OPINION: Corruption is killing South Africans and the economy

When it seems as if virtually every tender awarded during the time of a global health emergency is tainted with corruption, it says something about the very soul of a country. It is reasonable for South Africans to expect the President to be equally concerned and to act, write Judith February and Gary Pienaar.

"Is this time different?" asked journalist Stephen Grootes in a broadcast after Minister of Justice and Correctional Services, Ronald Lamola, briefed the media on the Cabinet meeting held last week.

When it seems as if virtually every tender awarded during the time of a global health emergency is tainted with corruption, it says something about the very soul of a country. It is reasonable for South Africans to expect the President to be equally concerned and to act.

The President’s own spokesperson, Khusela Diko, said she and her husband made an "error of judgment" when he tendered for a contract to supply PPE worth R125 million to the Gauteng Department of Health. Meanwhile, we read that the children of ANC secretary-general, Ace Magashule, and former Minister, Nomvula Mokonyane, allegedly benefitted from tenders for COVID-19-related contracts. The country is justifiably angry at the political elite’s continued blatant self-enrichment.

It seems as if being related to a politician lowers one’s ambitions to become a tenderpreneur. It’s lucrative in the extreme and requires no skill apart from knowing the right people. Even worse, it adds no value to the state’s supply chain.

To be clear: corruption is killing our economy and it is killing South Africans.

The bureaucratic buck-passing and endemic corruption that appears to have led to the devastation of Beirut in last week’s explosion and the wider collapse of the Lebanese economy will be our future too unless ethical sensibilities are enlivened, gross conflicts of interest are prevented and real accountability follows.

Lamola’s comments were, however, mostly in line with President Ramaphosa’s weekly letter published just over a week ago now. There, Ramaphosa specifically decried the brazen COVID-19-related corruption, calling it “the actions of scavengers”. He went on to say, “It is like a pack of hyenas circling wounded prey”.

That newsletter also spoke of a ‘fusion centre’ which will apparently strengthen government’s response to corruption ‘immediately’. The fusion centre will bring “together the Financial Intelligence Centre, the Independent Police Investigative Directorate, National Prosecuting Authority, the Hawks, Crime Intelligence and the SAPS Detective Service, South African Revenue Service, Special Investigating Unit and the State Security Agency” to deal with corruption.

Last Thursday evening, Lamola did not expand that much on this idea of a fusion centre but said that it would need to develop ‘organically’. Only then would Cabinet assess whether to provide it with a legislative home.

Ramaphosa recently signed a special proclamation authorising the SIU “to investigate any unlawful or improper conduct in the procurement of goods and services during the national state of disaster”. This is a step forward and the head of the Special Investigative Unit, Andy Mothibi, requested it in order to strengthen the capacity of the SIU to deal with the myriad complaints of COVID-19 related corruption.

A ministerial committee, with Lamola at its head and including the Ministers of Finance, COGTA, the Presidency, Public Service and Administration and Police, has now been set up to examine all the COVID-19 related tenders. Lamola, who will head up this ministerial committee, announced that details of tenders would be made available and all contracts in relation to the COVID-19 state of disaster scrutinised.

Details are few and far between: What form will such scrutiny take? Who will be in charge and what about local government contracts, since it seems only national and provincial contracts as well as those in relation to public entities will be scrutinised? What if all contracts are not declared? Who will be responsible for collating the information into a comprehensible report?

This is the problem with ex post facto transparency. For transparency to be of practical benefit, there needs to be a centralised tender database that should be accessible in real time. Who submitted bids? Who won the bid and what were the criteria? Are they tax-compliant with SARS? Do they have any track record or expertise in the field? Who are the actual owners of the successful company? In this way, citizens will be able to satisfy their right to know regarding such contracts with the state.

The saying may be trite, but sunlight is the best disinfectant.

One can quite easily see this 6-person ministerial committee being mired in bureaucracy, buried in paper and paralysed by internal party-political gridlock. The risk is that soon we will all have forgotten what the reason for the committee was in the first place.

Is now not therefore the time to take action speedily? Listening to Lamola, it sounded much like the typical Ramaphosa technical solution (centre, commission, task team, panel approach). The fusion centre is a babushka doll of agencies - yet will they really fuse, will they be able to collaborate effectively and efficiently? The Hawks are well-known for being less than hawkish about investigating certain matters, yet over-zealous in others. The recent Gigaba domestic melodrama is a case in point.

Has the time therefore not come for serious resources to be urgently designated for a special COVID-19 related corruption court? There are enough professional investigators and lawyers in South Africa who would be able to undertake investigative and prosecutorial work at pace.

And has the time not come for a firm rule to be clearly established that family members and friends of politicians cannot do business with the state? It may well be a drastic measure, but given the tenders for cronies which is causing the fiscus to be looted repeatedly, one should be able to prohibit ‘politically exposed persons’ (PEP) from doing business with the state.

Here, we may be able to look to The Financial Action Task Force (FATF) for guidance. The FATF is an independent intergovernmental body established by the G-7 summit held in Paris in 1989. Its mandate includes developing policies to combat money laundering. South Africa is a member of the FATF.

The FATF categorises PEPs as individuals who have been entrusted with a ‘prominent public function’. While this definition clearly applies to Cabinet ministers and senior public servants, we argue that there is no meaningful difference between them and their families and friends.

Indeed, the ethics rules currently applicable to the executive and senior public servants require them to disclose the financial interests of their family members. This requirement is aimed at deterring and preventing conflicts of interest from arising. These ethics rules are essentially meaningless - their preventative and deterrent effect is non-existent. Personal and political advantage trumps the public interest with increasing frequency.

It is instructive to note that even the ANC’s scandal-ridden fundraising front company, Chancellor House Holdings, now boldly declares on its website that “Chancellor House Holdings (Pty) Ltd will not invest in companies that tender for any work or conduct procurement directly or indirectly with RSA’s National, Provincial or Local Government spheres, Government Agencies and State Owned Entities”.

What’s good for the goose is generally good for the gander: if the ANC has sought to distance its investment arm from conflicts of interest, why should the same not be expected of the families and friends of ANC public representatives?

Although the ANC NEC recently voted against legislation to make these conflicts of interest unlawful, ANC secretary-general Ace Magashule was reported as saying on Friday that “he would not oppose a [party] resolution barring relatives of party leaders from doing business with the state”, as well as legislation to this effect.

Now is the time for that legislation and its determined enforcement. If we don’t clean up our public procurement with extreme urgency, widespread fears will be realised that continued losses from the national fiscus will render us unable to repay the recent loan from the IMF. The country will then face the very real and terrifying prospect of a sovereign default on our debt repayments. The next bailout loan from the IMF, which the country will then desperately need, will be neither soft nor unconditional.

It is also so that the President cannot direct law enforcement agencies to do their job and to work at speed. Yet, recently National Director of Public Prosecutions, Shamila Batohi, came before Parliament asking that her budget not be cut. The psychological aspect is clear: if one big skittle falls, the precedent is set and perhaps it will act as a disincentive for those who do not wish to follow? Should the NPA not set its sights on one large winnable matter and ensure a watertight case?

SIU head Mothibi clearly has focus, yet he has his work cut out for him. Apparently there are 167 cases or more of COVID-19 related corruption in Gauteng alone. He has, however, said:

“We are moving. We are making progress. And I think I understand that people are impatient. As far as the investigations are concerned, there’s good progress that is going to be made and our actions are going to show South Africans that indeed we are making progress.”

His is not an easy task. The establishment of a dedicated special tribunal to support the SIU’s civil recovery cases should help, but, again, this is trying to clean up the mess that we could and should have been able prevent.

It is interesting to note that after its recent meeting, the ANC NEC called for a new Scorpions-type agency (or Directorate of Special Operations as it was formally named). Yet, it was the ANC which disbanded the independent agency in 2008 when it became inconvenient for former President Zuma. The irony cannot escape us now even as it would be a worthwhile idea to pursue the Scorpions’ re-establishment.

The country currently also has a vital opportunity to prevent further procurement corruption and unethical abuse. In government’s commitments that secured the IMF loan, government acknowledged that a “commitment to transparently monitor and report all use of emergency funds is crucial to ensuring COVID-19-related spending reaches the targeted objectives”.

To this end, government gave the IMF its commitment to “transparently plan, use, monitor and report all COVID-19 related spending”, as well as to “publicly disseminat[e] all COVID-19-related procurement contracts and allocation (with details about awarded companies and their beneficial owners)”. Beneficial ownership data is more effective when combined with disclosures of any prominent influential persons (PEPs) and their associates.

These two commitments, read together, represent important elements of global good practice and aspiration, especially if they are also read together with a third commitment by government to “publish … on a regular basis … the execution of COVID-19-related expenditures”.

If ‘allocation’ refers to the final contract price, and if ‘regular’ means at frequent intervals, this moment represents a unique opportunity to reform public procurement in South Africa. National Treasury, in collaboration with the civil society coalition Imali Yethu, already has a tech platform to support its transparency pledge – Vulekamali.

Ours is a country that knows corruption and its consequences only too well. After all, it is former President Jacob Zuma’s almost decade-long capture of the state which led us to the IMF with a begging bowl.

Finance Minister Tito Mboweni says the vultures are circling to loot even more. So, when we read the President’s eloquently penned letters, we understand and can agree with the sentiment behind them.

But, the time for law enforcement agencies to act is now. It is also time for the President act more decisively against anyone who is in his Cabinet or inner circle who has a whiff of corruption about them.

South Africans are tired - tired of the looting, tired of broken promises. Action is needed. The President could start by dismissing his spokesperson. There is enough in the public domain to cast serious doubt on the credibility of her explanation. She has brought the Presidency into disrepute, in all likelihood breached the Public Service Code of Conduct and should therefore be dismissed.

She should not be ‘on leave’ on full pay at our expense.

It would send a message that while he may not be able to control the corrupt cronies within the ANC, he can deal decisively with that which is directly in his purview.

Judith February is a Visiting Fellow at the WITS School of Governance.

Gary Pienaar is an admitted advocate who has spent over 20 years in public service and researching issues of public ethics and governance.