04 Jan Being Cheated by Family
By Malin Nystrand
In Uganda, as in many other societies, it is common for business owners to employ their own relatives in their business enterprises. These employments are, from the business owners’ perspective, primarily seen as part of the larger pattern of social responsibilities within the family (Nystrand, 2015). Employing relatives is seen as a social obligation, not as a contribution to the business, and most business owners find these employments difficult to handle.
In my study of social responsibility of owners of SMEs in Uganda several interviewed business owners complained that employed relatives did not understand their role as employees and indicated that relatives perceived that they had some type of claim on the business because of the family relationship. Firing an employed relative was very difficult because of opposition from other relatives, even in cases of fraud and where the employee had inflicted large damage to the business enterprise. This is what happened in Peter’s (not his real name) manufacturing firm, where a large number of employees, including employed relatives, had gone behind his back for several years and squandered money from the business for private consumption. The employees had bought cars and built houses for themselves at the company’s expense and Peter lost a lot of money. When he discovered the fraud he dismissed all those who had been involved, wrote-off what he had lost and restarted the business again with new people. Even though the relatives had squandered money on such a large scale, the larger family criticised Peter for firing the employed relatives. ‘It was horrible, because I had relatives in there. I tried to punish them. My relatives were on me: “how can you punish, how can you threaten your cousins.”’
Similar stories were recounted by other business owners. Richard had lived abroad for many years and during this time he started a business venture sending second hand electrical goods to Uganda. He involved a cousin to sell the goods and also sent him money to manage the business venture. The cousin stole the money and the business venture came to nothing. Richard decided not to employ relatives after this incident. He attributed cheating among relatives to the lack of accountability in this type of relationship. As expressed by a third business owner, Michael, who also had suffered economic loss due to an employed relative’s behaviour: ‘They have that tendency of saying that what can he do to me, he can’t sue me, because the relatives will see me as a very bad person, so you have to suffer silently.’
In literature on close social groups and business (for example, Granovetter, 1995) it is often assumed that family relations entail trust and mutual support. The problem identified is primarily that claims on the business’ resources from members of the social group can be a drain and hamper investment in and growth of the business enterprise. The business owners discussed above all took large responsibilities for members of their extended families by funding education, etc. But they did not benefit from the trust within social groups that is normally assumed to be the other side of the coin in such relations. Only one of the business owners I interviewed fitted into the ‘ideal’ picture of how family relations were integrated into business in a way that strengthened both structures.
The stories of fraud by employed relatives puzzled me. From the business owners’ perspective it was a person that they had tried to help, by involving them in the business, which had turned against them and stolen their money. Naturally, it has to be acknowledged that the cases above are told from the business owners’ perspective. We do not know how previous behaviour, power relations and different interests of the persons involved affect the relationship. Furthermore, self-reporting with regard to moral behaviour tend to be biased towards viewing oneself as morally superior. Another reasonable objection is that the assumption that family relations are inherently trustful and supportive might not reflect realities anywhere in the world. But the reason why I found fraud puzzling in these cases was that norms of mutual support within the extended family are still very strong in Uganda. There is something here that has to be better understood, either with regard to the nature of family relations in business or in relation to views on economic fraud.
One explanation would be to view fraud by employed relatives as part of the general problem of fraud in Uganda. Corruption and fraud is widespread, both in the public and private sector (Nystrand, 2014), and sometimes interpreted as an expression of a neo-liberalisation of moral economies (Wiegratz, 2010; Wiegratz and Cesnulyte, 2016). The view that fraud is permeating society has also been expressed in Ugandan popular music, such as in the songs Kiwani by Bobi Wine and Bayuda by Jose Chameleone. The fact that economic fraud occurs also within social groups where trust is assumed to be a main asset, i.e. within the family, might be seen as an expression of this general problem.
Another perspective would be to focus on the business owners’ complaint that relatives thought that they had some type of claim on the business due to the family relation. This might indicate a collectivistic view of ownership and rights that might collide with the neo-liberal view of individual ownership.
A completely different take would be to see the extended families’ concern with social cohesion even when economic fraud has taken place (as described by both Peter and Michael above) as a sign that social relations are given a higher priority than money, i.e. the opposite of economic interests permeating society. A similar view is reflected in Richard’s motivation to why he wanted to preserve the relationship to the cousin who squandered his money:
I try to preserve every relationship that I have. For me, yes, money is very good but it is not the ultimate. It is good to enable you live the kind of life you want to live … But if you take it as the number one, “you stole my money”, then you will have many enemies.
Richard’s view that ‘money is not the ultimate’ is noteworthy and points to a moral position that deviates from the profit-maximising position often assumed to be dominant among business actors. However, Richard speaks from a position of high socio-economic standing as his businesses, both in Uganda and abroad, were relatively successful. His material position is somewhat different from, for example, the small scale traders in Uganda that are the focus in the analysis by Wiegratz and Cesnulyte (2016): some of these traders give priority to money over other moral concerns (such as being somewhat lenient with poor trading counterparts such as peasants), is in part due to high economic insecurity and very low profit margins that characterises their businesses. These contrasting narratives point to the importance of giving attention to class when studying moral economies. Who can afford to prioritise social relations over money?
Dr Malin Nystrand is a lecturer working in the School of Global Studies at the University of Gothenburg. Malin’s areas of interest are social responsibility, informal social safety nets, small business owners’ role in society, corruption, critical perspectives on the development discourse and forms of governance.
Granovetter, Mark (1995), “The Economic Sociology of Firms and Entrepreneurs”, in Alejandro Portes (ed), The Economic Sociology of Immigration: Essays on Networks, Ethnicity and Entrepreneurship, New York: Russel Sage Foundation
Nystrand, Malin (2014), “Petty and grand corruption and the conflict dynamics in northern Uganda”, Third World Quarterly 35(5), 821-835
Nystrand, Malin (2015), The Rationale of Taking Social Responsibility: Social Embeddedness of Business Owners in Uganda, PhD thesis, University of Gothenburg
Wiegratz, Jörg (2010), “Fake Capitalism? The Dynamics of Neoliberal Moral Restructuring and Pseudo-development: The Case of Uganda”, Review of African Political Economy, 37(124), 123-137
Wiegratz, Jörg and Egle Cesnulyte (2016), “Money Talks: Moral Economies of Earning a Living in Neoliberal East Africa”, New Political Economy 21(1), 1-25