Walter Sisulu University Faculty of Law, Humanities and Social Sciences – SOUTH AFRICA

Mthatha (mvenene44@gmail.com)

 

ABSTRACT
This paper’s crux is to analyse the manifestation of the COVID-19 pandemic in South Africa from the lens of disaster capitalism, particularly the economic consequences precipitated by the pandemic, which hit the poor and working class the hardest. The paper argues that disaster capitalism unfolded in the South African case through the declaration of a national state of disaster and the establishment of emergency procurement regulations skilfully used to administer economic shock therapy (through PPE procurement corruption) on people experiencing poverty and the working class. The article also analyses the economic crisis precipitated by the COVID-19 pandemic and its associated regulations, such as the national lockdown. The article will further examine how PPE and other COVID-19-related procurement irregularities were orchestrated through a public-private sector dialectical relationship in disaster profiteering. The paper’s central thesis is framed by the theory of disaster capitalism, which denotes that catastrophic events are instrumentalised by a national political and corporate elite into exciting market opportunities to accumulate wealth. In other words, these disaster events are construed as windows of opportunity to capitalise on catastrophe (Naomi Klein, 2007:6-7). This paper presents a context-specific nature of disaster capitalism through a case study research design that analyses secondary documentary data. The paper employs document analysis as a preferred research methodology, and the findings will be analysed using the content analysis approach.

KEYWORDS
Disaster Capitalism, COVID-19, disaster profiteering, business, and political elite, political and economic instrumentalisation

Introduction
This paper presents a theory-informed analysis of the economic consequences of the COVID-19 pandemic for the underclass (the poor and unemployed) and working class in South Africa through the lens of disaster capitalism. Politico-economic analyses of the COVID-19 pandemic have focused mainly on the global north, especially North America and Western Europe. Therefore, an analysis of the global south is justified, in alignment with the worldwide scope of the pandemic and its economic consequences that have impacted the south disproportionately (Fihlo and Ayers, 2020:84). According to Schuller and Maldonado (2016:62), disaster capitalism can be defined as a concerted effort by both transnational and national government institutions to convert catastrophe or cataclysmic events into an opportunity to serve an array of private and neoliberal capitalist interests. Klein (2007:6) and Storey (2008:74) concur that disaster capitalism is a window of opportunity for the enforcement of neoliberal capitalist interests and increased involvement of the private sector in the provision of services formerly provided by the public. The COVID-19 pandemic and emergency procurement regulations provided the gaps and opportunity for the corrupt in both the public and private sector to go on a looting spree (Mantzaris and Ngcamu, 2020:463).

In the age of the hegemony of neoliberalism and capitalism, the poor and the working class usually receive neoliberal shock therapy (Cline-Cole, 2020:181). Such therapy can be attributed to COVID-19 regulations including the national state of disaster which restricted movement and assembly, emergency procurement regulations, weak oversight enabling PPE tender corruption accompanied by massive job losses. Naomi Klein (2007:7-8) avers that there are three distinct shocks related to disaster capitalism: first, is the collective shock induced by the disaster event, leaving the public in a collective state of trauma; second, is the economic shock therapy, an array of neoliberal policy instalments; and third is the literal (usually electric) shock (often administered by the police or soldiers) on any resistance to the economic shock therapy. A critical assessment of the implications of such events is academically justified and necessary, especially in the South African case wherein there’s an overt gap on this particular subject matter from the lens of disaster capitalism (Fihlo and Ayers, 2020:85; Farrell, 2020).

A Theoretical Lens
Although Naomi Klein’s book “The Shock Doctrine: The Rise of Disaster Capitalism” published in 2007, was not necessarily an academic book, it gained immense traction in the circles of academia. So much so that contemporary academics have employed the concept of disaster capitalism. Assessments or analyses conducted by academics are not only limited to post-disaster settings but also include scholarly disaster analysis in the fields of disaster risk reduction, social policy, industrial sociology, and anthropology (Schuller and Maldonado, 2016; Harvey, 2017; Illner, 2021). Academics have also employed the concept of disaster capitalism as a Marxian-style theory to critique contemporary neoliberal market democracies and their disaster response efficacy (Gunewardena and Schuller, 2008; Perez and Cannella, 2011; Mirowski, 2013; Pyles, 2016). The concept of disaster capitalism is also dominant within social movements and in the mainstream media; there are a plethora of brimming journalistic accounts of profiteering from disaster (Mahlangu, 2020). The concept has established a footing in the academy and has received both plaudits and critiques from scholars.

For Klein (2007:6), disaster capitalism encompasses “orchestrated raids on the public sphere in the wake of catastrophic events, combined with the treatment of disasters as exciting market opportunities.” Harvey (2017:334-5) substantiates that this process of disaster profiteering is orchestrated through the government’s provision of no-bid disaster response contracts to politically connected private corporations. Loewenstein (2015:21) affirms that “many ongoing crises seem to have been sustained by business to fuel industries in which they have a financial stake. These corporations are like vultures feeding on the body of a weakened government that must increasingly rely on the private sector to provide public services.” It is important to note that this study’s theoretical framework is congruent with its unit of analysis and helps narrow and focus the study, enabling a theoretical explanation of the phenomenon under investigation. The study’s theoretical foundations are formed by previous research or literature on disaster capitalism and the industry-government relationship that is characterised by negative patron-client relations reinforced by the revolving door between business, organised labour, and government (Perez and Cannella, 2011:47; Schuller and Maldonado, 2016:64).

Disaster capitalism remains a relatively new concept and one that is largely unexplored in the South African case, construed here, as a health crisis that was exploited by a nexus between a state and industry (illicit) relationship that defrauded the public purse. Disaster capitalism during the COVID-19 pandemic is construed as a process permitted by the national state of disaster and emergency procurement regulations which according to Mantzaris and Ngcamu (2020:462) was “Manna from heaven” to corrupt public and private actors. Disaster profiteering can be observed in the litany of PPE and other COVID-19-related tender corruption scandals, which are brimming in the popular news media. As the catastrophic event was instrumentalised to amass profits for the public health bureaucratic elite and politically savvy service providers, the underclass and the working class were hit the hardest by the economic consequences of the COVID-19 pandemic (Farrell, 2020; Mahlangu, 2020). Three million South Africans lost their jobs (Tswanya, 2020). It can thus be inferred that the theory of disaster capitalism places the phenomenon under study in sharp focus.

Literature Review
The Orientation
Mirowski (2013:9) posits that the 2007-8 global financial crisis was “the most dramatic catastrophic global economic collapse after the Great Depression of the 1930s.” However, Gürcan and Kahraman (2020:56) contend that the economic crisis induced by the COVID-19 pandemic surpasses that of the Great Depression and the global financial crisis of 2007-8. Klein (2007:18-9) challenges the claim that free-market economics go hand-in-hand with freedom and democracy and that the evolution and progression of free-market economics results from embracing modern democracy. She contends that the growth and progression of free-market ideas across the globe is a result of an increase in shocks such as wars, invasions, natural or human-induced disasters, epidemics and pandemics, and economic crises that create a collective shock and a subsequent collective trauma. While the public is in a state of trauma, free marketers, right-wing think tanks, neoconservative politicians, and prominent corporate magnates collude to profit out of catastrophe and instate neoliberal economic reforms which accumulate wealth for global elites at the expense of the greater majority.

According to the World Health Organisation (WHO) (2023), SARS-CoV-2 is the virus which causes COVID-19 – coronavirus (World Health Organisation, 2021:1; Naude and Cameron, 2021:1) which first broke out in Wuhan, China in 2019. On the 30th of January 2020, WHO declared a Public Health Emergency of International Concern (PHEIC). In South Africa, the outbreak was characterised as a pandemic on March 11th, 2020. The national state of disaster was declared by President Cyril Ramaphosa on March 5th, 2020, followed by a nationwide lockdown. The lockdown regulations were provided for in the Disaster Management Act No. 57 of 2002. The national state of disaster was lifted on the 15th of March 2022 (Saloshni and Nithiseelan, 2022:1). The WHO (2023) reports that as of 23 September 2023, there are 2 248 538 confirmed deaths globally. The African continent surpassed the one million mark of confirmed cases in early August of 2020. In South Africa, the pandemic caused over 100,000 fatalities and more than 3.9 million reported cases (Saloshni and Nithiseelan, 2022:1). The economic impact of the Covid-19 pandemic exposed socioeconomic injustices throughout the world and in South Africa as well (Vaughn, 2021:1). Filho and Ayers (2020:88) surmise that “the economic fallout from the pandemics could increase global poverty by 500m people (8% of the world’s population) and push 265m people to the brink of starvation.”

The COVID-19 pandemic reinforced deep inequalities already existent in society, and the impact of the virus mirrored these inequalities. For instance, blacks in the United States of America (USA) and the United Kingdom (UK) were more prone to infection and death than their white counterparts. Inequalities of race, class and gender were evident in the victims of the disaster. Blacks, the lower-income working class and women are seldom in employment wherein it is possible to work from home behind a computer screen, thereby reducing risk; they seldom have health and life insurance and, in most instances, are unable to afford private quality healthcare (Cline-Cole, 2020:181-2; Fihlo and Ayers, 2020:85; Leach, Macgregor, Scoones and Wilkinson, 2021:4). Cline-Cole (2020:180) avers that “while the Covid-19 pandemic might not discriminate, the political economy does, frequently reinforcing existing and sometimes creating new patterns of coronavirus-related inequality.” The preceding postulations have established, the impact of the COVID-19 pandemic has disproportionate intensity.

Ploughing ahead, Naude and Cameron (2021:5) argue that quarantines, curfews, social distancing, prohibition of mass gatherings, the closure of institutions where infections were identified, and the seclusion of cities, towns or households curbed the spread of the SARS-CoV-2 virus in the absence of a vaccine. COVID-19 regulations have produced a paternalistic state with centralised decision-making concentrated in the executive in the form of the National Coronavirus Command Council (NCCC). In these circumstances, mechanisms to hold the government accountable were suspended, and disaster profiteering ensued without public interruption (South African Government, 2021; Medical Brief, [n.d.]). Schuller and Maldonado (2016:61) emphasize that “what is most significant to consider here is not the disaster event itself, but rather the disaster after the event that reproduced social inequalities, in large part through the process of disaster capitalism.”

By the end of June 2021, the Special Investigating Unit (SIU) had already spent a total of R350 million in investigations on COVID-19 PPE procurement corruption that arose because of no checks-and-balances in the systems of national and provincial governments, State-owned Enterprises (SOEs) and municipalities. The SIU further reported that it is probing 4000 cases involving 2400 service providers where there is a suspicion of or alleged irregularity. An estimate of the tally of the value defrauded from the government in the unlawful awarding of PPE contracts amounts to R4.8 billion. R4.8 billion, which is alleged to have been illegally channelled out of the public purse into private hands through a public-private partnership involving the public health bureaucratic elite and politically savvy businesspeople (Matya, 2021; McCain, 2021).

Research Design and Methodology
As was already alluded to elsewhere in the paper. This is a case study research design, and secondary data is analysed. Document analysis is the preferred research methodology. Documents analysed include newspaper articles, policy reports and government publications. The findings will be analysed using the content analysis approach.

Findings and Discussion
Personal Protective Equipment (PPE) Corruption Scandals: An Illustration of Disaster Capitalism – Making A Killing out of Catastrophe
The literature critiqued hereunder focuses on the industry-state dialectical relationship in manifesting disaster capitalism through contraventions of public procurement regulations, the Public Finance Management (PFMA) Act No. 29 of 1999, National Treasury guidelines, misconduct, unethical behaviour, and dereliction of duty in the PPE procurement process. Unsurprisingly, the beast of corruption, economic nepotism and cronyism has far-reaching consequences for the South African economy and its public, democratic, and legal institutions. This is despite the context of the country’s supreme guiding document, the Constitution of the Republic of South Africa Act 108 of 1996, which mandates a corruption-free and publicly accountable government responsive to the needs, demands and preferences of the people (Farrell, 2020; Mahlangu, 2020; Medical Brief, [n.d.]).

Despite the multiplicity of anti-corruption legislation and other government measures to eradicate corrupt practices, corruption is highly prevalent in South Africa. This scourge of corruption soared after the emergency COVID-19 procurement regulations were put in place. These regulations aimed to create a quick response to the impact caused by the pandemic and to strengthen the public health sector. However, the public sector bureaucratic elite and politically exposed service providers saw a window of opportunity to engage in self-serving acquisitive corruption at the expense of human lives (McCain, 2021; Dayimani, 2021; Heywood, 2021). The milieu of fear, panic, and uncertainty (Stiegler and Bouchard, 2020) culminated in the easing of procurement regulations concerning PPE and this blind spot was used by society’s undesirables to engage in tender corruption by inflating the cost by up to 500% in some cases and providing sub-standard PPE to the government’s health sector (Mokoena, 2020:526-7; Vaugh, 2021:5).

In the middle of a health emergency, while the public is in a state of disorientation, induced by the Covid-19 pandemic (accompanied by fear, panic and uncertainty) and the hard lockdown which technically suspended democratic processes, civil and political rights indirectly through quarantines, curfews, and social distancing; politically-exposed businesspeople, big pharmaceutical behemoths and the global corporate oligarchy identified a window of opportunity to capitalise on catastrophe. The flooding of wealth up to the ultra-rich and away from the underclass and working class was justified as preventing the further spread of the virus. In other words, providing disaster relief through highly inflated no-bid contracts awarded to politically connected service providers (Klein, 2007; Davis, 2020). This demand for PPE and other health-related services was intended to equip the ill-prepared public health sector and combat poverty and unemployment; however, the opposite occurred through a litany of PPE procurement corruption (Farrell, 2020; Mahlangu, 2020). Leach et al. (2021:5) note that “state-led responses to a disease outbreak therefore often replicate biases within development, reinforcing alienation, marginalisation and stigmatisation.”

Case Vignettes
The chief financial officer (CFO) of the Department of Health (DoH) in the Gauteng provincial government, Kabelo Lehloenya, alleged that then-premier David Makhura failed to fulfil his duties and responsibilities as the executive head of the provincial government. Lehloenya made these submissions at a Special Tribunal instigated by the SIU to recover public money unlawfully paid to service providers Ledla Structural Development and Beadica 430. Lehloenya espoused that under David Makhura’s watch, the PPE procurement process had been perverted by improper interests amounting to R42.8 million. In the stage-managed PPE procurement process, the two service providers mentioned above were awarded the contract because of their close ties to Chief Thandisizwe Diko II, the late husband of Khusela Diko, who was on special leave (or suspension) from her position at the time as presidential spokesperson. Chief Thandisizwe Diko II had close ties to Bandile Masuku, the Member of the Executive Committee (MEC) of Health at the time the unlawful procurement process unfolded (Koko, 2021). Khusela Diko’s decision to take special leave was encouraged by “allegations that her husband received part of R2.2b personal protective equipment tender awarded to 75 companies by the Gauteng Health Department (Medical Brief, [n.d.]).”

The PPE procurement corruption scandal highlighted above-involved price inflation, which resulted in an 800% profit margin for the front companies alleged to be linked to Chief Thandisizwe Diko II. The SIU acquired an order which froze assets worth R36 million, allegedly purchased from distasteful gains involving Diko’s front company Ledla Structural Development and the Gauteng DoH (Medical Brief, [n.d.]).

South African Government (2021) reported that the SIU, working collaboratively with the Hawks’ National Serious Corruption Investigation, arrested an unnamed man from Mpumalanga on 9 August 2021 embroiled in PPE procurement corruption. The man attempted to offer a bribe worth R50 000 to an SIU investigator to make the investigation into the questionable financial transactions related to the awarding of a tender to disinfect Mpumalanga provincial government buildings (in the Ehlanzeni district) evaporate. The SIU investigation found irregularities in the procurement process from the Department of Public Works, Roads and Transport in the district mentioned above. The irregularity emerged after the declaration of a National State of Disaster on March 20, 2020, which necessitated a multitude of healthcare services such as disinfection. The service provider was paid a total of R4.8 million post-disinfection, which was made in multiple instalments. After the first instalment of R1.3 million was paid, a series of large transfers were made to individuals and entities, including two department employees and a law firm based in Mpumalanga. The law firm proceeded to purchase a property worth R2.2 million, which was registered in the name of a departmental official’s daughter (Ibid).

The Hawks arrested two employees in August 2021 from the National Health Laboratory Services (NHLS) who were alleged to have engaged in theft, fraud, and contravention of the guidelines of the PFMA. The two suspects (former employees) enabled the unlawful awarding of a PPE contract worth R14.4 million from the NHLS. The two suspects would appear in the Palm Ridge Specialized Commercial Crimes Court soon after their apprehension to answer questions related to alleged tender fraud. Hawks’ spokesperson, Colonel Katlego Mogale, stated that some suspects in the investigation into PPE tender fraud led by the SIU had already resigned from their positions. The call for a comprehensive investigation into Covid-related corruption in the public sector was made in 2020 by President Cyril Ramaphosa (Makhafola, 2021).

Ayanda Matinise, the former messenger of axed Eastern Cape (EC) MEC of Health Sindiswa Gomba, was prosecuted on fraud, forgery, and uttering charges. Matinise forged the signature of the director of supply chain management to unlawfully award a PPE contract worth R23.4 million to a favoured service provider, Falaz Protection Services. Matinise appeared in the Mthatha Specialized Commercial Crimes Court, where he was released on R1000 bail. (Dayimani, 2021b). Matinise was sentenced to a decade behind bars in early 2023 (TimesLive, 2023).

The relaxed public procurement measures introduced by the government shortly after declaring a state of disaster in March 2020 created a window of opportunity for senior government officials and politically connected businesspeople to go on a looting spree during a life-threatening pandemic. The headlines in the media were painted colourfully by a series of PPE (face and surgical masks, sanitisers, gloves, and disinfectants) and other COVID-19-related corruption at different levels of government. This carried adverse effects on the overburdened public health sector. The looting spree was made possible by the government’s gamble to relax already weak procurement policies in South Africa (Thinane, 2021:5; Vaughn, 2021:6).

Gürcan and Kahraman (2020:56) affirm that the sheer scale of the economic impact brought by the COVID-19 pandemic is one never witnessed before. The thirty-day hard lockdown in 2020, which was emulated by the Chinese government, carried severe economic consequences, including a decline in the fiscus, the shedding of 2.5 million jobs, a seven-percentage point drop in the yearly gross domestic product (GDP) and other associated social costs. Despite this, senior government officials, political office bearers, and politically exposed service providers engaged in cost inflation and non-delivery or delivery of sub-standard PPE and other COVID-19-related services, regardless of the risk of losing human lives (Mahlangu, 2020; Mmakwena and Moses, 2022:987).

Mmakwena and Moses (2022:987) argue that “the combination of the breadth and complexity of the crisis, the need for a rapid response, and a lack of sufficient state capacity has led to a perfect storm for increased opportunities for corruption.” Sebake and Mudau (2020:490; 462) concur that emergency procurement regulations provided gaps and opportunities for the corrupt in both the public and private sectors to go on a looting spree. It is not public procurement policies that do not exist, but it is the administrative and procurement officers that have mastered the art of manipulating the process of bidding with the intent of personal gain. Mahlangu (2020) reported that the Public Service Regulations and the Constitution clearly speak to ethical (integrity and honesty) standards applicable in the procurement process, the conduct of procurement officers, the quality of goods to be procured for the state, and safeguarding those goods.

It is, however, the non-existence of policy probity in South Africa, which contributes mainly to high levels of corruption in public procurement; policies regulating this aspect still need to be revised. Political office bearers and public office holders in the South African government should create a space of competitiveness regarding the awarding of COVID-19 PPE procurement contracts and refrain from cronyism, which ultimately leaks money out of government coffers into the private pockets of businesspeople intricately tied to the political elite. A fight against corruption cannot only be fought by law enforcement agencies. It also requires ethical practices in the procurement process, which will not permit room for society’s undesirables (Farrell, 2020; Mahlangu, 2020).

Conclusion
The main thrust of this paper is the instrumentalisation of the COVID-19 pandemic by the political and business elite, which is enabled by the national state of disaster and emergency procurement regulations, which provided windows and gaps for misconduct and wrongdoing by both unscrupulous public and private actors. The findings and analysis indicate that out of disaster profiteering, poverty and unemployment worsened, and the socioeconomic circumstances of the underclass and the working class deteriorated, while the opposite occurred for politically connected businesspeople. This line of argument was framed by the theory of disaster capitalism, which enhanced our understanding of PPE and other COVID-19-related tender corruption in South Africa.

Acknowledgements
The author acknowledges the insightful inputs of colleagues, friends, and family that resulted in significant enhancements in the article.

Declaration of Interest Statement
The author reports that there are no competing interests to declare.

Biographical Note
The author is studying for a PhD in political studies at Nelson Mandela University. The author teaches political studies at Walter Sisulu University. The author also writes opinion pieces for The Sowetan and The Daily Dispatch.

Funding Information
The author declares that this research was not funded by any individual or institution.

Disclaimer
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any affiliated agency of the author.

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