Lore Stories: Facing Down Corruption
Telling a high-ranking bureaucrat to jump in the lake but with lawyerly cover and diplomatic threats.
Two decades ago, I ran a substantial mining conference in Cape Town, South Africa. I was brought in as part of the change of control when a Chicago-based private equity1 group bought the very successful business from its Miami-based founding owner. The mandate was to transform a loosey-goosey family business into a formal operation that could be sold at a much higher valuation within five years and to provide the new owners with monster cash flows and the prospect of a bonanza payday. In the process, I encountered petty and significant corruption.
The first task of a hired gun “transformation manager” is to DOGE2 everything. Always start with cash handling and payments. You will never fail to find dark insectoid deeds when large quantities of actual dollar bills change hands. That is precisely where representatives of the South African Police Services were scurrying around.
Near the end of the conference proceedings, a reasonably senior uniformed policeman handed me a plastic packet (shopping bag) filled with hundreds of receipts in less-than-pristine condition.
Annoyed but trying to be helpful, I asked, “Do you want me to throw it away for you?”
“No, sir. These are the receipts for the petrol that you must pay the SAPS for,” he responded, somewhat bemused by my ignorance as the newbie. “We are security for this event and your VIPs, so we must be paid for the petrol,” he added with the confidence that uniforms give certain people.
I rummaged through the bag to generate a random sample. The receipts were from all hours of the day and night across the entire Cape Peninsula. However, the conference was confined to the Cape Town Convention Center, some VIP airport transfers, and a Somerset West wine estate gala dinner with no police presence.
The founder came from a high-trust society and had paid the requested cash in good faith for years. As an expatriate South African, I immediately knew what I was looking at ⸺ the fuel bill for a fleet of minibus taxis. Perhaps the policeman was part owner of the enterprise, or maybe he was the “look-the-other-way” coordinator receiving kickbacks for roadworthiness and traffic violations.
In these situations, it’s pointless letting on that you know it’s a scam. The easiest option is to lament your status as a lowly functionary dependent on several layers of bosses above you.
“We can settle the amount within 15 days by wire transfer, but I will get fired without an itemized invoice on an official SAPS letterhead with a purchase order number from my company,” I implored.
The itemized invoice never arrived, so the business was a few thousand dollars richer that year.
Passive Aggressive Revenge
The following year, we invited the President of Tanzania to deliver a keynote address at the conference. He was partial to mining, and the country was clawing back its lost decades under Julius Nyere.
In prior years, contacting the diplomatic service and SAPS VIP Protection Unit to alert them was sufficient to trigger a process that safely delivered a head of state to the Convention Center. There was no response to the initial communications and stony silence for months afterward.
As President Jakaya Kikwete’s arrival drew near, I warned the South Africans that if they refused him at the diplomatic processing point, the president would proceed through regular customs with his armed bodyguard. In addition, I would let the media know what had happened if there was a security incident. No response was received. So be it. A helpful Afrikaans idiom in these situations, apparently derived from Amos 4:1–13, is, “Wie nie wil hoor nie, moet voel,”: “Whoever doesn’t listen is going to feel.”
Shortly after President Kikwete’s team alerted me to his arrival in Cape Town, I received a frantic call from the diplomatic control point: “Why don’t we know about this?” The “feeling moment” had arrived, and I was delighted. “You do know about it. Speak to [*],” I responded as nonchalantly as possible.
About 90 minutes later, the entourage arrived with a full SAPS VIP protection detail. The Afrikaans captain in charge, whom I had never dealt with, attempted a stern lecture about how irresponsible it was to do what we did, etc. I shrugged and gave him the backstory, which elicited a grimace.
We were all on the same page from then on and every year after.
What’s Yours Is Mine
Petty corruption is a nuisance but relatively easy to navigate. An attempt to extort a one-fifth ownership share of the conference was more than an annoyance.
The most senior bureaucrat in the SA Department of Mineral Resources and Energy called me at work in the US and offered to be “helpful.” He sprinted through a preamble to explain that the recently enacted Mining Charter required all mining and mining adjacent companies to eventually surrender a 26% share of their equity to “Black Persons who had been denied the right to own the means of production and from meaningful participation in the mainstream economy.” The “Black Persons” he had in mind were singular - himself.
I explained that the Mining Charter did not cover media companies and that he should write a letter explaining the issue on his Department or private company letterhead. He immediately changed tack to claim that the previous owner had promised him the stake.
“Write it all down, and e-mail it to me,” was all I could offer.
Just like the fuel invoice, the Mining Charter letter never arrived. Nevertheless, it was an incredibly serious development with felony implications because of the broad interpretation of the Foreign Corrupt Practices Act (FCPA).
The conference owners were alerted, and our attorneys were tasked with briefing the US Embassy in Pretoria. We engaged the SA law firm Webber Wentzel to prepare a response and create a shielding paper trail within SA. They assessed Mining Indaba's exposure to the Mining Charter. Needless to say, mining media companies were not subject to the Charter’s provisions.
Starlink Unplugged
Starlink is banned from offering services in South Africa for similar “Empowerment” reasons, although it is being bootlegged. Its bandwidth and coverage are desperately needed, but it will not receive a telecoms license until and unless the right people with the right political connections get a cut (30% “black-only ownership” or “equity equivalents”).
☩TW☩
Private equity is the fancy business school name for Dante’s mostly unknown tenth circle of hell, where the worst offenses and characters from the preceding nine circles puddle together.
DOGE should be the Oxford 2025 Word of the Year. It is an acronym for Department of Government Efficiency. It is also a very fine verb that combines a task and an outcome: When an institution is DOGEd, its business processes and accounts are scrutinized to uncover waste, fraud, and abuse (WFA). When WFA is discovered, the culprits are mocked and humiliated, especially when indicted.
The simplicity in how you handled the corruption is what has become the normal yearly teaching course my employer provides for us. Its awesome to see how effective the corruption is stopped by a letterhead or itemized invoice request.
How illuminating. Broken trust in government, from bribery to corruption to executive breakdowns in consistently enforcing laws (or all three), means childish communication and petulant behavior at best and outright violence at worst. Thanks for sharing.