Hello and welcome to the So What podcast, in which political economic analyst JP Landman
discusses the issues uppermost in the minds of South Africans. You can find a written
version of this content on JP's website, jplantman.co.za. I am Ruda Landman and I am your host.
These first few recordings were done at our dining room table, but we will soon be moving
into a studio. Hello and a very warm welcome to another discussion based on JP's latest
newsletter. This one is dated the 20th of September 2023. The heading is neither a one-day nor
a one-person job. It's your annual update on what's happening with measures to counter
corruption in South Africa, but you start in the US with research done on corruption
in that country between, what is it, 1865 and 1941. That was a period infamous for its
corruption. What did the researchers find? Yes, indeed. It was a sort of dark period
in American history and a period in which there was a lot of particularly corporate
corruption. The two researchers found four things. The first one is it is possible for
a system to transition from one which is absolutely corrupt to one where corrupt behavior is seen
as aberrational. So we can get out of this. You can get out of it. That is the bottom
line. I think we as South Africans can take some comfort from that. The fact that we now
find ourselves in a system which is systemically corrupt doesn't mean we will stay there forever.
That was the first finding. The second finding I think is equally important for South Africa
and that is that the change in the US was not a linear one. It was incremental. It was
uneven and it was slow. Incremental, uneven and slow. So there was no big bang. There
was no upward graph that just went from the left bottom to the top right. And again, I
think that is applicable to us here in South Africa. We tend to think, you know, if the
NPA loses one case, then that is the end of all action against corruption. And that is
simply not correct. The third one is, if you want to have a systemic curbing of corruption,
then you must be willing to put resources behind it. The idea that the smallest state
gives you less corruption is simply nonsense in the view of the researchers. It is the
opposite. What you in fact need is for more money, more resources, more power in the hands
of the law enforcement agencies to curb crime and corruption. I don't think we have a particular
problem with that in South Africa, except perhaps for budget cuts. You know, we must
be careful not to go too far with that. And then the fourth and the last finding was that
it is not just about having high profile prosecutions, arrests and prosecutions. It is also about
systemic change in the rest of the civil service. It's about ongoing institutional reform that
gives you more effective institutions. And I think this last one is particularly important
for South Africa. And I focus this note on that point. It struck me so much that I thought,
well, it is worth mentioning it and then worth writing about that, which is what we do here.
What are the institutions that you see that are coming through, which we didn't know before?
Two in particular stand out. Both of them were initiated in February 2019 by the president.
The first one is the SIU Tribunal, Special Investigative Unit Tribunal. Now, you may
remember the SIU started its life during Mr. Mandela's term as president. Legislation was
passed towards the end of the 1990s. And it's basically a unit government agency that specializes
in reclaiming money that was lost through corruption or maladministration. And they
use civil proceedings. It's not a prosecutorial agency. It is a civil litigation agency that
reclaims money lost through corruption or maladministration. Is it part of the NPA?
It's not part of the NPA. It's part of the Department of Justice, but it stands next
to the NPA. Now, as I say, this dates from the days of Mr. Mandela. The problem that
developed over time was because it's civil litigation, the unit always had to go to the
high court. Nothing wrong with that, except that the queues in the high court are very,
very long. And in 2019, the president announced that he's creating a tribunal which will
hear SIU cases. Now, what is a tribunal? It is simply judges of the high court who sit
as a tribunal specializing only on SIU cases. So no other cases served before them, and
they only deal with SIU cases. So the role is not so overpopulated? The role is not overpopulated.
The only people that can bring cases to that role, or put cases on the role rather, is
the SIU, the Special Investigative Unit. Now, it is noticeable that since this change was
made in 2019 by way of government gazette and presidential proclamation, the activities
of the SIU have picked up quite considerably. So we quote the numbers in the book, in the
note rather, in 2022, the SIU recovered funds and assets to the value of nearly 6 billion
Rand, and they set aside contracts to the value of 5.5 billion Rand. So if they go through
Transat, for example, or through ISCOM or any other place in the public sector, and
they find that there are contracts which were inappropriately awarded, they can apply to
the tribunal to have it set aside, and in fact this has happened. So it has got nothing
to do with orange overalls. People are not being prosecuted, but it has to do with getting
back the money, the ill-gotten gains of the corrupt, and it certainly is having a great
impact. So that's the first institution, was the tribunal that was created to assist the
SIU. The second reform, civil service reform or institutional reform that took place was
that also in 2019 the president created an investigative directorate. Now this is a unit
inside the NPA, and they specialize just on state capture and corruption cases. Hermione
Conier was the first director, you may remember. Unfortunately, she resigned after about two
and a half years and left, and Andrea Johnson is now the head of that unit. Now what is
important about the ID or the investigative directorate is that it is a prosecutor-led
agency. So when they investigate a criminal case, unlike the SIU which do civil litigation,
the investigative directorate does prosecution. So it's a criminal process. They aim to put
people in jail. They aim to put people in jail or orange overalls. And the way that
they do it is to have a prosecutor-led investigative teams. The experience is that the prosecutor-led
institution is just more effective and efficient than one where the prosecutors are not involved
from the beginning. We had that in the scorpions. Can the ID, are they stepping into those shoes
or not quite? Yes, they are. Conceptually they are. But remember, their mandate is more
limited. They are only mandated to look at state capture and corruption, whilst the old
scorpions could investigate any case. But yes, it is in principle exactly the same thing.
So in that sense, the scorpions are coming back. Now what is very important is that legislation
is now before parliament. It was introduced in September to make the ID a permanent unit.
When the president created it in 2019, he did so by way of a presidential proclamation.
Now that implies you can also abolish the unit with a presidential proclamation. And
you will recall that the scorpions indeed were abolished, not by proclamation, but by
an act of parliament. Now to give more permanence to the ID legislation is now before parliament.
To make them permanent, to give them the prosecutorial powers and investigative capabilities. And
to appoint permanent staff. At the moment they must rely on staff seconded from the
Department of Justice or the Saratoga Police Service or the Intelligence Service or from
the Revenue Service to come and do work in the investigative directorate. This should
also increase their independence. It will certainly increase their independence and
it will give them more oomph. And they are now busy recruiting people on the basis of
this permanence. Now I was just pointing out that in parliament there was a lot of criticism
of the legislation. Not because anybody is against it or at least not the people who
criticized, but they wanted more. They wanted the ID to be made a chapter 9 institution.
My approach to this is that one must not make the perfect enemy of the good. And to delay
the whole process and go through a constitutional amendment and in the meantime you leave the
ID at the mercy of a presidential proclamation is as far as I'm concerned not good politics.
Because to introduce them into chapter 9 of the constitution. Will require a constitutional
amendment process which is much more onerous than just an act before parliament. In any
case I think the mood has shifted a lot since the time that the scorpions were abolished.
Remember that abolition was tested in the Constitutional Court. The court found it
was okay. Well it found that it was legal. It found it was legal. Quite correct. It found
it was legal and fitted in with the constitution. One doesn't know whether the Constitutional
Court today would again make such a ruling. Now right now at the moment the ID is working
on 97 state capture investigations. They have enrolled 35 cases in court involving over
200 people or 200 accused. Amongst the accused you find senior politicians, civil servants,
former CEOs and also companies, corporate institutions, corporate heavyweights like
Tongard Hewlett's, ABB, McKinsey and others. And the ID has also secured restraining orders
valued at over 7 billion rand. So while the cases are going on the money gets frozen so
that it cannot be spent. I must point out that one of the biggest victories of the NPA
is that in December last year they extracted a punitive fine from the international engineering
company ABB for fraud committed at ESCOM. This was in addition to 1.6 billion rand which
ABB paid back in 2020 already for fraud committed at ESCOM. So clearly you know it's an indication
of how corruption is not just a one-way street. You need two parties to participate in corruption.
And once again it is not uniquely South African. And it's absolutely not uniquely South African.
Because this is a well-known international, good repute.
It's Swedish companies. Yeah, absolutely. Then the third institution that has developed
is the Anti-Corruption Task Team or ACTT for short and it's exactly what the title suggests.
It is the bringing together of several branches of the state. The intelligence services, the
police services, prosecutorial services and so on to oversee joint action against suspects
in particular cases. And to date as a result of the existence of the ACTT 554 people were
arrested and 142 of them have been convicted up to the end of 2022. It's a unique thing
in the sense that these arrests and prosecutions were the function of coordination.
So this is not, I think South Africans are a bit cynical about more task teams, more
coordinating bodies etc etc. So you think this one actually works?
Yeah, look it's really simple. I mean crime is evolving all the time and crime is getting
better financed, it's getting better organized, crime is becoming more professional. So you
can't have that development on one side and the other side you don't take steps to make
the anti-crime agencies not also more professional and better coordinated and better integrated.
You know the one must balance the other. So no I'm not cynical about it at all, I think
it helps to balance the forces between the people who commit crime and the crime fighters.
And SARS is also participating in this fight? Absolutely, SARS has scored a number of important
victories. They're using lifestyle audits and they're now busy with an unexplained wealth
initiative which is most welcome. There was a bit of a rampage a few months ago when people
who want to take their money out of the country had to declare where the money came from and
some people misinterpreted this perhaps willfully as an extra form of exchange control. It's
got of course nothing to do with that. It's got to do with where does the money come from
that you want to take out and that you pay your due taxes on it. It's as simple as that.
So SARS is also upping the game which I think is very good. And once again that is not unique
to South Africa. Friends of ours who wanted to get money out of the UK had to go back
in their own history for about 15 or 20 years and declare where it came from. Absolutely,
they had to explain to the British bank the origin of the funds that they had in the UK
before they could repatriate it. I suspect the grey listing also has something to do
with this but I don't have concrete information on that. The private sector is getting involved
in many areas of our public life. Can they play a role in this? Yes, there are three
areas in which the private sector on an organised basis is helping government. The first one
is energy, the second one is logistics, ports and railway lines or railway operations rather
and the third one is crime and corruption. And it's the crime and corruption that is
important here. Now a couple of things, the private sector created a thing called the
Resource Mobilisation Fund and there is some 100 million rand I think in there and from
that fund they give help with energy, with logistics but also to the NPA on crime and
corruption. So the partnership is not between the NPA and individual companies. I think
that's very important. It is with this collective institution. So there is no one on one partnership,
no individual companies and secondly... So no one can buy the NPA? No one can buy the
NPA and secondly the assistance that the NPA can get is only in kind, it's not money. So
for example qualified legal people can be seconded to the NPA to help with prosecutions
and I think that's what will happen and we also know that the private sector is helping
to resuscitate the forensics laboratory of the police which should have a big impact.
So yes the private sector is showing up and having a partnership with government which
should give some dividends. All of these are new institutions, new approaches, what's happening
with what you call the old workhorses of the NPA in the meantime? Yeah I think it's important
not to forget what is there and there are basically three of them that we can refer
to. The first one is the asset forfeiture unit which investigates cases of organized
crime and can seize assets, money, assets, the proceeds of crime after they obtain the
court order. So they have to investigate a case, build it up and convince the judge to
give them that order. Over the past five years the asset forfeiture unit has obtained 1630
freezing orders to the value of 12 billion rand. It's quite a big amount of money, it's
quite a big amount of money and again it indicates that it's not just about audience overalls.
The asset forfeiture unit has got nothing to do with prosecutions but they have to do with
going after your government gains and getting it back. The money gets paid into CARA, the
criminal asset recovery account and I will talk about that a little bit more just now.
But the second unit apart from the asset forfeiture unit is the specialized commercial crimes
unit in the NPA and they pursue amongst other things corruption involving the state and
state owned companies. What is interesting here is that they have got 87% conviction
rate of all government officials that they have charged. I mean that is a very good number.
The other interesting thing about specialized commercial crimes is that they obtained 52%
more convictions of people from the private sector than from people in the public sector.
So clearly it's not just people in the, it's not just public servants who put their fingers
in a cookie jar. And on the other hand it's not just public servants who are prosecuted.
No absolutely. The private sector does also come into it. Yeah more people in the private
sector are prosecuted and found guilty. And then of course the biggest unit in the NPA
is the prosecuting services and they deal with 850,000 cases per year. Now you know
how much is 850,000 cases per year? Well it works out if you work on 250 working days
it comes to about 5,550 cases per day or 700 per hour. Now the country is big and you have
got many towns and regional cities and so on. But still think about that for one central
service to handle 700 cases per hour. It is quite a big operation. It's quite a big operation.
And therefore once again the point that we can learn from the Americans, you have to
keep on putting resources into that. You have to keep on building those institutions to
make them more efficient, help them to cope with bigger and bigger volumes. There's just
no ways around that. The prosecuting service actually has a very good track record that
I don't think people know about. Yes in the High Court their conviction rate is 90%, in
the regional courts it's 82% and in district courts it's 95%. These are impressive numbers.
Some people will probably argue they only take cases which they know they can win, but
what does they do? They take cases which they know they will lose. Don't people watch law
and order? Indeed. I think the bottom line of these numbers is once you are charged by
the prosecuting service, it's better to admit and get it over and done with than to run
the gauntlet with these kinds of conviction numbers. And then CARA, you said you talk
more about that? Yes, CARA is the Criminal Asset Recovery Fund. Now monies that are expropriated
by the Asset Forfeiture Unit and by the SIU go into CARA, into this Criminal Asset Recovery
Account and then the money is reallocated to fight priority crimes and it is there for
the benefit of the victims of crime. Now many billions of rands have already gone into it.
Currently it's about 3.5 billion rand, 3.4 billion rand and that is earmarked for building
forensic capacity and to fight illegal mining operations. So the money comes back and you
can use it again. But a bit of a, we've now said that they are actually doing better than
one thinks, but then your next heading is they cannot do it alone. Yes and I think this
is a very important point. That is why the heading of the piece as a whole is it is not
just a one person job. There are two institutions which are completely independent of the NPA
but which really impacts on the NPA's performance. The one is the South African Police Service
because they do, remember they do the investigations, they have to take the statements, they have
to collect the evidence and the other one is the court system. Now the South African
Police Service is, there is a ton of empirical evidence available from for example the Institute
for Security Studies on how the South African Police Services has become a dysfunctional
organization as their budget has increased and parliament has given them the money. As
their budget has increased by more than 80%, their performance has actually gone down.
So there is clearly a need for huge people and institutional reform in the police. I
think it is a matter of common knowledge that the Crime Intelligence Service is not giving
us the kind of information that one would like. So there is work to be done in the police.
The president has taken the trouble to start both people and institutional reform in the
police. It seems to be the next area of work has to be the police service. Likewise there
is the court system. Now the court system is completely independent of the civil service.
They have their own budget, their own personnel, their own head office even and they fall under
the control of the Chief Justice. But you know the Chief Justice becomes the Chief Justice
because he is a good legal person, not because he is necessarily a good manager. And there
are numerous cases where our court system is just not functioning properly and more
work needs to be done to reform that as well. So these two institutions, the police service
on the one hand and the court system on the other hand, are as I say standing next to
the NPA, independent of the NPA, but it influences what is going on in the NPA.
A bit of a side issue, but I think something that people really worry about. Consequences
after the July 2021 KZN riots. It's now two and a quarter years later.
Yeah I thought it would be interesting to just follow up on that. And that's what I
do here. And I just do a very superficial reference to both the January 6 attack on
Capitol Hill in the United States in 2021. We had the President Atoll riots in July
2021. And then of course in January 2023 there was the similar attack on the Capitol on parliamentary
building of Brazil after Bolsonaro lost the election and Lula de Silva won. So you've
got actually three of these cases that you can look at. And what I found interesting
was that the first prosecutions in South Africa for KZN riots took place 14 months after the
riots. In the United States it took exactly 14 months before the first people were convicted
in court. You know now the Americans have got a formidable police and crime fighting
machine. If it took them 14 months to get a prosecution, then maybe one can look at
the KZN thing in a slightly different light. What have we actually done in KZN? Well we've
seen 63 people charged up to date, until the date of the note, and 28 preservation orders
that have been obtained by the asset forfeiture unit. For example one of them was a guy that
was found guilty of commit of looting and creating damage. But he also lost his bucket,
which was used to transport some stolen goods. So you know that's the role of the asset forfeiture
unit. It's interesting to compare what we are doing and what the United States have done
to Brazil. In Brazil the judiciary created what they called fast track courts to deal
precisely with the January 23 riots. And they had their first case I think nine months after
the riots took place. The riots took place in January and the first conviction was in
September. So maybe it's something that we can learn from then in the spirit of institutional
reform is to establish fast track courts for criminal for serious crimes like illegal mining,
attacks on infrastructure, that sort of thing. That you get it through the court system much
quicker and you can lock people up and claim their assets. So with all this data, so what?
The first thing that strikes me is that we are not unique, number one. And number two,
that as you said in the beginning, that the pattern internationally is that progress is
incremental, uneven, slow. Yeah absolutely. I think those two points stand. I mean as
we're sitting here talking, it is quite clear that some army generals, military elite in
China is being prosecuted, locked up, whatever. We don't quite know. Even in Ukraine? In Ukraine
there was a problem. So you know corruption is not a uniquely South African feature. And
like those societies, we're fighting to move a system to a better place. And I think the
other thing that you've already alluded to is the fact that the progress is incremental,
uneven and slow. Forget about the quick fixes and quick solutions. There's no such a thing.
You know some member of the commentary art said that the NPA or the investigative director
should be involved in some 900 corruption cases. Well that simply doesn't have any
contact with reality. You know the British have got an office similar to the investigative
directorate known as the SFO, the Serious Fraud Office. It's older than the ID, much older.
It's older than the NPA in fact. And it's quite a well-resourced resource company or institution
rather. They've got 500 people working there. They limit themselves to about 100 cases at any
given time. So the idea is specialized, focused, prioritized. Then you get the best results.
And I think that's what one must bear in mind when we talk about let's just have prosecutions.
But another so what that you lift up is that it's not just the institutions, it's also
the people, the population that we must start seeing things in a different way.
Absolutely. It's all about values. And what we learned from UN development is that value shift.
Values are not permanent. And societies where they are permanent run into trouble.
Now if you think about shifting values in South Africa, there was a time when the most wonderful
people put themselves into contortions and twists to defend the inappropriate spending of the
Kandla. Now it is a condition of the ANC that to run for office you can't have any serious charges
against you. You know that is we've come a long way in a few years. And that process will carry
on. That's how you move a system from one state to another. And the work that we're doing around
institutions, around fighting corruption, around claiming money, reclaiming money and so on, it's
all part of that process. And then there's as you say ongoing civil service reform but it has to go
wider than the NPA. Yeah I think we've discussed that at length and don't have to but it's clearly
a priority. It's clearly a priority the president must attend to. What about accountability in the
private sector? I think that is an equally important point. We cannot shift the system away from
tolerance of corruption while you have extensible corruption going on in the private sector.
We hear about health professionals who fleece the system. We know about the advocates and lawyers
who simply charge outrageous fees to the taxpayer. That kind of nonsense must also be taken up.
It's about adherence to the rule of law and that can't be done by the NPA or even the government.
It's the regulatory bodies in the private sector that must do that. The regulatory bodies for the
legal profession, for the medical profession, for the auditing profession and so on and so forth.
And it's corporates. It's corporates that mistake action against people who participate or
assist in these processes. SAS is a very good pointer on that. They have prevented two or three
deals that went ahead with the concurrence of big commercial banks. And when SAS brought tax claims
and so on the deals fell apart. Now that for me is an indication of where the role should be played
by the private sector. And then you end on quite a bleak note that there are new battle fronts in
South African crime. Yeah look I think it's quite clear if you watch the news that organized crime
gangs, illegal mining and extortion are crimes that are on the rise and that are causing havoc
in certain communities. And obviously the crime fighting authorities must respond to that.
So I think it's a fairly safe bet to say that once the ID legislation is passed by parliament
and provided parliament provides money in the budget that we will get more IDs, more investigative
directorates that will specialize on illegal mining, extortion, kidnapping and organized crime
gangs. And that's the way that it should be. That's the way it should be and at least we are pursuing
that. So it's not just a one-way street. I think that's the overall conclusion that I take away
from doing this research and writing this note. There's a lot of pushback going on and all of us
must climb in behind the pushback and help it. If you say it's not a one-way street what do you mean?
Well what I mean is that you know it's not everything is done to favor the criminals.
It's not that the criminals are running wild and getting away with things. The Guptas got away with
her enormous amount of stealing and I'm sure a lot of that is still going on on the smaller scale.
But the fact is the Guptas are no longer here. The fact is they're on the run. The fact is a lot of
proceeds of corrupt activities have been confiscated either by the SIU or the asset
forfeiture unit or frozen by the ID. So the money is being recovered and it's recycled into
further crime fighting. So the battle is on and it's by no means lost. Thank you very much. Thank you.
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