Corporate SA is having a greed attack

Corporate South Africa mostly takes its social responsibilities seriously. That’s maybe because its sector is besieged by nostalgic communists from within government and on the streets by wilfully ignorant radicals.

There’s Woolworths with proclamations of commitment to social transformation and pious promises of ethically driven behaviour. There’s furniture retailer Joshua Doore, which for more than 30 years has urged us to remember: “You have an uncle in the furniture business.”

But Big Business is not all rosy cheeks and avuncular men. For many that’s merely a mask, which periodically slips to reveal a countenance puckered in greed. That’s particularly true during an economic downturn, when profit margins are slipping and shareholders are grumbling.

This week we got a couple of glimpses of the ugly face of SA business. The one was inadvertent — misbehaviour exposed Facebook. The other was triggered by hubris — cellphone giants so eager to stifle competition that they were blissfully unaware of the brand damage they were doing themselves.

Let’s start with the brazenly greedy. Vodacom and MTN are appearing before a parliamentary committee, calling for the regulation of so-called over-the-top (OTT) services such as WhatsApp and Skype, which are essentially free and are therefore eroding the local cartel’s generous margins.

Generous margins they are, too, since SA cellphone and data charges are among the highest in the world. Last year MTN’s revenue was R146 billion, delivering earnings of R65 bn, while Vodacom’s were R75 billion and R27 billion respectively.

What makes their pleas for protection hypocritical is that their own SMS services, upon which particularly the poor are dependent, are both expensive and inefficient. And, of course, long forgotten are their hand-on-heart promises, dating back to the 1990s when they were applying for their telecom licences, to roll out high-speed, cheap networks to rural SA.

The other miscreant is the Lewis Group, a furniture and electrical goods retailer targeting the black market with easy credit and eye-watering mark-ups. It ran into unexpected flak when it sold a washing machine on credit to the gardener of businessman Onne Vegter.

What the gardener — “a very humble, timid man in his 60s, with limited literacy” — did not comprehend until Vegter pointed it out, was that the cost of the R5 999 appliance would over the three-year repayment period amount to R18 555. This exorbitant price of a machine that was already over-priced, was achieved by capitalising to the ticket price various dubious insurances, extended warranties and compulsory delivery charges, and finally revving up their returns by charging 23% compound interest.

When Vegter approached Lewis on behalf of his gardener, they made the mistake of not simply cancelling the contract. Instead, they launched into screeds of sanctimonious explanations as to why this is actually all above board and perfectly acceptable.

Vegter claims theythreatened him with “consequences” for his “defamatory” suggestion that Lewis’ practices might be a contravention to the National Credit Regulator’s stipulations on reckless lending. It’s a threat that draws a chuckle from Dave Woollam, a director of Summit Financial Services and a consumer activist — he was one of those who drove the recent successful class action on illegal garnishee orders — whose particular bugbear is the exploitation of financially illiterate consumers.

Woollam has also earned the ire of the Lewis Group before. A year ago his damning investigation into their selling techniques led to Lewis last year having to refund R67.1 million to pensioners and self-employed customers for “mistakenly” selling them unemployment insurance. They were also slapped with a R10 million fine.

Woollam says such “excessive selling” is par for the course among retailers that target the less affluent. “But Lewis is the worst of the worst and has a particularly deceptive way of operating … they are exploitative, immoral and unethical.”

The problem is that many of the corporate giants don’t appreciate that legality and morality are not the same.

Vodacom and MTN are trying to seize the moral high ground over OTTs by arguing that unlike them, Skype and WhatsApp don’t pay taxes here. Retail gougers like Lewis argue that everything they do is absolutely legal.

However, most ordinary people can see through this corporate sophistry. They instinctually know that something can be legal but wrong, hence the anger on social media. These ducking and diving captains of commerce would be foolish to ignore it.

Follow WSM on Twitter @TheJaundicedEye