JOHN ENDRES | Extortionists, whether regulatory or criminal, should be defied - Business Day

John Endres

In the year 845 a fleet of Viking longships under a chieftain named Ragnar entered the Seine and made its way upriver to Paris, arriving on Easter Sunday. The Franks could not mount a credible defence. King Charles the Bald paid the raiders a ransom of silver and gold ― about 2,570kg in precious metals ― and hoped the problem would go away.

It did not. The Vikings returned again and again, each time securing loot or ransom. Over the following decades the Frankish kings paid the Danegeld 13 times. Rudyard Kipling drew the lesson in verse:

We never pay any-one Dane-geld,

No matter how trifling the cost;

For the end of that game is oppression and shame,

And the nation that pays it is lost!

South African businesses are paying the Danegeld right now. They are paying it to multiple collectors, across multiple sectors, through mechanisms that range from criminal violence to regulatory coercion.

Every rand paid to the extortionists proves to them that the model works.

The mafias
Some of these extortionists are easy to see. Construction mafias ― criminal networks that call themselves “business forums” ― have disrupted more than 180 infrastructure projects worth at least R63bn since 2019. They invade sites, demand a cut of the contract and threaten violence if refused.

Many claim affiliation to the radical economic transformation faction of the ANC. Public works minister Dean Macpherson told parliament last year that the MK party and construction mafias are “one and the same”.

In KwaZulu-Natal the intertwining of gangsterism and politics is so advanced that analysts have warned that the province risks becoming South Africa’s answer to a narco-state.

Water tanker mafias operate on the same model, but with a crueller twist: they sabotage municipal water infrastructure to create demand for their own services, then win the emergency tanker contracts, often with the complicity of municipal officials who pocket a share.

In Gauteng alone municipalities spent R2.4bn on water tankers over five years. In Tshwane a Special Investigating Unit probe is now under way after reports of a R95m tanker contract awarded to an individual living in an RDP house.

The state as collector
This is a fast-growing extortion economy. But criminal mafias collecting the Danegeld at gunpoint are not the only ones to have learnt the trick. The state collects it too, in a suit and tie, through regulation.

In February this year about 50 people, including MPs and armed police, arrived unannounced at Normandien Farms in the Newcastle district, the largest employer in the area with 3,000 workers and a spotless compliance record.

They overran security, ignored biosecurity protocols and intimidated staff. The National Employers’ Association of South Africa called it a political stunt. The department called it an inspection. Either way, the message was clear: comply, or we come for you.

Business federation Sakeliga has identified a broader trend it calls “third-wave BEE”. The method is the same across sectors. First, the state redefines an industry so that previously free economic activity falls under a regulator. Then the regulator demands BEE certificates as an administrative formality. Once the industry is accustomed to reporting, the regulator begins withholding licences from those that do not comply.

The Property Practitioners Regulatory Authority (PPRA) is a good example. It told 40,000 estate agents and property businesses to reach level 8 BEE compliance or lose their fidelity fund certificates, without which they cannot legally operate.

Another example is the South African Health Products Regulatory Authority (Sahpra), which published a policy requiring BEE certificates for licences to manufacture, distribute and import medicines and medical devices. It then admitted, under pressure, that it lacked the legal authority to enforce it. It kept demanding the certificates anyway.

The difference between a construction mafia demanding 30% of a contract and a regulator demanding a BEE certificate to issue a licence is one of degree, not of kind. Both say: pay up, or you do not operate here.

Finding their voice
American economist and social scientist Albert Hirschman argued that people respond to deteriorating institutions in three ways: exit, loyalty or voice. South African businesses have tried the first two. Exit means leaving: emigrating, offshoring, closing the business, withdrawing capital. Loyalty means staying and complying: it means paying the Danegeld, absorbing the cost, pretending to like it.

South Africa is bearing the cost of both approaches. Exit drains the country of the capital, skills and enterprise it needs to grow. Loyalty means taking decisions that are not in the interest of the business, rewarding coercion and guaranteeing more of it.

The wealthy, influential circles of Weimar Germany learnt the cost of accommodating predatory politics when the National Socialists, whom respectable society had declined to confront, consumed it.

Voice is the remaining option. And voice works. When Sakeliga challenged the PPRA in court, the minister of trade, industry & competition withdrew his opposition. When the Sahpra’s overreach was exposed, the regulator backed down from its most aggressive demands.

The owners of Normandien Farms laid criminal charges against members of the parliamentary delegation, wrote to parliament and took their case to the national media. There have been no further invasions.

The Normandien experience shows that individual courage is necessary but insufficient ― voice must be backed by litigation, publicity and institutional support if it is to change the behaviour of those in power.

What these cases have in common is that organised, principled, public refusal, backed by litigation, communication and institutional support, changes the calculus for the extortionist.

Silent Revolution, authored by the late John Kane-Berman, until 2014 CEO of the Institute of Race Relations, documented how millions of South African citizens defied apartheid era laws through quiet, sustained noncompliance.

Sakeliga, drawing on the same principle, has given it a contemporary operational name: maximum achievable noncompliance. And when put into practice – in court against the PPRA, in public against Sahpra, in parliament against elected representatives ― it works.

South African business needs to stop paying the Danegeld. The mafias, the regulators and the political actors who back them must learn that their coercion is countered with resistance, not rewarded with revenue.

The only effective response to the demands of Vikings, mafiosi and extortionate state regulators is “No”.

Dr Endres is CEO of the SA Institute of Race Relations.

https://www.businessday.co.za/opinion/2026-06-02-john-endres-extortionists-whether-regulatory-or-criminal-should-be-defied/