TRC Final Report

Volume 4

Chapter 2

Subsection 3

First order involvement

23 To the extent that business played a central role in helping to design and implement apartheid policies, it must be held accountable. This applies particularly to the mining industry which, for this reason, is dealt with in some detail below. Direct involvement with the state in the formulation of oppressive policies or practices that resulted in low labour costs (or otherwise boosted profits) can be described as first-order involvement. This is clearly of a different moral order to simply benefiting from such policies. Businesses that were involved in this way must be held responsible and accountable for the suffering that resulted. Furthermore, to the extent that subsequent capital accumulation was boosted beyond that which would have occurred in the absence of such policies, the moral basis of such wealth must be questioned – a matter that is dealt with in the recommendations.

24 Other forms of involvement are more difficult to deal with because the argument shifts from accusing business of active design to accusing it of profiting from the system.

25 One could adopt a stance that argues that any business operating in South Africa was tainted by apartheid, and that the intentions of individual businesses are irrelevant to the argument. The Apartheid Debt Co-ordinating Committee makes such a case with regard to loans:

A large number of inter-bank loans, for instance, had no direct connection with apartheid. Yet, the foreign exchange given for a seemingly innocuous purpose – ranging from the development of ESKOM [Electricity Supply Commission] to the financing of a domestic home – was recycled as part of apartheid’s sanctions-busting strategy. Similarly, some foreign loans were used for purposes of international trade and, in this respect, were no different from those regularly found throughout the world. Yet, even the seemingly most pristine of these trade loans were tainted by apartheid. The simple fact of trade with South Africa inescapably meant helping to sustain and reproduce the structures, practices and lifestyles normalised by apartheid. No loan could avoid this institutional contamination.

Second order involvement

26 However, a distinction needs to be made between those businesses that made their money by engaging directly in activities that promoted state repression and those whose business dealings could not have been reasonably expected to contribute directly or subsequently to repression. Businesses that provided armoured vehicles to the police during the mid-1980s would fall into the former category – so-called second-order involvement – whereas those building houses for state employees would need to be viewed differently.

27 As is the case with first-order involvement, those who made their money through second-order involvement clearly have more to answer for than did those who made their money in other business activities. The argument is that, as entrepreneurs, they could have chosen not to engage in such business – allocating their capital and energies elsewhere.

28 Second-order involvement hinges to some extent on people knowing that their products or services would be used for morally unacceptable purposes. Consider the example provided by Major Williamson – that banks provided the police with covert credit cards. A bank that provides a covert credit card to the police to help them with, say, investigations into white-collar fraud, is in a different position to one which knowingly provides covert credit cards to death squads to help them lure their victims. Some covert activities are more acceptable than are others.

Covert credit cards and other banking facilities are, no doubt, still provided by banks to the police to help with their investigations of white-collar crime.

29 COSAB acknowledged that being a bank “inevitably” meant doing business with a variety of bodies that were an integral part of the apartheid system. All financial institutions were required to hold government and parastatal securities.

It would have been as impossible then, as it is now, to comply with the banking regulations without effectively doing business with government agencies.

30 So, banks were “knowingly or unknowingly” involved in providing banking services and lending to the apartheid government and its agencies. They were similarly involved in the movement of funds from overseas donors to organisations resisting apartheid.

31 The fact, however, that a former spy and Civil Co-operation Bureau (CCB) operative referred to the use that was made of covert credit cards cannot be ignored. The particular banker involved may not have had direct knowledge of why specific cards were being used. However, there was no obvious attempt on the part of the banking industry to investigate or stop the use being made of their facilities in an environment that was rife with gross human rights violations.

Third order involvement

32 Finally, one can categorise third-order involvement as ordinary business activities that benefited indirectly by virtue of operating within the racially structured context of an apartheid society. Condemning such businesses suggests that all who prospered under apartheid have something to answer for, in that they took advantage of a situation which depressed the earnings of black South Africans, whilst boosting their own. Taken to its logical conclusion, this argument would need to extend also to those businesses that bankrolled opposition parties and funded resistance movements against apartheid. Clearly not all businesses can be tarred with the same brush.

33 The issue of third-order involvement does, however, highlight the fact that the current distribution of wealth (which is substantially concentrated in white hands) is a product of business activity that took place under an apartheid system that favoured whites. This acts as a counterbalance to statements by business that apartheid harmed them, a reminder that white business accumulated (sometimes vast amounts of) wealth in spite of this alleged harm. It also raises the question about the need for business as a whole to commit itself to narrowing the gap between the rich and the poor – a matter that is addressed later in this chapter.

34 Some of the business submissions grappled with the issue of third-order involvement by asking themselves whether, by merely doing business under apartheid, they were in some sense supporting the system. The Textile Federation, for example, pointed to its only direct link with the state, namely through government clothing contracts. Old Mutual noted that, by paying taxes and investing in government stock, it might possibly have contributed in some very indirect way.

35 COSAB, while expressing regret for acts of omission and commission committed by its members that contributed to the damage caused by apartheid, pointed to an intimate involvement by the banking industry in the structures of apartheid:

By the very nature of their business, banks were involved in every aspect of commerce during the apartheid years. Without them, government and the economy would have come to a standstill. But it would have been an ‘all or nothing’ decision. There could have been no halfway position. Either you are in the business of banking, or you are not. It does not lie in the mouth of a bank to say that it will accept the instruction of its client to pay one person but not another.

36 Against the above analysis, this chapter (which deals exclusively with the private sector) explores some of the moral issues raised in submissions on the role of business under apartheid.