Copyright © 2022 Inclusive Society Institute 50 Long Street Cape Town, 8000 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or its Board or Council members. All records and findings included in this report, originated from a high-level discussion on the establishment of a National Anti-Corruption Agency for South Africa, which took place on 19 October 2021. Author: Stephen Langtry Editor: Daryl Swanepoel
Setting the scene, Daryl Swanepoel & Roger Latchman
Moderator’s remarks, Prof Bonang Mohale
South African context
Input by panellists
One body cannot defeat corruption on its own – Prof Evengelos Mantzaris
Different types of anti-corruption agencies – Drago Kos
Anti-corruption agencies need to be nurtured – Prof Andrew Spalding
Conducting proper diagnosis – Dr Abiola Makinwa
The effects of corruption – Prof Pregala Solosh Pillay
Prevention is key – Mr Willie Hofmeyr
Transitional arrangements and independence – Prof Gavin Woods
Setting the scene
By Daryl Swanepoel, Chief Executive Officer of the Inclusive Society Institute & Roger Latchman, Convenor of the Inclusive Society Institute’s research into corruption
On 19 October 2021, the Inclusive Society Institute hosted a high-level dialogue on the merits of establishing the National Anti-Corruption Agency announced by the State President earlier in 2021. The dialogue revealed areas of alignment and disparity between the esteemed members of the panel but what emerged was an important synthesis of key takeaways that will serve to underpin our ongoing research on this critical issue as the institute moves forward.
Participating panelists included:
Professor Evangelos Mantzaris, Anti-Corruption Centre for Education and Research at Stellenbosch University (ACCERUS)
Drago Kos, Chair of the OECD Working Group on Bribery and International Business Transactions, Co-Chair of MENA OECD Business Integrity Network, and a member of the International Anti-Corruption Advisory Board
Professor Andrew Spalding, University of Richmond School of Law, Founding President of the American Society of International Law’s Anti-Corruption Interest Group and Chiar of the Olympics Compliance Task Force
Dr Abiola Makinwa, Principal Lecturer of Commercial Law, Anti-Corruption Law and Policy at The Hague University of Applied Sciences Law Department
Professor Solosh Pillay, Vice-Dean for Social and Impact Transformation at the Faculty of Management and Economic Sciences at the University of Stellenbosch, and a Director of ACCERUS
Mr Willie Hofmeyr, former Head of the Asset Forfeiture Unit of the National Prosecuting Authority
Professor Gavin Woods, ACCERUS and former Chairperson of the Parliamentary Standing Committee on Public Accounts (SCOPA)
There is much promise in this country, which corruption has systematically been eating away at. In order to prosper as a nation, South Africa needs to leave no stone unturned in its efforts to reverse the damages that corruption has caused to the economy. And indeed, the very fibre of society. The Inclusive Society Institute acknowledges the current regime’s commitment to fighting the scourge, which fight is slowly but surely starting to turn the wheels of justice. That said, the powers that be, need to pick up the pace.
In his State of the Nation Address President Ramaphosa proposed the establishment of a National Anti-Corruption Advisory Council that will report directly to Parliament. In principle, the institute will support any effort that aims to cause the demise of corruption in this country. However, as a research institute, it also wants to ensure that the most productive and effective path is followed, to address the social ills in society.
There are currently some fourteen bodies of various shapes and sizes, involved in combatting crime and corruption in South Africa. Perhaps this is the reason for the dubious response by some when the President announced the initiative. It is from this departure that the institute has decided to get involved in the debate. To answer the questions: What will the specific mandate of the Council be? How will it differ from the other organs? How will the various bodies coordinate and communicate? These are the questions this high-level meeting of minds attempted to answer.
Professor Bonang Mohale, President of Business Unity South Africa and Chancellor of the University of the Free State
Nothing could be more urgent, or more needed, than a National Anti-Corruption Agency in South Africa. Firstly, after twenty-seven years of democracy, even after three-and-a-half years into the sixth administration, it is very clear that State Capture continues to be a problem – despite the concerted efforts of the President. The thieves in Cabinet caught out for their corrupt activities have yet to be brought to book. And the President continues to include them in his new Cabinet.
Furthermore, those in the Chapter Nine institutions who aided and abetted and who were themselves protagonists in state capture, also still hold their positions, thereby frustrating the actions of those who have chosen the right side of the law.
Secondly, all the metrics for South Africa indicate that the country is in deep trouble. But if one looks at the numbers – there are 60.1 million people in South Africa and on average, the South African Revenue Service (SARS) collects R1.4 trillion annually – there is absolutely no reason why anybody in this country should go to bed hungry, because clearly there is more than enough to go around.
South Africa is a middle-income country, not a poor country. Like the rest of the African continent, South Africa is not poor, but rather poorly managed, which is at the root of most of the country’s problems. In the nine wasted years of State Capture, it has taken just five years to steal R1.5 trillion. That is a fifth of what SARS Head Edward Kieswetter collects in a year in revenue. During those nine years, R200 billion a year was being syphoned off by two Zupta families alone – revenue which could have been used to provide health care, education, houses, toilets, and the list goes on, for countless poverty-stricken individuals and families.
Or providing security – a recent report stated that 70% of South Africans live in fear, and yet South Africa has the best Constitution in the world. Its preamble, never mind the main body of the Constitution, talks about three principals: social justice, democratic values and fundamental human rights. It promises these freedoms but most importantly, it promises freedom from hunger.
The fact that the people who call themselves South Africa’s leaders are literally stealing food out of their citizens’ mouths – R500 billion in social economic stimulus as a response to the pandemic, PPE that is meant for their colleagues and family members, funds meant for social grants and feeding schemes for the youth – says that South Africa still has a very long way to go to achieving these freedoms. Hence the need for a National Anti-Corruption Agency, and bodies such as the Inclusive Society Institute, to take up the challenge to do research and create dialogue around inclusion and what it means for South Africans.
There is no doubt that the country needs to include black people, and women in particular, more in its dealings and decisions. After all, they constitute 90% and 51% of the population respectively. A final thought to ponder and perhaps take to heart, inspired by Martin Luther King Jr., is that our lives begin to end the day we become silent about the things that matter. It is time for South African leaders, and citizens, to stand up and be counted.
At the dawn of the new millennium, there was a proliferation in the establishment of anti-corruption agencies. This was driven, in part, by the establishment of the United Nations Convention against Corruption (UNCAC), and in part by the European Union mandating such agencies in a number of countries attempting to become part of the European Union.
Unfortunately, despite progress made elsewhere in the world, there is still a great deal of work to be done in combatting the scourge of corruption on the African continent, where 25% of African GDP is lost to corruption. The developing nations are the most severely impacted by it.
South African context
In the South African context, the impact of many years of corruption has been devastating. It has resulted in significant economic losses whilst deterring foreign investment. It has deepened public service dysfunction, eroded institutional integrity and it has had a corrosive impact on the rule of law and our democratic processes. It has also served to further entrench poverty and inequality, and it has exacerbated the plight of our most vulnerable citizens.
It therefore came as no surprise when President Ramaphosa announced, in his 2021 State of the Nation Address, the proposed establishment of a high-level National Anti-Corruption Council that would act in an advisory capacity and report directly to Parliament. Critics were, however, quick to point out that there are already fourteen law enforcement agencies operating in South Africa, all with a mandate to combat crime and corruption. The questions that then arose were why and how a fifteenth agency could be expected to make the kind of seismic difference all the other agencies have thus far failed to achieve? In the alternative, should government not allocate its resources to improving efficiencies in the existing agencies? These are the issues that were set before our panel for their learned consideration and here is what we learned.
Analysis/Mapping is a critical foundational step
Given that South Africa already has fourteen existing agencies to deal with crime and corruption, clear and careful gap analysis and mapping is essential to determine whether a fifteenth agency is in fact necessary at all, or whether the government would be more likely to succeed in their efforts by upgrading and retooling the existing agencies.
Starting with a look at the country’s international obligations, South Africa is a member of the United Nations Convention against Corruption (UNCAC), under which it has certain obligations. Article 6 of the Convention establishes the obligation of each State Party to guarantee the existence of a body or bodies tasked with the prevention of corruption. Article 36 provides that each State Party shall, in accordance with the fundamental principles of its legal system, ensure the existence of a body or bodies specialized in combating corruption through law enforcement. This means that any fundamental gap analysis of South Africa’s anti-corruption efforts must start by asking to what extent the existing anti-corruption agencies are meeting the outcomes envisaged of such agencies under Article 6 and Article 36 of UNCAC.
What must follow from this mapping exercise is a comprehensive and practical analysis of the domestic landscape, keeping in mind all the relevant constitutional, cultural, economic, political and social factors. As pointed out by Professor Andrew Spalding, anti-corruption measures must be culturally adapted to the context in which they are deployed.
Careful consideration of the Nature and Functions of Anti-Corruption Agencies must be undertaken
If comprehensive analysis should reveal that a fifteenth agency is indeed necessary in order to achieve South Africa’s anti-corruption objectives, it will be imperative to consider very carefully the proposed nature and structure of such agency, including the duties, functions and powers that it will enjoy under South African law, as well as the specific objectives it seeks to achieve. As Professor Gavin Woods emphasized, there are a number of complex legal considerations that would need to be dealt with in the South African context. In terms of our law, the establishment of an agency of the sort proposed would require some sort of Constitutional authority in order to carry out the mandate being proposed.
In addition to the legal foundations, the structure of any such agency also requires careful consideration. In broad terms, there are four categories of anti-corruption agencies that have developed over time. These are as follows:
Agencies of a preventative nature that have no law enforcement powers but typically include the promotion of standards that assist in guiding public and private actors and the facilitation of education at all levels of society. This type of agency is typically associated with active public participation and the mobilization of all citizens against corruption.
Agencies that have law enforcement powers and act as such. Where existing law enforcement agencies like this already exist, the creation of new agencies should be avoided where the same result may be achieved by upgrading and retooling existing agencies to achieve the desired outcomes. The reason for this is that whilst the creation of a new agency invariably creates new solutions, it also creates new challenges and difficulties.
Agencies that are of a hybrid nature – these agencies are composed of both national public officials, who contribute their local experience and knowledge, and international anti-corruption experts, who bring their broad expertise and independence to bear. This model is largely employed in countries where they are unable to fight corruption without external assistance. Examples include Afghanistan and Ukraine.
Agencies of an advisory or coordinating nature. These bodies are typically referred to as Councils and are ordinarily driven by political will and founded at a high level. This is the kind of anti-corruption agency proposed by President Ramaphosa. Unfortunately, these bodies do not enjoy a successful track record as the efficacy of their role is entirely dependent on the degree of their authority. Agencies of this kind are theoretically tasked with ensuring a greater degree of coordination and cooperation between existing law enforcement agencies, thereby resulting in improved efficiencies. However, if such an agency lacks authority over the law enforcement bodies it is tasked with coordinating, its authority becomes little more than notional. This is a potential danger for South Africa in the adoption of this type of agency, unless such agency is indeed vested with the type of meaningful oversight authority which must then be constitutionally provided for.
Adoption of Global Best Practice and Modelling must be deployed in combatting Corruption
Whether South Africa elects to move forward with a coordinating Council to combat corruption or to deal with systemic challenges purely by way of upgrading the existing institutional framework and its implementing agencies, what is clear is that these efforts should be focused on three core functions:
prosecutorial capacity and efficacy;
standards – to guide public and private actors; and
education – society wide
In addressing these core functions, it is also critical that South Africa looks to global best practice and models agencies and tools that have been effective elsewhere in the world. In Brazil, for example, immense progress was made in the fight against corruption simply by equipping federal prosecutors with the prosecutorial tools they needed to address corruption, one of which was the non-trial resolution (NTR). This is also referred to as an out of court settlement. It is effectively a resolution that grants a measure of leniency that is, in turn, contingent upon the extent to which a wrongdoing entity self-reports and cooperates with prosecuting authorities.
NTRs have incentivized the public sector to partner in anti-corruption enforcement and it is a growing trend in many countries and a significant and invaluable component of the global anti-corruption effort. In South Africa, a new regulatory framework of non-trial resolutions upon which a new or existing agency can develop policies and practices to develop this kind of public, private cooperation scheme is certainly worthy of consideration.
In France, the government established an anti-corruption agency dedicated to promulgating standards for anti-corruption compliance and to assisting private actors, particularly corporations, in incorporating those standards. As Professor Andrew Spalding has pointed out, the nexus between corporations and the government is a big part of systemic corruption in South Africa. As such, an initiative of this kind also has great relevance here and is an example of the kind of programme that may well be worth modelling.
In terms of education, the Anti-Corruption Commission Seychelles (ACCS) has mechanisms for fighting against corruption whilst simultaneously developing education programmes on ethics. These are the type of global best practices that must be modelled if South Africa is to decisively answer the question as to how to better structure and equip its agencies with the tools to decisively turn the tide in the fight against corruption.
Barriers to Anti-Corruption efforts must be dealt with
A variety of factors were identified by the panelists as impediments to the ongoing efforts to combat corruption:
Contamination of Law Enforcement is a serious issue in South Africa with all but one of the country’s National Police Commissioners having been removed for corruption-related charges. It was suggested by Mr Willie Hofmeyr that a potential solution to this problem lies in the more widespread use of the Voice Stress Analysis technology. This technology has long been used by the Special Investigating Unit within the National Prosecuting Authority as part of their internal integrity process. It was suggested that it could, however, be more widely used to ensure that law enforcement personnel play no part in corrupt activity.
Cronyism continues to be a problem in South Africa and it is imperative that the culture of mediocrity that accompanies it be aggressively dismantled. People cannot continue to be promoted in spite of doing a mediocre or even substandard job. The right people must simply be appointed for the right jobs based on their skill set. Once appointed, staff should be subject to integrity testing and lifestyle audits at regular intervals, although concerns were raised about the manner in which lifestyle audits may be lacking.
Inadequate support for Whistleblowers has dissuaded many who may otherwise have come forward, from doing so. The support structure for whistleblowers has been identified as being inadequate and leaves them feeling unsafe and lacking the essential support they need. There must be adequate protection and security for them and it has also been suggested that they should receive financial support.
Violent crime rates in South Africa have been high for a number of years and this has led to law enforcement agencies prioritizing violent crime over corruption, since this is understandably where the public expectation lies in terms of the allocation of limited resources. This exclusive focus argument is cited as one of the arguments in favour of a dedicated fifteenth agency devoted to the pursuit of crimes involving corruption. However, in order to fulfill such a role, the agency would need to fulfil the role of a law enforcement agency and not an advisory agency reporting to Parliament, as currently envisaged.
In conclusion the recommendations arising out of the panel discussion as to the way forward are to:
Determine, via gap analysis and mapping, to what extent the existing anti-corruption agencies in South Africa are meeting the outcomes envisaged of such agencies under Article 6 and Article 36 of UNCAC.
Determine, with reference to South Africa’s international obligations and the domestic landscape, keeping in mind all the relevant constitutional, cultural, economic, political and social factors, whether the nation would in fact be best served in proceeding with the establishment of the proposed fifteenth body.
Determine, in the event that a fifteenth agency is indicated, what the structure, duties, functions and powers of such an agency will be under South African law.
Determine, in the event that a fifteenth agency is contra-indicated, what the proposed upgrades to the existing agencies should be in order to ensure greater prosecutorial capacity and efficacy, the promulgation and enforcement of standards by public and private actors, and the promotion of broad-based education designed to reverse societal resignation to corruption.
Research global best practices and determine specific models and practices for incorporation into new policy and/or regulatory frameworks for new or existing agencies in South Africa.
Consider the barriers to anti-corruption efforts, as identified, and make preliminary proposals, as appropriate.
Consider and supply draft responses to the following questions:
Would South Africa be willing to offer Amnesty for past acts of corruption in order to ward off opposition to anti-corruption enforcement and to drive anti-corruption compliance?
Would South Africa be willing to adopt a framework of Non-Trial Resolutions (NTRs) and if so, under what conditions might this take place?
Input by panellists
One body cannot defeat corruption on its own
– Professor Evangelos Mantzaris
Professor Mantzaris leads the Inclusive Society Institute’s (ISI) research into corruption. He is attached to ACCERUS and the School for Public Leadership at the University of Stellenbosch.
One single body cannot defeat corruption on its own. Furthermore, no one body can fight against corruption without the full support of an entire society. It is a fight that requires the joint efforts of all communities throughout the country; civil society; government; and all of its institutions.
The research that has thus far been conducted by ISI/ACCERUS into institutions that are effective in combatting corruption is based on primary and secondary sources. It is grounded, in particular, through research from institutions in Africa and internationally and is further informed by interviews with fifteen influential thought leaders in this field of interest. The final report arising from this research will be very comprehensive and it will contain several recommendations. In the interim, here is what is already clear:
Firstly, the establishment of the proposed anti-corruption agency requires two stages. The first one is likely to take place over a period of approximately two years and it will prepare the basis, the structure, the functions and the processes of the agency. Only then, in the second stage, can the agency be established.
The leadership of the agency should be composed of between seven and ten senior representatives from government, civil society and business. They will be responsible for monitoring the initial transitional arrangements and strategy implementation – including research, communication and conceptual debating. In order to achieve this, the agency will have to appoint a full-time Secretariat.
The proposed agency must be based on established anti-corruption strategies and its establishment should follow the well-documented protocols for the establishment of all anti-corruption agencies.
One of the functions of the proposed agency will also be to facilitate education about corruption at all levels of society. This is going to be a very important initiative given that it is associated with active public participation and the mobilisation of all citizens against corruption. To achieve this, it will, however, need two fundamentals: the first – and most important – is political will, and the second is the right personnel.
Political will and selection of new people in this proposed agency has to be based on regular integrity testing and lifestyle audits. It is also critically important to upgrade what already exists in terms of the already established anti-corruption agencies.
Achieving these steps will not be easy, but the Anti-Corruption Commission of Seychelles (ACCS) has achieved miracles in combatting corruption this way – precisely because it is completely independent. It has put in place mechanisms for actively fighting against corruption and developing education programmes on ethics. Another example to follow is the Directorate on Corruption and Economic Crime in Botswana, also a highly efficient institution with well-planned prevention-based programmes. It can be done; these are the kinds of programmes that South Africa needs to be looking at moving forward.
Different types of anti-corruption agencies
– Drago Kos
Drago Kos is currently the Chair of the OECD Working Group on Bribery and International Business Transactions. He is also the Co-chair of MENA OECD Business Integrity Network and a member of the International Anti-Corruption Advisory Board.
Slovenia gained its independence back in 1991 and has been down the long road of establishing an anti-corruption agency, which was then called the Anti-Corruption Commission. Drago Kos, a representative from Slovenia on the panel, has also participated in establishing anti-corruption bodies in many other countries.
To date, Kos’s record is eight anti-corruption agencies in Ukraine and six in Montenegro. Kos believes that establishing a fifteenth anti-corruption agency in South Africa will not be a simple task, with possible difficulties in identifying its power relationships with other agencies.
At the end of the previous millennium and the beginning of this one, there was a wave of establishing anti-corruption agencies all over the world. One reason for that was the adoption of the United Nations Commission Against Corruption. The second reason, especially in Eastern Europe, was the desire of countries to join the European Union (EU). In the beginning, there were no criteria that countries had to fulfill with regards to fighting corruption in order to join the EU. But the EU eventually jumped on the bandwagon and started requiring the establishment of such agencies. In Hong Kong and Indonesia, such agencies already existed, namely the ICC and the KPK.
There are basically two different types of agencies. The first type are preventative agencies, which do not have any law enforcement powers. Countries that have established this type include Slovenia, Serbia, Montenegro, Rumania, Ukraine and, lately, France. The second type are law enforcement agencies, established by countries such as Hong Kong, Indonesia, Lithuania, Latvia, Croatia, Romania and Ukraine.
The big question is: Should an agency have law enforcement powers or not? If a country controls its existing law enforcement agencies, it will not need to establish new institutions that will not only produce solutions but will also create new problems. A new institution will garner the resentment of existing institutions, because commonly the newest institution collects personnel from those already in existence, leaving the existing ones objectively weaker.
Furthermore, it is easy for a new agency to boast that they will investigate and prosecute corruption, but to prosecute, there has to be the resources and technical equipment, etc., available to do so. This is a basic dilemma which all countries have to deal with when establishing anti-corruption agencies.
After the first wave of enthusiasm, once many agencies had been established, came the first wave of disappointment. Suddenly countries started speaking about anti-corruption fatigue. Now, a few years later, the situation has settled down and a cool head can be used to think through the issues.
There is now also a type of agency called a Council. This is the type of agency that was mentioned by South African President Ramaphosa and by a few speakers on the panel. Normally these are high-level agencies or anti-corruption institutions established by countries that want to show that they are giving the fight against corruption strong political emphasis. However, to be frank, there has never been such a body that has been effective.
First of all, such a body cannot do any concrete work, because they cannot carry out law enforcement. In the case of South Africa, this is excluded by definition. The President has said that the council will report to Parliament. But law enforcement agencies cannot report directly to Parliament if they are to have executive power.
Secondly, an agency at such a high level will be under pressure to impress on others. The tasks of institutions or councils at a very high level are to deal mostly with the coordination and cooperation of existing institutions. This can be done but it has yet to be seen, mainly due to the fact that the existing agencies already have their assigned powers and responsibilities; they are already responsible to another entity. Therefore, if the body cannot impose its position and its strength to force existing agencies to function as directed, then what will the council actually be able to do?
It is not known what powers the council will have, but here is a basic analogy. There are anti-corruption agencies which simply fall into the strategy of the institutions as already set up in a country. And then there are agencies that act like sharks. Agency one cannot do much in the fight against corruption. However, an agency that is acting as a shark in a pool of big fish, being the existing agencies, can enforce them to do their jobs. Of course, this would immediately make the council very unpopular with the other agencies. But this should not be a sticking point, after all, the purpose of working in the public sector is not to make friends, it is to take care of communities. Therefore, if the agency has a coordinating task, it will need to be a shark, which will require it to have very strong powers.
It is not enough to have general political will and good personnel. An agency also needs clearly defined boundaries, and resources. South Africa will have to decide on whether to form an agency or a council that will try to increase the level of cooperation, coordination and functioning of its existing bodies by acting as a shark. Otherwise, there is no real reason why South Africa should establish yet another agency, which is surely a recognition of the fact that not all of the existing fourteen are as effective as they could be, or even necessary.
There is another way of going about it, but not a method that is recommended for South Africa. Within the last year there has been a new kind of anti-corruption agency established in Afghanistan, Ukraine and Moldova. Armenia and Tunisia are also thinking about taking this approach on board – an agency that is not only composed of national public officials but in which there are also a combination of national and international anti-corruption experts.
The national public officials bring in their experience with regard to the local circumstances and their law, while the international experts bring in their anti-corruption experience and independent positions. This could very well be the future of anti-corruption agencies. This approach is not applicable to South Africa, but it is well suited to much more complicated countries that cannot fight corruption on their own.
South Africa will need to do a thorough analysis of what the proposed new agency or council’s role should be. If this is not carefully thought through, then South Africa will simply be sitting with agency number fifteen.
It is encouraging that the government is willing to take the issue on headfirst – this is most important. However, it would be ill advised to take shortcuts in fighting corruption, as this could cause more harm than good in the long term.
Anti-corruption agencies need to be nurtured
– Professor Andrew Spalding
Professor Spalding, from the University of Richmond School of Law, is the Founding President of the American Society of International Law’s Anti-Corruption Interest Group and Chair of the Olympics Compliance Task Force.
The emblem of the Inclusive Society Institute contains a flower, a Protea, which is a great metaphor for an effective anti-corruption movement. It has to be cultivated over some time and, at the same time, though it can take much effort to cultivate, it is itself very fragile.
For an American, it is strange to be in a country that just a few years ago was part of the elite in terms of the global anti-corruption movement, and then suddenly, the political winds shifted so very quickly. Building an effective set of institutions, and norms and measures, takes time and must be safeguarded.
Modern South Africa was born at about the same time as the modern anti-corruption movement. These both occurred in the 1990s, and both are still relatively young. There is still much to learn about how different measures fit in different countries and in different cultural contexts. Examples of countries that have made a significant pivot and have gone through the kind of rapid transition that South Africa now aspires to include Brazil and France. But, of course, when talking about commissions, Hong Kong is the example. These three countries make for an interesting comparison because they have very different institutional arrangements, very different approaches, and very different catalysing events that occurred in their countries.
Sometimes an added commission is effective and sometimes it is not. Brazil is a country, for example, that made tremendous headway, in a short period of time, in addressing systemic government corruption without creating a commission. They did it just by giving the existing federal prosecutors, who were themselves capable people, the prosecutorial tools that they needed to address corruption. Brazil gave prosecutors two much needed tools to crack down on corruption. One was the obstruction of justice charge, which did not previously exist in Brazilian law and which the prosecutors could use to turn witnesses. The other was the non-trial resolution (NTR) – the out-of-court settlement. The NTRs have been a tremendous component of the global anti-corruption enforcement effort, but also a very controversial one. It cannot just be transplanted from one country to the next as it sits very differently in different contexts.
With new institutional measures, whether it is a new commission or it is some other body, there are three core functions. Firstly, there is the prosecutorial function. In the South African context, when creating a new commission, first and foremost is its prosecutorial capacity – its ability to crack down on corruption by prosecuting both public and private actors. This is of utmost importance.
That being said, a couple of other factors need attention. The second function is the standards issue: the function of a dedicated anti-corruption agency is to promulgate standards that help guide public and private actors. One really interesting example of this is France. In 2017, they passed new anti-corruption legislation and created a new agency that is dedicated to promulgating standards for anti-corruption compliance and for helping private actors, particularly corporations, incorporate those standards.
Whereas, in South Africa the nexus between corporations and the government is a big part of systemic corruption and this is one of the greatest challenges to be tackled. To succeed in doing so, clear standards will need to be set and effective enforcement tools provided that will enable prosecutors to encourage, if not require, companies to adopt these standards. Therefore, standard-setting is going to be a critical part of this and South Africa needs to think about the broad function of any new commission, in robustly developing standards (particularly, standards of corporate compliance) and what that might look like in the South African context.
Then finally, the third function, in addition to prosecution and standard-setting, is education. It is very important to think about what the educational mission of any anti-corruption commission is. In the early days of anti-corruption enforcement of the anti-corruption movement, it was often said that there are places in the world where corruption is cultural. That is incorrect. In fact, there is no country in the world, at least none that has been encountered, where the belief is genuinely held that a suitcase full of cash, exchanged under the table in return for illegal benefits, is a good thing – that it is such that it would not be reduced if it could. That corruption is an affirmative good that needs to be preserved as a part of the culture, as a part of the system of government.
There are places where corruption is quite pervasive and there is a widespread sense of resignation to the necessity of corruption. There are certainly parts of the world where it is widely believed that corruption is just not something you can control, but that is a different problem. If that is the case, as it likely is in South Africa, then the educational mission is to convince people that corruption is actually not something they have to live with. It is not inherent in government.
There are measures that have been learned, studied and experimented with that can be adopted to reduce corruption. Corruption is not like bad traffic on the highway – an issue that just has to be lived with. So, the educational mission of an anti-corruption commission must be to convince the public that there are measures that can be adopted, which have worked in other contexts and can be tethered to this context, and that way, corruption can be reduced.
One last point about the educational effort. It is often said, with enthusiasm, that South Africa is trying to build a world in which corruption has been eliminated. But there is no guarantee that corruption can be eliminated in its entirety. However, that itself is not a strike against the anti-corruption movement. Anti-fraud laws, generally, even in jurisdictions where they are thought to be very effective, have not eliminated fraud.
Then again, statutes prohibiting murder have not eliminated murder, but they reduce it to a point that it becomes the exception, not the norm. Where endemic corruption has been eliminated, systemic corruption has been eliminated and so, what is seen instead are isolated incidences. When these isolated incidents occur, it is not only disappointing, it is shocking, but measures can be put in place to address them very swiftly. That is the world to try to build.
Convincing people that corruption is something we can reduce – and that reduction is itself the goal and is a realistic goal – is very important.
In conclusion, there are a few questions remaining in relation to anti-corruption commissions:
Firstly, if the commission is to have a prosecutorial function, and it is to collect money through fines and penalties, what should be done with that money? This is an issue the United States is also wrestling with. US companies will go into a foreign jurisdiction and pay bribes. A criminal penalty is attached to those bribes. That penalty is then collected from the US wrongdoers, and where does that money go? Into the US Treasury. How does that money help the victims of corruption? In that case, how, if penalty money is collected, could such funds be reinvested into initiatives or programmes that will benefit the victims of corruption in South Africa? This is important given that the victims are of course the citizens of South Africa, especially the most vulnerable ones.
The second question, in relation to a prosecutorial function, is to what degree might negotiated settlements, in other words non-trial resolutions (NTRs) or out-of-court settlements, be used? In the US, they are called deferred prosecution or non-prosecution agreements. In Brazil, they are called leniency agreements. In France, they are called Public Interest Agreements. No matter what they are called, supporters believe that they increase the efficiency and the effectiveness of anti-corruption prosecution by settling charges with defendants out of court rather than going to trial. However, in order to incentivise defendants to settle out of court, they have to be given penalty reductions. Penalty reductions, though, can be highly controversial, because the public may believe that justice has not been done. In the South African cultural context, that could be a delicate issue. Might it be thought that people are being let off with unduly light penalties for the sake of prosecutorial convenience? This may be problematic in the South African context but non-trial resolutions have been essential to the effective global prosecution of corruption.
Finally, an issue that arose in the Hong Kong context, which would be especially volatile in the South African context, is the issue of amnesty. Granting amnesty for past acts of corruption, not necessarily for the sake of reconciliation, but to ward off opposition to anti-corruption enforcement is another question that arises. If the anti-corruption movement in South Africa is going to stave off opposition to aggressive anti-corruption enforcement, are there past acts of corruption that will have to explicitly, or implicitly, be dealt with by way of amnesty? Hong Kong did this in the early days of its anti-corruption commission. It’s an extremely sensitive topic – as it ought to be, but it is something that South Africa will have to think about.
Conducting proper diagnosis
– Dr Abiola Makinwa
Dr Makinwa is a Principal Lecturer of Commercial Law, Anti-Corruption Law and Policy at The Hague University of Applied Sciences Law Department.
How can the anti-corruption enforcement institutional framework be made stronger? How can it be improved to better realise corruption prevention, and effective investigation and prosecution? There are three main points which need to be highlighted in answer to these questions.
First, the need for a proper diagnosis. South Africa has been cautioned on the danger of the fifteenth agency. It has to think about that option very carefully. Second, on the question as to what is needed: a new agency or a new modus operandi. Thirdly, and very importantly, what lessons may be leveraged from what has been shepherded in by Western anti-corruption agencies which has led to increased enforcement and prevention focussed compliance. What lessons can South Africa glean from these best practices?
It is useful to situate this discussion within the context of the Global Anti-Corruption architecture envisaged by the United Nations Convention against Corruption (UNCAC), of which South Africa is a member and under which South Africa has certain obligations. On the one hand, there are Article 6 type agencies that focus on establishing and promoting policies for the prevention of corruption. And on the other, we have Article 36 type agencies whose central focus is effective anti-corruption enforcement by way of specialised investigative and prosecutorial functions. They are very much outcome-driven agencies.
Beyond the very important questions typical of discussions that relate to anti-corruption agencies, such as independence, adequately skilled and knowledgeable staff, the need for information sharing and coordination, the need to shield anti-corruption agencies from political interference and to ensure operational independence, there is an additional, but important line of enquiry that is needed. In this foundational two-year period, a mapping along the Article 6 and Article 36 axis is required.
In other words, to what extent are existing agencies explicitly set up to realise the specific outcomes in Article 6 and Article 36 of UNCAC or will these objectives be ill-defined and spread across a variety of multi-purpose agencies? Is this a successful formula or will it lead to fragmentation and inefficiencies that serve to counter the realisation of corruption prevention and effective investigation enforcement? In the absence of such a gap analysis, it is difficult to robustly assess the possible benefit of an additional agency, or an additional layer of overview and supervision. Unless the underlying inefficiencies that have led to this discussion, and which have led to this proposal, are clearly mapped, the new agency may only add to the problem rather than being a part of the solution.
This introduces the second question: Does South Africa need a new agency or a new modus operandi? To what degree does the existing anti-corruption institutional framework and its implementing agencies overcome some of the systemic challenges associated with traditional approaches to anti-corruption enforcement?
Systemic challenges include profound information asymmetries, that present a critical lack of prosecutorial capacity to discover and establish a criminal burden of proof for cases that are deliberately structured to disguise ownership, and that present complex multi-layered structures. These are usually set up by the best lawyers, accountants and specialists that money can buy. They handicap the best efforts of any national agency to, for example, detect and establish accountability for acts of corruption by the elite and powerful multinationals. This lack of capacity, rather than acting as a deterrent to corruption, actually fuels impunity and undermines the role of any anti-corruption agency.
Furthermore, traditional criminal prosecution is typically a time-consuming process. Ten or fifteen years can be spent on a single trial. It is also more susceptible to the machinations of power, or a lack of political will to act against influential people with deep pockets and connections at the highest levels. These are very difficult waters for any anti-corruption agency to navigate, regardless of how it is set up.
Finally, the fact that corruption itself is a means to an end, and not an end in itself, means that even where traditional courts’ criminal prosecution is successful, it may fail to recover the money from the crime. The incentive remains intact, which may fail to redress the true costs of bribery, since the corruption has already undermined the rule of law, the governance structures and so on.
The ISI project provides an opportunity to ascertain the position in South Africa by mapping the terrain. The outcome of such a line of inquiry may, for example, suggest that there is a need for a radical new approach that addresses many of the systemic challenges. At the very least there is an attempt to develop an agency that explicitly seeks to address some of these challenges modelled on an approach that has proven successful in many Western countries.
What has informed the increased enforcement activity and prevention focused compliance observed in Western countries? Looking at the revelations of global bribery schemes perpetrated over the last ten to fifteen years by companies such as Goldman Sachs, Airbus, Petrobras, Ericsson, Atelier Mobile, Tele-Systems and Siemens, to name just a few, it highlights what has worked in anti-bribery enforcement activity. These corporations were all brought to book by way of US FCPA style non-trial resolution, otherwise referred to as negotiated settlement or out-of-court settlement, hereinafter referred to as NTRs.
What are NTRs? Essentially, they are resolutions that grant a measure of leniency that is contingent, firstly, upon the extent to which a wrongdoing entity self-reports and cooperates with prosecuting authorities to provide usable evidence of acts of foreign bribery that the agency would not have discovered on its own. And secondly, leniency in NTRs is contingent upon the degree to which the wrongdoing entity, or corporation, or individual, can establish proof of efforts to prevent the acts of bribery prior to the discovery of the corrupt activity. This takes the focus away from punishment after the fact, to prevention, and is a radical and pragmatic departure from the traditional criminal prosecution that focuses on punishment.
Rewarding cooperation by way of a settlement, or agreed resolution, leverages the self-interest of private sector entities through the introduction of new efficiencies, such as building the business case for compliance, and by so doing, the public sector is incentivised to partner in anti-corruption enforcement. This is a growing trend. Many countries are introducing NTR regimes that reward self-reporting, cooperation and corruption prevention.
As a result, what we see is that NTRs have become the primary mechanism of anti-foreign bribery and bribery enforcement. NTRs have led to this increase in enforcement activities and since NTRs target the supply side of bribes, this development should be welcomed. Their use is dramatically changing the face of anti-corruption enforcement. It is therefore very important to consider how it may affect the role of the anti-corruption agency/council envisaged for South Africa.
A country begins to perish when it continues to do the same thing and expects different results. Based on these best practices, this project may draw on lessons from the West and propose, as a pre-requisite step towards establishing a new agency or council, the need for such a framework. A new regulatory framework of non-trial resolutions upon which such a new agency/council, or an existing agency, can develop policies and practices to facilitate public, private cooperation that has proven to drive an increase in enforcement activity in the West.
From having almost zero prosecutions, there are now dozens of cases at the very highest level in South Africa. There has been accountability for acts of grand-scale corruption which has undermined governments across the globe. It has certainly been a positive step forward. South Africa could also provide such a bespoke framework for its anti-corruption agency proposal, suitably adapted for the South African context.
To recap. To what degree is South Africa meeting the outcomes envisaged for anti-corruption agencies under Article 6 and Article 36 of UNCAC? That has to be the starting point. The territory has to be mapped, the gaps seen and filled. To what degree is the current South African institutional and anti-corruption architecture succeeding in overcoming systemic challenges of anti-corruption agencies? And how can agencies be better structured and equipped with the tools to turn the tide in the fight against corruption? Doing more of the same is not likely to succeed.
In closing, keep in mind that anti-corruption enforcement has moved squarely into the public-private cooperation space. NTRs have become the primary enforcement mechanism, and a new tool for prosecutors in the West. This project may well motivate the development of a South African non-trial resolution regime that can provide the framework needed to enable a truly robust new approach, either within existing agencies or for a new anti-corruption agency, and thereby improve prevention, investigation and prosecution in South Africa.
The effects of corruption
– Professor Pregala Solosh Pillay
Professor Pregala Solosh Pillay is the Vice Dean for Social and Impact Transformation at the Faculty of Management and Economic Sciences at the University of Stellenbosch. She is also a Director of ACCERUS.
Corruption has had long-lasting effects. It has deterred investment in our country, created huge economic losses, exacerbated poverty and inequality, engendered public sector dysfunctionality, service delivery protests and unrest, resulted in human rights violations, and fanned public frustrations.
Corruption has led to a continuous erosion of institutional integrity, transparency, and a lack of trust, both towards the political and administrative institutions of the State. Corruption has also eroded South African citizens’ confidence in public institutions. It undermines social trust and the legitimacy of State institutions, and ultimately, it has had a corrosive impact on the rule of law and democratic processes.
Policies, however well intended, lack credibility, and fail to secure citizen, business and civil society buy-in, if there is a perception that government is corrupt. In addition, the allocation of public procurement contracts through a corrupt system has led to a lower quality of infrastructure and public services.
Corruption has also tempted government officials to prioritise projects that present opportunities for bribes and kickbacks at the expense of projects that have a positive impact in terms of societal welfare. The effect is that the poor must pay an additional tax in the form of bribes for access to overpriced and inefficient State services.
In addition, as looting intensifies, service provision and service delivery declines. This means that the poor must pay bribes to get access to resources in an environment characterized by shrinking capacity; and violent service delivery protests inevitably escalate.
The literature shows that corruption robs the poor. The corrupt have taken advantage of existing opportunities, and there is a lack of will on the part of State institutions, including the absence of sufficient deterrents and punishment, the absence of accountability and transparency, as well as a lack of ethical leadership, to achieve their ends. Whilst corruption is a global phenomenon, it has the most destructive effects in developing countries, where it is most prevalent.
In Africa, it is estimated that 25% of States’ GDP is lost to corruption annually. The prevalence of corruption in South Africa is a source of grave concern, as shown by several corruption scandals and cases, including those highlighted by the Zondo Commission of inquiry into State capture. Many studies have established that corruption has discouraged investment and that it acts as an additional cost of doing business, thus reducing the profitability of investment projects. It is one of the major disincentives for foreign investment. Investors who seek a fair, competitive business environment will avoid investing in countries where there is a high level of corruption. Furthermore, if people are not willing to invest in the country, it is almost impossible to generate new jobs.
The recent unrest and looting in KwaZulu-Natal and Gauteng has also had a devastating impact on our economy. Added to this is the fact that during the period of time since the Covid-19 pandemic began – one of the most challenging and distressing periods for the whole of humanity, especially for the poor, the vulnerable and marginalised – unscrupulous people have found opportunities to either abuse or misappropriate the funds set aside for social relief – right down to food parcels. There has also been a plethora of financial and supply chain maladministration, bribery and nepotism, including political and administrative interference.
Our former Minister of Health was implicated in the looting of R150 million of public funds in the Digital Vibes scandal. The South African Revenue Services publicly announced that it has been focusing on 52 non-compliant companies that received R1 billion in contracts for the supply of PPEs and other Covid-related services, and that 11 companies have been convicted. Seven cases are currently on the court roll and a total of 29 cases are currently with the National Prosecuting Authority. Five case dockets are being processed by the SAPS. An amount of R170 million in unpaid taxes linked to PPE contracts has already been recovered while a further R500 million in assets, including cash, under preservation orders, has been recovered. The South African Revenue Service has also investigated 33 entities linked to “politically exposed persons” – this is presumably code for companies that have links to politicians, senior government officials and politically connected businesspeople.
On 1 November, South Africa saw local government elections. President Ramaphosa called upon all registered voters to use the opportunity to exercise their democratic right and to exercise their civic duty to vote. Take note, however, that public trust in elected representatives is particularly low, and only a quarter of South Africans have expressed trust in either the ruling or the opposition parties.
So, the question remains, how do we fight this scourge?
Firstly, it is imperative that only the best, most qualified candidates, who are best suited for their roles and responsibilities, should hold office. Those found guilty of unlawful activities and misconduct should not be appointed into public positions. Consequence management should serve as a deterrent. South Africa must put a stop to a culture where we promote people and recycle them into better positions, despite poor performance. Basically, the more people mess up, the better jobs they get. This must stop.
There must also be protection, security and financial compensation for whistleblowers. Just recently, South Africans witnessed the unfortunate events leading to the untimely death of Mrs Babita Deokaran, and others before her.
In today’s world, the increasing availability and access to information and online tools can also help in anti-corruption efforts across all sectors. For instance, there is the potential for technology-based tools that can be designed to cut out traditional approaches that may more readily be compromised.
These questions also need to be asked: How has South Africa become so morally bankrupt? How does it reinforce ethical cultures in public and private sectors? Instead of just focusing on ethics training, perhaps there should also be a focus on reinforcing the model of Ubuntu and human values, where the emphasis is on returning to the basics – a values-based approach, the development of individuals in a holistic manner, in the home, at school, at university and at societal level.
The media, civil society organisations and communities throughout the country, must continue with and intensify their peaceful campaigns to fight corruption. Chapter 9 Institutions, such as the Public Protector, the Auditor General, the Human Rights Commission, the Electoral Commission, must remain independent because they are the cornerstones to sustain democracy and enhance democratic principles, such as accountability, respect, the rule of law and human rights. More importantly, anti-corruption agencies must not become more powerful; they must become more functional.
It is the collective responsibility of South Africans to curb this scourge. The world will not be destroyed by those who do evil, but by those who watch them without doing anything.
Prevention is key
– Mr Willie Hofmeyr
Willie Hofmeyr is the Former Head of the Asset Forfeiture Unit of the National Prosecuting Authority.
Amnesty is not possible under our Constitution. The only amnesty that there is, that South Africa can use, is for people who are willing to plead guilty and be a witness against their fellow thieves. However, for this to be applicable, a court has to find that their evidence was honest and truthful.
Law enforcement has been severely contaminated over the years. The latest suspension of the National Commissioner of Police means that apart from the first Commissioner of Police, every other Commissioner of Police has been removed for corruption-related charges. That is a very serious issue, and much thought needs to go into how those appointments are made.
Prevention is also something that is not getting enough attention. The Special Investigating Unit developed quite a sophisticated internal integrity process. They used a technology called Voice Stress Analysis, which is similar to a lie detector. All staff went through these internal integrity tests on appointment, and regularly after their appointment. If South Africa is to combat crime and corruption, it needs to know that its soldiers’ hands are clean. This technology is a very useful tool – a vital tool in fact – to ensure that that is the case.
This technology has been used by the Special Investigating Unit for over ten years. It has been challenged in court, so there is really no reason why it cannot be used elsewhere. It should be used for all senior law enforcement appointments in the country. However, it should also be used for everybody in the supply chain management process: all accounting officers, chief financial officers, heads of procurement – they should all go through this process regularly.
Prevention is a much less politically costly way of cleaning things up than sending powerful politicians to jail, when their supporters may react violently, as has been witnessed in the recent past. There needs to be a lot more attention given to using technology as an advantage.
It is also important to recognise that the focus of law enforcement agencies has typically been on violent crime, sexual offences and the type of crimes that cause public outrage. The public has every reason to be outraged and law enforcement has to answer for these types of offences. It does, however, mean that very often, where only money is at stake – rather than people’s lives – the non-violent crimes get less attention. That is one of the reasons why South Africa should be supporting an anti-corruption agency whose only job is to focus on corruption and that does not have to deal with rapes and murders and all the other issues that the public demand action on from the other law enforcement agencies.
Furthermore, if the country is looking at an anti-corruption agency similar to the old Scorpions (also known as the Directorate of Special Operations or DSO), it should have the same kinds of powers, including the power to compel suspects to answer self-incriminating questions during an investigation. This is vital for law enforcement officers who are investigating complex economic crimes and corruption. It is an example of the type of investigative powers that are very common to law enforcement agencies in other democracies, where you can compel suspects to answer self-incriminating questions during the investigative process, and while the answers suspects give cannot be used against them in their own criminal trials, they can be used against their accomplices. In addition, this serves to prevent suspects from changing their version of events when more evidence comes to light and dragging investigations on for extended periods of time. South Africa has this power but is currently using it very little.
So, while the recent establishment of the Investigating Directorate within the NPA – which has those kinds of powers – is certainly a good start, an investigating directorate with 30 or 40 people is not going to make the kind of difference that is needed. South Africa needs a national anti-corruption agency, or body, whose only focus is corruption, and it should probably be separate from the NPA and the South African Police Service.
The last point to make is that there needs to be much more serious thought about how whistleblowing is encouraged. There have been many whistleblowers coming forward over the last few years. Most of them are too scared to talk to anybody because they do not know whether they will be protected or whether they will be kept safe after it becomes known that they are the whistleblowers. There should be a proper whistleblowing mechanism set up under the control of retired judges from the Constitutional Court. That is the one institution in the country that still enjoys public confidence and where whistleblowers will feel safe to go and tell their stories and be confident that they will be properly protected.
Finally, issues such as lifestyle audits have been raised. Frankly, that is useless. The main reason being because it is easy to hide assets in family trusts, and there is no way of easily identifying whether a person has an interest in a trust, which may have millions of rands in it.
Transitional arrangements and independence
– Professor Gavin Woods
Professor Woods is from ACCERUS. He was the Chairperson, for many years, of the Parliamentary Standing Committee on Public Accounts (SCOPA).
Firstly, much of the discussion has covered whether another agency is a necessity or not. Professor Gavin Woods is not in favour of there being one. Woods’s experience, from having been in Parliament, chairing SCOPA, chairing the committee that wrote the Public Finance Management Act (PFMA), which incorporates many anti-corruption measures, experience at Stellenbosch as Professor of Public Finance, as a director of ACCERUS, and a stint with the Public Service Commission, has given him some insights into what really happens regarding corruption within government institutions and organisations. This is where there has been a vague failure to implement the preventative measures that South Africa has in law, and which people are obligated to take up. In terms of the investigative side, the problems are basically about capacity and resourcing. Hence the backlogs. And so, the failure is on both the preventative and the after-the-fact side.
There are two stages to the proposal for setting up an anti-corruption council. The first phase of this new council is to set up an interim structure. That might seem like quite a simple task, but when looking at the detail, and the proposals contained in the National Strategy document, there is clearly a huge amount of complexity there. For this initiative, there will be a great many complexities that will need to be worked through in devising the proposals.
For example, it is about more than just deciding on the role of the Secretariat and who should be the seven to ten members of this interim council, it is a matter of looking at the legalities that are going to be involved. There is a myriad of laws here, going right up to the Constitution. This body that is being proposed, the ultimate body, is going to require Constitutional backing, whether as a Chapter 9 organisation or some other way. Nonetheless, it will need to have those powers and that authority, and the independence to really have an effect on and carry out the mandate that is being proposed.
South Africa also needs to gather a group of very special people. It is not just a matter, according to the strategy, of getting a few people from business and a few from government on board; they will have to be people who really understand the nature of corruption in this country, the philosophical and sociological underpinning of this corruption. South Africa will have to look carefully at the composition, the powers, how this body will operate, the budget, and the institutional arrangements.
Before it can go ahead with its work, this envisaged interim structure will have to make arrangements to action its final proposals, once accepted by the President, and possibly the Cabinet. They will have to enable the ultimate structure – the final structure – in phase two of the proposals, to hit the ground running. Inevitably, certain laws will need to be in place and others will need to be made.
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This report has been published by the Inclusive Society Institute
The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals.
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