Ethics rules lose their bite in South Africa when incentives, leaders and whistleblower protection fail

Introduction

South Africa does not lack ethics machinery. The Constitution sets out basic values for public administration, departments are expected to have ethics committees and ethics officers, and the Protected Disclosures Act 26 of 2000 is meant to shelter people who report wrongdoing (Vyas-Doorgapersad, 2022; Wright, 2025). Yet the record of the last decade or so, from state capture to audit failures at some of the biggest firms in the country, suggests that having the machinery is one thing and having it work is another (Mkhize, Kayembe and Thusi, 2025; Ma-Nlep, 2025).

This paper argues that formal ethics rules in South African organisations lose their force when three things around them are weak. The first is the incentive environment, meaning pay structures and investor reactions that do little to reward integrity or punish misconduct. The second is leadership and culture, where what leaders actually do carries more weight than what the code says. The third is protection for people who speak up (Wright, 2025). The paper starts with the gap between ethics frameworks and conduct, then looks at ethical leadership and culture, then at incentives and markets, and then at whistleblowing. A word of caution before going further. Much of the South African evidence is desktop analysis (Mkhize, Kayembe and Thusi, 2025), comes from the public sector (Vyas-Doorgapersad, 2022), or rests on convenience samples (Grobler and Grobler, 2024), so the claims here are about what the evidence points to and not about what has been proved.

Frameworks are in place and misconduct persists

Vyas-Doorgapersad (2022) offers a useful picture of the public-sector side. Her desktop study, drawing on legislation, policy documents and Corruption Watch material for 2020 and 2021, notes that the Integrated Management Framework asked departments to set up ethics committees, executive-level ethics champions and ethics officers, and that certification of ethics officers was being developed. Even so, she reports that financial mismanagement and corruption continue, together with non-compliance, disciplinary procedures applied badly and weak use of oversight mechanisms. Her conclusion is that codes and statutes on their own are not enough and that an organisational culture is needed to tell people what right and wrong look like (Vyas-Doorgapersad, 2022; Maile and Vyas-Doorgapersad, 2023).

Maile and Vyas-Doorgapersad (2023) press the same point from the side of misconduct. They treat corruption as one form of misconduct recorded in the public service and ask why it persists. The reasons could be socio-economic, political or institutional, and they concentrate on the institutional ones. Their message is that good governance stays out of reach if everyday wrongdoing is not handled properly. That is a modest claim, but it matters, because it puts the problem in how institutions respond to misconduct and not only in the rules on the books (Maile and Vyas-Doorgapersad, 2023; Vyas-Doorgapersad, 2022).

State capture shows what happens when the problem is much bigger than individual lapses. Mkhize, Kayembe and Thusi (2025) draw on 62 sources, including Zondo Commission findings, to argue that capture is different from ordinary corruption because it reshapes laws and institutions to serve narrow interests. They describe weakened oversight bodies, politicised appointments and manipulated procurement, and they report cost estimates running to R1.5 trillion over four years. Those figures come largely from press reports, so they need to be read as rough indications. The authors also point out that firms such as SAP, McKinsey and ABB were implicated and paid restitution, which they consider insufficient, and they judge the post-Zondo reforms to have had mixed success (Mkhize et al., 2025).

There are limits to all of this. Both Vyas-Doorgapersad (2022) and Mkhize et al. (2025) rely on secondary sources, and Vyas-Doorgapersad admits that long-run corruption data are scarce. Neither measures whether an ethics office actually changes behaviour inside a department or company. So the evidence supports a fairly narrow conclusion: frameworks and misconduct coexist, and the existence of the former tells us little about their effect on the latter. What explains the gap has to be looked for elsewhere (Vyas-Doorgapersad, 2022; Mkhize et al., 2025).

Leaders and culture decide whether the code is believed

Grobler and Grobler (2024) give one of the few large South African data sets on ethical leadership. They collected 1,184 usable responses from 20 organisations, 587 in the private sector and 597 in the public sector, and tested how human resource practices shape perceived organisational justice with ethical leadership as a mediator. Respondents in the private sector reported higher ethical leadership scores than those in the public sector (4.62 against 4.25 on a six-point scale). Human resource practices and ethical leadership together explained 44% of the variation in perceived justice, and ethical leadership carried about 21% of the effect of HR practices across the whole sample (Grobler and Grobler, 2024).

The detail is worth a second look. Ethical leadership mediated 32% of the effect in the private sector but only 13% in the public sector. That suggests leaders’ conduct translates into employees’ sense of fairness more readily in the private organisations sampled, while in public bodies the HR practices work more directly and leaders add less. The authors used convenience sampling and a single cross-sectional survey, so causal claims are out of reach. Still, the result complicates any simple story in which ethical leaders fix everything, since in the public service the rules and procedures employees experience seem to matter at least as much (Grobler and Grobler, 2024; Vyas-Doorgapersad, 2022). It also sits oddly with the usual assumption that private firms are the ethical benchmark. Higher scores for private-sector leaders in one survey (Grobler and Grobler, 2024) have to be set beside audit and governance failures in the private sector (Ma-Nlep, 2025; Mutenda, 2025), and the safest reading is that perceptions of leaders inside an organisation and its behaviour towards the outside world are two separate things.

The audit failures at KPMG and PwC show the opposite side of the coin. Ma-Nlep (2025) examined two cases through secondary sources and argues that a culture of profit at any cost pulled both firms away from their duty as independent auditors. In the South African Airways case, PwC and Nkonki issued unqualified opinions for five years, while the State Capture Inquiry found the board to be in precipitous governance decline and found that audit procedures had not been designed to detect corruption. Fees above R69 million for 2013 to 2016 were judged irregular. KPMG, for its part, admitted its audits of Gupta-linked companies fell well short of expected quality (Ma-Nlep, 2025).

Ma-Nlep’s account has to be handled with care, since much of it rests on press coverage and many points are allegations, not findings. Even with that caveat, the argument that combined audit and consulting relationships create conflicts of interest fits what Mkhize et al. (2025) say about firms such as McKinsey and SAP being drawn into capture. Where the culture rewards the client relationship, a code of conduct does little. That seems to be the common thread, and it is not obviously a problem that more rules could solve (Ma-Nlep, 2025; Mkhize et al., 2025).

What firms do after a scandal says something about culture too. Mutenda (2025) used a qualitative multiple-case design and an ethical apology rubric to assess statements from Tiger Brands, Steinhoff and Eskom-linked firms. McKinsey showed moderate engagement by returning illicit fees and reforming internal processes, while Steinhoff and Trillian avoided moral responsibility altogether. Overall, the apologies were reactive, driven by reputation and legally cautious, and fell short of normative ethical standards. The sample is small and the rubric is the author’s own, so the scores are not a league table. The pattern is still telling, because it suggests that ethical accountability is often treated as crisis management, not as an ordinary part of how the organisation runs (Mutenda, 2025; Ma-Nlep, 2025).

Incentives and markets do little to discipline misconduct

If leaders and codes are weak, one might hope incentives or investors would pick up the slack. The evidence on the Johannesburg Stock Exchange (JSE) is not encouraging. Muzata and Marozva (2022) studied FTSE/JSE Top-40 companies between 2008 and 2016 and concluded that executive compensation structures can accelerate agency and governance problems. Performance was found to affect directors’ remuneration negatively, governance also had a negative effect on remuneration, and share-option trading pointed to agency conflict, since net trades and the number of directors trading deteriorated as remuneration improved. In plain terms, pay did not follow performance or governance in the way a sensible incentive scheme would require (Muzata and Marozva, 2022).

Luthuli and Moloi (2024) looked at the other end, which is whether the market punishes misconduct once it comes out. They began with 489 announcements on the JSE’s news service, kept 30 from 30 companies over 2011 to 2020, and ran an event study. Their cumulative abnormal return over the event window was 5.37% with a t-statistic of 0.48, which they read as no meaningful punishment, and they conclude that shareholders of JSE-listed companies do not significantly punish announced misconduct. If a company’s share price barely moves when fraud or irregularities are announced, directors have little financial reason to invest in ethics (Luthuli and Moloi, 2024).

The Luthuli and Moloi study is thin, and it should not carry too much weight. The sample is 30 convenience-selected events, the method relies on assumptions of market efficiency, and the authors’ own tables and text disagree on which windows were significant. They suggest institutional investors, who dominate the JSE, may hold on for reasons not captured by the model. Put next to Muzata and Marozva (2022), though, the picture is of an environment in which neither pay nor share prices reliably reward good governance or penalise bad. That is a plausible reason for ethics programmes to feel like compliance exercises (Luthuli and Moloi, 2024; Muzata and Marozva, 2022).

There is a link back to leadership here. If directors know the market will probably not react, then the signal that matters is the one sent inside the organisation, which brings us back to the leaders and culture discussed above. It also helps explain the pattern in Mutenda (2025), where apologies were shaped by legal caution and reputation rather than by the cost of the misconduct itself. Weak external discipline leaves organisations free to treat ethics as optional, and the evidence on KPMG and PwC suggests some did (Mutenda, 2025; Ma-Nlep, 2025).

Whistleblowing is the weakest link

An ethics programme depends on people being willing to report, and that depends on what happens to them afterwards. Wright (2025) uses a doctrinal approach to examine legal protection for people who report municipal corruption, and much of what she finds probably applies well beyond municipalities. She finds that the law does not define whistleblower or whistleblowing, that the Protected Disclosures Act covers employees reporting on their employer and gives remedies only for occupational detriment, and that mandatory reporting duties in the Prevention and Combating of Corrupt Activities Act and the Municipal Finance Management Act come with no special protection. Witness protection, she says, is cumbersome, and confidentiality duties are patchy (Wright, 2025).

The human cost is spelled out too. Wright (2025) describes retaliation that runs from dismissal and harassment to false charges and physical harm, and she links fear of retaliation to the murder of Babita Deokaran. She also recounts the case of Thuso Bloem, a municipal manager dismissed in 2011 after reporting his superior, who by 2021 was still in litigation without relief. Her proposed fix is a set of nine elements for new legislation, among them clear definitions, reporting channels, a presumption of causality, immunity, confidentiality and an independent institution, together with a bar on protection for malicious reports (Wright, 2025).

One structural oddity deserves mention. Wright (2025) points out that the Prevention and Combating of Corrupt Activities Act and the Municipal Finance Management Act require certain people to report corruption, yet no special protection attaches to doing so. So a manager who follows the law and reports may end up exposed to the same retaliation as a volunteer. She also notes that the Protected Disclosures Act and the Competition Act penalise false allegations, which sits with her own proposal to withhold protection from malicious reports but does not add up to a wider protective system. For a finance director or compliance officer weighing whether to escalate a problem to the board, those details are not academic (Wright, 2025; Uys and Radulovic, 2025).

Uys and Radulovic (2025) approach the subject from the whistleblowers’ side. Their article draws on accounts from several South African whistleblowers across local, provincial and national government and the private sector, running from disclosures in the decade before the Protected Disclosures Act through to state capture. It points to the personal challenges of acting in the public interest and to a persistent struggle between public duty and personal risk. Taken with Wright’s legal analysis, this makes a consistent case. People who might make an ethics programme work, by telling the organisation what is actually going on, are asked to carry most of the risk themselves (Uys and Radulovic, 2025; Wright, 2025).

Two cautions apply. Wright’s article focuses on municipalities, and the narratives in Uys and Radulovic are selected accounts that cannot show how common retaliation is (Wright, 2025; Uys and Radulovic, 2025). Neither tells us how private employers treat internal reporters in everyday cases, which is where much of the potential benefit sits. The direction of the evidence is nonetheless clear enough. Where reporting is dangerous, ethics hotlines and codes are likely to produce silence, and the leaders who most need to be challenged may be the last to hear about it (Wright, 2025; Uys and Radulovic, 2025).

Conclusion

The sources reviewed here point to a consistent pattern. South African organisations have codes, committees, officers and a whistleblowing statute, but misconduct persists in the public service and in parts of the private sector (Vyas-Doorgapersad, 2022; Mkhize et al., 2025). Ethical leadership matters, though by Grobler and Grobler (2024) its effect is partial and varies by sector, and the audit and apology cases suggest that a culture driven by client relationships and reputation defeats formal rules (Ma-Nlep, 2025; Mutenda, 2025). External discipline is weak, with pay not tracking performance or governance and share prices barely reacting to announced misconduct (Muzata and Marozva, 2022; Luthuli and Moloi, 2024). And the people who could expose problems are poorly protected (Wright, 2025).

The practical implication is that more rules are unlikely to be the answer (Vyas-Doorgapersad, 2022; Maile and Vyas-Doorgapersad, 2023). Organisations and regulators would do better to look at how directors and executives are paid, whether boards respond when misconduct is announced, whether leaders are held to the standards they set, and whether reporting is safe. The research base is limited. It leans on desktop work and convenience samples, it says little about whether ethics programmes change behaviour, and the private sector is underrepresented. Studies that follow organisations over time and compare firms with and without credible reporting channels would show a good deal more. Until then, the safest reading is that ethics in South African organisations is mostly decided by incentives, leaders and protection, and only partly by the code on the wall (Grobler and Grobler, 2024; Wright, 2025).

Reference list

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