Yes Stephen, there is a direct link between BEE and State Capture - Daily Maverick

Gabriel Crouse

Stephen Grootes recently wrote that State Capture has ‘nothing to do’ with BEE. However, the State Capture report directly addressed the link, which is a point of national significance that should not be ignored.

Is there a connection between BEE and State Capture? That is the question.

On one side there is Stephen Grootes, who says no. In an After The Bell column titled “Why we abandon BEE at our peril” on 12 June, Grootes writes that “State Capture damaged” the argument for BEE, “even though it really had nothing to do with it”.

Really? Does BEE have nothing to do with corruption?

The Zondo Report, more formally known as the Judicial Commission of Inquiry into State Capture Report, provides a different, more enlightening, answer.

Grootes might fruitfully begin a reappraisal of his view of the connection between BEE, specifically the Public Procurement Policy Framework Act’s provision for BEE premiums, and State Capture, by reading Volume 1 of the Zondo Report; subsection “Problems in the legislative design”; subtitled “Difficulties in interpreting the legislative mosaic”; page 795 – 797; paragraphs 528 – 532.

For the reader’s sake, I will skip to the concluding recommendation on how to resolve the “inevitable tension” between “value-for-money” and BEE premiums, according to the Zondo Report: “Ultimately, in the view of the commission, the primary national interest is best served when the government derives the maximum value-for-money in the procurement process and procurement officials should be so advised.”

The Zondo Report’s recommendation to reduce BEE premiums to zero would make no sense, given its mandate, were it not for its evaluation that the current BEE premium scheme facilitates State Capture.

But if Grootes doubts that, he can familiarise himself with the Zondo Report’s discovery of a nexus between BEE and corruption by looking at the IMF’s summary on BEE premiums in preferential public procurement: 

“The preferential procurement system is costly and ineffective. The cost concerns have arisen not only because of the trade-offs with competitive procurement, but also because the Zondo Commission reports have illustrated how the preferential procurement system has been used as an avenue for corruption, State Capture, and rent seeking.”

Grootes can also look at Harvard Growth Lab’s Inclusive Growth Report, which repeatedly found that “the preferential procurement system has exacerbated patronage opportunities”. It would help to know that “patronage opportunities” in this context is a fancy way of saying “State Capture”.

One of the ways that BEE facilitates State Capture is through what the Harvard Growth Lab calls “overburdening”. Both suppliers and government officials are required to get through so much confusing red tape on BEE that precious resources are drained that could go towards better things like busting corruption.

“There are clear interactions between these deep issues of gridlock, ideology, overburdening and patronage. For example, the preferential procurement system has exacerbated patronage opportunities, and this patronage is reflected in contract opacity and failed investments,” Harvard’s Growth Lab noted.

One can also look at how Paul Holden covered the connection between BEE and State Capture in his book Zondo at Your Fingertips, which I covered here under the title, “Zondo and Parliament: Overlooked flaw in the law that favours crooks”.

I also argued more than a year ago in these pages that Treasury must come clean on how much taxpayers spend on BEE premiums.

There I noted the fact that BEE premiums have been spent every year, for 25 years, with Treasury never once providing an official estimate of their cost. This demonstrates in a painful, obvious way, that BEE undermines transparency, and accountability.

Grootes surely already knows that “contract opacity” and a lack of budget transparency facilitates… State Capture.

But if he still has doubts, he can also look at more specific examples of BEE facilitating State Capture, such as former political commentator Gwen Ngwenya’s recollection of how BEE facilitated corruption at Eskom that caused load shedding, under the title Eskom and BEE: A total eclipse of the brain.

Or Grootes can look into BEE at a much deeper, systemic level, even from a Marxist perspective. Moeletsi Mbeki famously wrote a piece titled BEE and affirmative action are the biggest drivers of corruption in SA, which Grootes should definitely read.

Or he can look at the BEE-corruption connection from a cultural perspective, as William Gumede recently did in noting that BEE, among other things, “has fostered a culture of corruption, using political connectedness rather than merit to generate wealth”.

Or Grootes can look at the race of most victims of the BEE-corruption connection, as Mpumelelo Mkhabela recently did, noting that the “effect of corrupt public procurement, with BEE as a cover, has become black socio-economic disempowerment”.

Any way that Grootes might look at it, BEE has something to do with corruption.

So, what happened? Has Grootes been writing about BEE and corruption without looking? Against the mountain of evidence, how could he claim that BEE has “nothing to do with” State Capture?

“I think you can conflate BEE with cadre deployment and all that follows,” he wrote, “but in reality, they are completely different things”.

To be sure, BEE and cadre deployment are technically distinct. Does that prove, against the Zondo Report and everything else, that BEE has “nothing to do with” State Capture?

The answer is so obvious it doesn’t require spelling out.

Grootes did not write anything else to support his claim that BEE had nothing to do with State Capture, but he is a trailblazer in denying any connection between the two.

For now, it is worth noting that unlike Grootes, BEE supporters tend to admit that BEE has facilitated corruption. For example, Christopher Rutledge recently wrote that “BEE could have been a transformative tool. Instead, it became a looting platform – captured by political elites, abused for tenders and patronage, and weaponised to justify wealth accumulation by a few in the name of the many”.

In contrast to Rutledge, Grootes is in outright denial about the connection between BEE and State Capture.

That reveals something very important about what has happened to the BEE debate. People who support the policy platform of minority looting and mass socio-economic disempowerment can change their minds in the face of evidence, or increasingly feel the pressure to try to win the argument around BEE by ignoring major evidence bases, starting with the Zondo Report itself.

Even if Grootes does not read the part of the Zondo Report I highlighted, or any of the commentators I have highlighted along the way, I hope the reader does.

BEE will end not by some grand act of force from outside, but by more and more South Africans informing themselves about how painfully the policy that was supposed to help ended up contributing to an 18-year no-growth economy, the doubling of black unemployment, and the ongoing mass looting of public property known as State Capture.

Gabriel Crouse is a fellow at the Institute of Race Relations

https://www.dailymaverick.co.za/opinionista/2025-07-09-yes-stephen-there-is-a-direct-link-between-bee-and-state-capture/