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Ok. Got itThe fight against corruption in the US offers many lessons. Independent political analyst, JP Landman, exploresthe parallels between SA and the US in incremental progress, institutional reforms and prosecutor-led investigations.
20 September 2023
JP Landman
This political research note was prepared by JP Landman in his personal capacity. Landman is an independent political and economic analyst, and the opinions expressed in this article are his own and do not reflect the views of Nedbank Group. |
Learning from others
In 2021 two researchers published a paper on corruption in the United States (US) between 1865 and 1941, a period infamous for its corruption. They distilled the following 4 lessons from that period:
The focus of this note is institutional reforms in SA and the fight against corruption.
Creating institutions
Institutional reform in SA started in 2019 when President Ramaphosa created a tribunal to hear Special Investigative Unit (SIU) cases. A month later he established the Investigative Directorate (ID).
(The president had initiated a process of ‘people reform’ a year earlier when he fired the NPA director, then the 2 deputy-directors, and in due course also reversed the promotions of several senior prosecutors.)
The Special Investigative Unit Tribunal
This tribunal – a panel of high court judges – only hands down judgement in SIU cases. The SIU is an ‘old’ organisation which started life in President Mandela’s time as the so-called Heath Commission. Its purpose is to use civil litigation to recover public funds lost to corruption or maladministration. For years the SIU had to join the queue at the high court to get orders to freeze and reclaim money. Creating a separate tribunal focusing only on SIU cases has sped up the process considerably. Apart from monies recovered, SIU investigations has also claimed several scalps, most notably previous Health Minister Zweli Mkhize, after the SIU pounced on Digital Vibes.
It is noticeable that the amount of money recovered and volume of cases handled have increased since 2018. In 2022 the SIU recovered funds and assets to the value of nearly R6 billion and set aside contracts of R5,5 billion. Currently, around 119 cases worth more than R12 billion are enrolled at the SIU Tribunal.
The SIU and the Tribunal have become South Africa’s most effective weapons against corruption. Fighting corruption is not just about orange overalls. Losing ill-gotten gains and jobs are very much part of holding the corrupt accountable.
The Investigative Directorate
In April 2019 the president established the Investigating Directorate (ID) in the NPA. The ID is a prosecutor-led agency tasked to investigate and prosecute state capture cases. Addressing state capture and corruption is the NPA’s number one priority and the ID is key to that. The ID’s first head was Hermione Cronje. She resigned after two and a half years and was succeeded by the feisty Andrea Johnson.
Experience shows that prosecutor-led investigations achieve better results. Readers will remember the old Scorpions which was exactly that (a prosecutor-led agency), and which was dismantled when the Zuma era started. Political heavyweights like Zwelinzima Vavi and Fikile Mbalula have since admitted their mistake in supporting its abolition at the time.
To date the ID have not filled that gap completely. It was established by presidential proclamation and can thus be disbanded by proclamation. The lack of permanence has made it difficult to attract permanent staff, particularly analysts and criminal investigators. The ID has had to rely on secondment from other departments. Legislation that would make the ID permanent with full investigative powers has been tabled in Parliament.
Once the legislation has been passed, expect more investigative directorates to be created to tackle illegal mining and organised crime syndicates. As organised crime becomes more sophisticated and better resourced, so must anti-crime institutions.
(For the record, the proposed legislation has been criticised for not going far enough, particularly because it doesn’t turn the ID into a Chapter 9 institution. On the basis that the perfect need not be the enemy of the good, I will not cover that argument extensively here.)
Currently, the ID is working on 97 state capture investigations. They have enrolled 35 cases involving over 200 people, including senior politicians, civil servants and former CEOs, as well as corporate heavyweights like Tongaat-Huletts, ABB, McKinsey and Steinhoff. The ID has also secured restraining orders valued at R7,18 billion.
It is interesting to note that the United Kingdom (UK) equivalent of the ID, the Serious Fraud Office, a much older and more established institution than the ID, limits itself to about 100 cases at any given time. A targeted approach with priorities brings more success.
One of the biggest successes to date is the R2,5 billion punitive fine extracted from the global engineering company ABB for fraud committed at Eskom. The proceeds went into the Criminal Assets Recovery Account (CARA), as discussed in greater detail below. (Back in 2020, ABB also paid R1.6 billion to Eskom to settle an investigation into allegedly criminal conduct involving contracts at the Kusile power station. They really had their hands deep in the cookie jar!)
Stronger coordination
The Anti-Corruption Task Team (ACTT) is a multi-agency team overseeing high-priority investigations and prosecutions. It brings together the NPA, ID, Hawks, South African Police Service (SAPS), intelligence services, the Financial Intelligence Centre, and others to combine resources and ‘follow the money’. As a direct result of the task team’s work, 554 suspects were arrested for corruption between 2019 and 2022, of which 142 were convicted.
The South African Revenue Service (SARS) continues to fight corruption with lifestyle audits and other legislative tools. It is piloting a new unexplained wealth initiative to recover assets suspected of having been acquired illegally or through the proceeds of crime.
When private shareholders, assisted by prominent banks, were ready to sell Tongaat-Huletts to suspect buyers, SARS stepped in with a tax claim that torpedoed the transaction. When Gupta-linked company Regiments Capital succeeded in staving off liquidation, SARS slapped it with a R700 million tax bill. Nice to see coordinated action.
Building partnerships
A further step in building better institutions is the partnership between government and the private sector that authorises private sector resources to be made available to the NPA. The support can only be in kind, not money. Also, it does not come from companies directly but from the Resource Management Fund (RMF), which also coordinates assistance to Eskom and Transnet. The partnership should help the NPA, particularly in the prosecution of complex corruption cases and in fighting organised crime.
The show goes on.
In the meantime, the old workhorses of the NPA are carrying on.
The Asset Forfeiture Unit (AFU) investigates cases of organised crime and can seize assets or proceeds of criminal behaviour after obtaining a court order. Over the past 5 years the AFU has obtained 1 630 freezing orders to the value of R12,4 billion. (The money goes into CARA.)
The Specialised Commercial Crimes Unit, which pursues, among other cases, corruption involving the state and state-owned enterprises, has an 87% conviction rate of government officials. Interestingly enough, it obtained 52% more convictions of private sector criminals than of criminals in the public sector. Clearly not only public servants put their fingers in the cookie jar.
The Prosecuting Service (the biggest workhorse in the NPA), deals with around 850 000 cases per year. Since there are 250 working days in a year, that figure boils down to 5 550 cases per day or 700 per hour! The Prosecuting Service averages a conviction rate of 90% in the high court, 82% in the regional courts and 95% in district courts. In the case of complex tax cases, the conviction rate is over 96%. Once you are in the dock you are probably guilty. Better to stay out.
CARA is where monies recovered through NPA actions are deposited. It is then disbursed to fight priority crimes and help victims of crime. Currently there is some R3,4 billion in CARA and it is earmarked for combating illegal mining operations and building forensic capacity.
The National Prosecuting Authority cannot do it alone.
The above data, however, does not tell us about the SAPS and court administration, 2 institutions next to the NPA that are wholly independent from, but critical to its success.
Shoddy police work undermines prosecutorial success. There is a tonne of empirical evidence, from the likes of the Institute for Security Studies, that SAPS is a highly dysfunctional organisation. Its budget has increased, but its performance keeps declining. Money is not a problem. It is an area where both institutional and people reform are desperately needed. The president clearly needs to repeat the people reform and institutional renewal at SAPS that he initiated at the NPA from 2018.
There is not as much empirical evidence of dysfunctionality in court administration, but many cases just do not advance, and some judgements are inordinately delayed. Load-shedding does not help either, as court days are shortened. Also, how is it possible that an acting judge was appointed to hear the first state capture case, a complex corruption case where the best defence lawyers would be deployed? The courts are not part of the civil service and fall under the Office of the Chief Justice, complete with its own budget, personnel, and head office. It is correct that interference not allowed. But judicial independence cannot exclude accountability for managerial and administrative weakness.
The ongoing consequences of the KwaZulu-Natal riots
The KwaZulu-Natal (KZN) riots of 2021 was SA’s equivalent to the attack on the US Capitol on 6 January 2021, and the Bolsonaro riots in Brazil in January 2023.
Regarding the KZN riots, 63 people have been charged to date and the AFU has obtained 28 preservation orders. The first convictions were in August and September 2022 (about 14 months after the riots), followed by more this year and the latest being in this month. Investigations and prosecutions are ongoing.
For curiosity's sake, the first trail concerning the US 6 January attack was in March 2022 (about 14 months after the event) and prosecution is ongoing. The wheels of justice turn slowly.
In Brazil, the first conviction was on 14 September – 9 months after the attack. The Brazilian judiciary created a ‘fast track channel’ to hear and adjudicate these cases. Perhaps we can follow suit and let specific courts process priority crimes?
So what?