Diversity of Diesel Skimming in SA

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There are some South African schemes that make me take my hat off to criminals. Last night I watched a Carte Blanche documentary on diesel skimming. The crime has apparently been going on for years and as an engineer I was humbled that I didn’t know even know what the word “skimming” means.

The technique is very simple: the thief puts a hosepipe inside a truck’s diesel tank. He then makes a syphon by sucking a bit of air out of the pipe with his mouth. As the draining starts, he silently waits as the liquid flows into a separate container. This operation naturally requires the cooperation of the truck driver, who is willingly screwing over his employer, the logistics company.

The whole story is uniquely South African. There is no other country where a Zimbabwean businessman can run a deeply criminal enterprise that is managed by an Afrikaner. The white guy even has one of the most traditional Afrikaans names: ‘Johan’. The stereotyping goes further, because one of his confirmed buyers is Indian, and most probably a middle-man, if you can forgive the cliché.

The organisation seems to employ a lot of black people and for all that I can tell it does truly reflect the demographics of the country. Sadly, we should be proud that this criminal enterprise is truly transformed, independent of the state, helping to grow SMME skimmers, and led by a successful and “probably” illegal African immigrant.

The leader of the clan, “Beki”, is seemingly unaffected by the latest waves of Xenophobia. When questioned, naturally, ‘nobody knew of anything’ and “Beki” was nowhere to be found, because speaking the truth does not get you out of trouble. I suspect that Skimming organisations such as these are probably just the tip of the iceberg.

Now, South Africa has had black markets for years. The most notorious of them have been the drug cartels, prostitute pimps, rhino horn poachers and diamond smugglers. Every single time they are at first associated with foreigners, but as soon as one digs deep enough, we find that Ubuntu is real and that the whole rainbow nation in involved. I will not be surprised, if there is a South African at the top of the pyramids and if a politician or two is implicated.

We should know by now that we cannot just get rid of black markets, if we are not prepared to address the underlying conditions that allow for them to happen. The moment that one market dies another will pop up around the corner. If this is true, then why are we constantly bumping our heads against the wall, if we think that we can just call in the police and get rid of them? South African’s should not be asking how to crack down on criminals, because let’s face it – the police is not going to do it. In all likelihood, we know that they will be involved in the crime as soon as the first officer realises that there is good money to be made by turning a blind eye.

The Carte Blanche documentary claims that the diesel is being sold for R6 less per litre –a price that is substantially less than the price at petrol pumps. The rationale behind buying diesel on the black market is simple: “the government already steals through taxes, so why should I feel bad about stealing a few rands of the fuel levy?”

The argument is not entirely amoral or unconvincing, because South Africa’s fuel levy has been the government’s milk cow for years. Diesel skimming is only a consequence of government stupidity. This should also be a warning for anyone who is calling for a climate tax, because by fixing the price of fuel, the black market’s fuel price becomes profitable. The usual line that follows from this is that we need the police to do their job!

This argument is also not thought through properly, because South Africans who are calling for the police to step in, might need to look at the history of black markets and ask whether or not the police does get rid of them. History tells us that it leads to more violence and bloodshed when cartels are fighting for a smaller market share. This was the case in New York under the Mafia boss Lucy Luciano in the 1920s.

Luciano explained in his autobiography that the mafia could get away with their crimes, because there are always some crimes that the public at large are prepared to accept. In those days, his crime was selling whisky when it was illegal to do so. The illegal laws gave him enough profit to run a bigger enterprise than General Motors at the height of their production. When the police started cracking down on him it intensified the turf wars in New York and resulted in the rise of the American Mafia.

Luciano’s 2nd business principle was that the most important document in any business is the debtor’s list and that a good CEO should always make sure that the judges, policemen and politicians are the ones who get paid first. Luciano was a badly educated migrant, but he had an intuition and sense of power. The police in America could not figure out how to deal with him, because they also had their hands in the cookie jar. It is the classic case of how black markets corrupt a society. For the decades of the 1920s, Luciano was unstoppable and photographed by the press among New York’s business and political elite. His luck was about to run out when President Franklin Roosevelt ran on the ticket of getting rid of prohibition. Roosevelt himself was governor of New York, but the political debate of ending prohibition started with his predecessor Al Smith. Smith’s argument was that prohibition was simply unenforceable given the corruption that he saw in New York.

In 1933, the 18th Amendment to the US constitution was appealed and prohibition abolished, alcohol was made legal again. The lack of illegal money quickly made the mafia unstable and without a good stream of income they started to collapse. In 1936, only three year later, the Mafia boss was sent to jail. As soon as the debtor’s list went unpaid, Luciano could no longer count on corrupting the system.

The experiment in prohibition in America has been cited as a case study by those of us who are calling for legalising prostitution and drugs, for years. It is not that we wish to encourage these activities, but rather because the best way to get rid of any cartel would be to take away the economic power that lies behind it. In the case of diesel skimming, this can only be done by lowering the fuel levy and by consequence driving down the business margins of companies such as Beki’s. The illegal industries will collapse within months, because the crimes associated with them will no longer pay. Young men would not be given an incentive to enter these industries. Like Luciano’s mafia the real crooks behind all of this will turn on each other and eventually be brought to the book.

If South Africa follows this basic principle in dealing with cartels, then perhaps we can come to a point where we can address the deeper question that underlies all of this. What exactly persuades young, and black men in particular, to become diesel skimmers for only a few 100 Rands a day? The answer is more difficult, because it is a sad reflection on the opportunities that are afforded to them by our society.

 

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