Why it's taken so long to prosecute state capture cases in South Africa

Head of South Africa’s National Prosecuting Authority, Shaun Abrahams.
Reuters/Siphiwe Sibeko

The Asset Forfeiture Unit of South Africa’s National Prosecuting Authority (NPA) has confirmed that it is probing seven cases related to what has come to be known as “state capture”, involving R50 billion. This development follows months of public frustration due to lack of action by the country’s law enforcement agencies despite mounting evidence pointing to massive corruption. Politics and society editor Thabo Leshilo spoke to legal expert, Professor Penelope Andrews.

What does the NPA’s decision tell us about South Africa’s prosecutorial capabilities and resolve?

The failure of the NPA to act swiftly and vigorously against those involved in state capture shows that there has been a dereliction of duty.

The NPA has the capability and could muster the resolve to pursue prosecutions according to its constitutional mandate: without fear, favour or prejudice. So its decision to act now says little about its capabilities but more about its autonomy and independence.

The latest developments highlight the challenges around the appointment of National Director of Public Prosecutions. From all accounts, the incumbent Shaun Abrahams is deeply compromised. His loyalty to President Jacob Zuma, who appointed him, means that he is caught in a professional malaise and inertia.

The president has the right to appoint the head of the NPA as set out under South Africa’s Constitution. There is unlikely to be a conflict of interest if a strong independent individual is chosen. But when a weak individual – someone who is chosen for reasons other than their legal talent and skill – is put in the post, the chances are that they will fail to act decisively against their line managers. The result will be the situation South Africa finds itself in now.

Why did it take so long for any action to be taken?

There are several possible explanations that the NPA could offer for the delay.

Firstly, they could argue that it takes time for evidence to be gathered to build a solid case.

Secondly, South Africa’s political climate, particularly in the last two years, has not been conducive to pursue those involved in allegations of state capture. This seems to have changed with a new president, Cyril Ramaphosa, at the helm of the governing African National Congress.

The third possibility is that the NPA has finally decided to act because it didn’t have a choice. Of all the institutions involved in discussions about state capture, the NPA’s silence has been the most noticeable. It finally got to the point where it had nowhere to hide and was forced to act.

The last possibility is that the NPA has been spurred on by developments in the British Parliament where Lord Peter Hain called on UK regulatory bodies to investigate some British companies mentioned in the Gupta e-mails. These actions stand in direct contrast to the inaction of the NPA, an embarrassment, thereby forcing it to proceed.

Should South Africans be concerned about the rule of law?

The NPA and the police have not promoted and protected the rule of law as well as they could have. But the country’s judiciary has been a ray of light.

Except for a few lapses, the judiciary has consistently tried to strengthen the foundations and safeguard South Africa’s very fragile democracy since 1994. This has been despite many attacks – direct and indirect.

Several judgments show this. One was the case of Johannesburg businessman Hugh Glenister who took then Police Minister Nathi Nhleko and the Director of Public Prosecutions to court to force them to prosecute police officers involved in a crime. Another was the Nkandla case which involved the use of public money on President Jacob Zuma’s private homestead. The Constitutional Court found that Zuma had failed to uphold the rule of law.

The unique feature of the South African Constitution is that judges are the final arbiters over the exercise of all public power. This is a welcome departure from the apartheid era, where parliament was sovereign and judges had no authority to review or overturn parliamentary actions, no matter the lack of morality or justice. In short, public power under apartheid was not subject to review by the courts.

Through their creative and courageous decision-making the post-1994 judiciary, especially the Constitutional Court, has demonstrated the textbook example of an effective separation of powers doctrine in a democracy.

Why is it hard to prosecute corruption and commercial crimes?

It is probably harder to prosecute corruption because it invariably involves subterfuge and deception to create the web of relationships. These relationships are often challenging to unpack.

And the levels of complexity in certain kinds of commercial cases – sometimes involving layers of complicated financial and other documents – make them harder to prosecute.

Yet the NPA has in the past two decades succeeded in a few prosecutions for corruption, including that of Schabir Shaik, Zuma’s then financial benefactor.

Its challenge is resources. Its a David versus Goliath situation if you compare the expertise in the NPA’s ranks with the resources that white collar criminals have at their disposal. This is true even though the NPA has expertise in its senior ranks.

In addition, in most cases South Africa’s top legal minds provide expertise, at very high rates, to white collar criminals.

There is nothing that prevents the NPA from employing outside expertise to prosecute complex cases, as it did in its case against tax dodger David Cunningham King.

To prevail in the pending state capture prosecutions, the NPA should look beyond its in-house expertise and gather the best talent in the legal profession.

Penelope Andrews, Dean of Law and Professor, University of Cape Town

This article was originally published on The Conversation.

South African news station ANN7 is on the skids: why it won't be missed

Television news station linked to the Guptas faces imminent closure.
Reuters/Siphiwe Sibeko

The closure of any media outlet is normally mourned by all journalists, because of the loss of jobs, diversity and competition. But the announcement that South African pay-TV operator Multichoice will not renew the contract of news channel ANN7 will be no great loss to the news media, or the public debate.

It will, though, be a setback to the corrupt three-way state capture conspiracy which brought together ANN7, Multichoice and elements of the government, as exposed by the now notorious Guptaleaks emails.

The emails were leaked some months ago from inside the Gupta clan. The family has been at the centre of state capture accusations in South Africa because of its extraordinary influence over President Jacob Zuma, his family and members of his Cabinet. The allegations of corruption have extended to Multichoice. It stands accused of making multi-million rand payments to both ANN7 and the South African Broadcasting Corporation to get their support for Multichoice’s attempt to influence government policy on digitalisation.

Yesterday Multichoice, which is facing an inquiry by South Africa’s broadcast regulator Icasa, announced the results of its own internal probe. The company said it had made mistakes, but there was nothing corrupt or illegal about its decisions. Nevertheless, it would not be renewing ANN7s contract when it expired in August. Instead Multichoice would open up bidding for another black-owned news station.

The night before this announcement, ANN7 had run a piece on air about the Vrede dairy farm, in central South Africa, which is part of the police investigation into Gupta-inspired fraud. The TV station promised to give the country the real story that the rest of the corruption obsessed media were not telling.

The report aired by ANN7 was a clear illustration of the kind of dishonest journalism the station has produced since its launch in 2013. It was unmistakenly part of the fight back campaign being launched by Zuma’s supporters, a number of whom are among those accused of fraud in relation to the dairy farm.

An unseemly story

As part of the piece station owner Mzwaneli Manyi, a former government communicator who was gifted the station by the Guptas, went to the farm himself to show that it was not derelict, but a “world class facility”, a fact being downplayed by the rest of the media. It was a repetitive piece in the ANN7 tradition of trying to deflect criticism of friends and sponsors accused of corruption and state capture.

There were also some significant omissions in the report. It made no attempt to tell the audience why the farm’s current state was relevant to fraud that happened at least five years ago under different ownership. Nor did it address the issue of whether it was worth the R220 million of taxpayers’ money that went into it, nor why most of that money appeared to have been peeled off to pay for a lavish Gupta wedding and other non-farming activities.

It did not say whether the farm was profitable. They did speak to some of the 45 employees who said they and their families depended on the farm, though the townspeople they spoke to all said that the politician’s promises that this farm would benefit the community had come to little.

It was the worst kind of sham, poisonous journalism for which ANN7 has become known. It was based on a false premise (that the media were suggesting that the farm was still derelict) and intended to throw up dust around those accused of involvement in what was by all accounts a fraudulent business venture.

One veterinarian took one look at the pictures of cows and tweeted, “Call the SPCA”, saying these bony bovines did not look healthy enough to produce significant amounts of milk.

But Manyi did not get an expert to look at the pictures. Instead the station wheeled out analysts and commentators to repeat the station’s mantra that other media was hiding the real story as part of the grand white monopoly capital conspiracy.

A history of dishonest journalism

Was this kind of dishonest political propaganda the reason Multichoice not renewing ANN7’s contract? It’s impossible to tell how the decision was made because the company gave no details of what their mistakes were, nor any explanation of why it was not corrupt.

One possible conclusion is that Multichoice and its parent company, the global internet and entertainment group Naspers, was doing what it has done best for over 100 years: move with the political wind to stay onside with whoever is – or is going to be – in Pretoria’s Union Buildings. With Zuma about to be replaced as president of the country by new African National Congress president Cyril Ramaphosa, the Gupta connection becomes a liability rather than an asset.

This is why the demise of ANN7 is more worrying for the Gupta network of corruption than for journalists or the viewing public. Surely in the post-truth age we have to act against those who knowingly purvey falsity?

The closure of ANN7 could be viewed as South Africa’s Facebook lesson: diversity in news is of dubious value when it means polluting the air with dishonest journalism. What South Africa audiences want is more, better, independent journalism – and they will have a better chance of getting that if ANN7 is replaced by another station.

There is a precedent in this country for a media outlet that was born in sin and shunned for decades by anyone who cared about news and journalism: The Citizen newspaper. It was started in the 1970s with secret government funds, with the express intention of undermining the Rand Daily Mail, at the time the most liberal and anti-apartheid of our newspapers.

The Citizen went through multiple changes of ownership until this history was bleached out. But only diehard apartheid supporters would have mourned its closure in the 1980s, just as only diehard Gupta-supporters will mourn the disappearance of ANN7.

What this incident highlights more than anything is the danger of the Multichoice monopoly on pay-TV, which gives it extraordinary power to decide what alternatives audiences have to the public broadcaster, the SABC.

Rather than the future of ANN7, South Africans should perhaps worry about Multichoice having so much power, and using it so cynically.

Anton Harber, Caxton Professor of Journalism, University of the Witwatersrand

This article was originally published on The Conversation.

Is South Africa seeing a return to the rule of law? More evidence is needed

South Africa’s President Jacob Zuma and Deputy President Cyril Ramaphosa. Which one of them does the criminal justice system support?
EPA-EFE/Cornell Tukiri

It appears as if the Gupta family, known for being politically connected to South Africa’s President Jacob Zuma and accused of “state capture”, have not had a good start to the year. The country’s Asset Forfeiture Unit has indicated that they’re pursuing 17 cases to recover R50 billion linked to state capture and corruption. The unit, which falls under the country’s National Prosecuting Authority, is reportedly going after the Gupta family and their associates.

The phenomenon of “state capture” in South Africa epitomises unconstitutional conduct. It has involved private interests using illegal means to gain influence over public representatives or state officials with the aim of getting them to take decisions that benefit both parties but compromise the public interest and the constitutional integrity of state institutions.

Capturing the criminal justice system is critical to those pursuing the state capture agenda: it becomes a self-fulfilling prophecy in the sense that it’s aimed at securing protection against any criminal prosecution. In turn this creates a favourable environment for ongoing state capture.

The question then is whether the latest developments of possible charges and asset seizures requested by the NPA against Gupta related companies amount to a paradigm shift?

To answer this question we need to keep in mind four factors: the rule of law, the relationship between politics and the criminal justice system and the professional independence of the country’s prosecuting system. In addition, it’s important to remember that putting a stop to state capture requires a myriad of actors to play their part.

Other countries have faced this predicament. Examples of investigations with explosive political implications include the FBI’s probe into Hillary Clinton’s e-mails days before the 2016 American presidential election and the Robert Mueller special investigation into possible Russian interference in the US election.

The difference in South Africa is that the democratic checks and balances to prevent long-term harm are not yet fully consolidated.

The rule of law

State capture and the rule of law are mutually exclusive. This is because the rule of law depends on effective judicial independence and incorporates the separation of powers principle.

South Africans have welcomed the latest developments because they believe they will strengthen the rule of law. For many this principle is sacrosanct because it’s part of a democracy as well as quality government. In principle it insists on equality before the law for all, and no exceptional treatment.

It also confirms that all disputes in society involving constitutional or legal principles, governance matters and private matters affecting legal rights must – in the final instance – be resolved by judicial means.

In addition, the rule of law confirms that all executive and administrative actions are subject to judicial adjudication or review.

A more complex issue is how the judiciary and criminal justice system can become entangled in political dynamics. How should a government relate or interact with its criminal justice component? What is the acceptable norm? On the one hand it is part of government. On the other it has to be independent.

The criminal justice system is immensely attractive to politicians in power who want to use its investigative and intelligence capacity to deal with political foes. This has certainly been the case in South Africa over the past decade.

The question is whether the latest actions taken by the NPA are a continuation of the abuse of its power, or the beginning of a genuine rule of law regime.

The new president of the African National Congress President Cyril Ramaphosa has said that he wants the NPA to act swiftly against those implicated in state capture. This is significant given that developments since the early 2000s have compromised the independence of South Africa’s investigative and prosecutorial institutions.

But South Africans should be cautious about uncritically accepting the latest moves as a new-found sense of independence. Is it not simply a change in allegiance from Zuma to the new ANC leadership?

Over the past 10 years the country’s criminal justice system has been exploited by the government to deal mainly with internal ANC factional dynamics. The country’s Revenue Service, which also has investigative and semi-judicial powers, has also been drawn into these dynamics. This is graphically captured in the book The President’s Keepers written by investigative journalist Jacques Pauw.

There are a number of examples of the criminal justice system being exploited for political ends. One of the most prominent examples was the 2007 “spy tape” saga. This involved taped conversations between former NPA and Scorpion officials in which the timing of Zuma’s corruption charges were discussed. In 2009 the tapes were appropriated by the National Director of Public Prosecutions as a justification to withdraw the charges because the conversations politically compromised the NPA. This, on its own, was an extraordinary self-indictment.

Another example was the Hawks and NPA investigations against Finance Minister Pravin Gordhan and SARS officials responsible for tax crime investigations. This was meant to neutralise the threat posed by the tax authority to Zuma’s networks.

The reverse side of this trend was numerous court judgements initiated by opposition parties, NGOs and foundations to counter executive actions deemed to be unconstitutional and to challenge parliamentary procedures or prosecutorial decisions. Often the judiciary landed up reprimanding the criminal justice system.

A paradigm shift?

The NPA’s new approach to the Guptas should not be seen in isolation. Other important institutions are playing their part in challenging bad behaviour.

For example, a parliamentary portfolio committee is making impressive inroads into poor governance and corrupt behaviour at the state power utility Eskom.

In the private sector South Africa’s main commercial banks have closed the bank accounts of the company owned by the Guptas, Oakbay Energy and Resources. Internationally companies implicated with the Guptas such as Bell Pottinger, McKinsey, KPMG have been called to account.

The international business response has been followed by court orders for the seizure of company assets. The prosecution of individuals could be next. This will be complex because in these situations it’s difficult to know who to prosecute when the scale of involvement is so widely spread.

Any prosecutions will have to satisfy the public’s quest for justice. They will also have to serve as a deterrent against a repetition of the mismanagement, criminal behaviour and political complicity in hijacking government institutions.

The main objective should be to restore public confidence in key institutions that make up the criminal justice system. These include the Hawks, NPA, state and crime intelligence and the revenue service. It is a huge task, not least because the NPA is caught in the shifting power relations between Zuma and Ramaphosa. This makes its mandate to act without “fear or favour” a Herculean task.

The positive side is that the judiciary is not politically compromised in the same way.

Dirk Kotze, Professor in Political Science, University of South Africa

This article was originally published on The Conversation.

Why shaking up South Africa's power utility matters for the economy

Cyril Ramaphosa, South Africa’s deputy president who was recently elected as the leader of ruling party, is seen to be fighting corruption.
EPA

South Africa’s power utility Eskom has seen a remarkable leadership shake up in the past few days. Almost the entire board has been replaced with seasoned businessmen. And a well respected acting CEO has been put in place, too. The developments appear to reflect resolve by the country’s deputy president Cyril Ramaphosa, who was elected as president of the African National Congress in December. Sibonelo Radebe asked Jannie Rossouw to discuss what the changes at Eskom mean.

What do you make of the shake up at Eskom?

The announcement of a new board at Eskom is welcome for a number of reasons.

Firstly, the previous board and top executive layer proved to be incompetent if not downright destructive. Secondly, the power utility had sunk into dire financial difficulties on their watch. Recent reports suggested that the power utility has run out of funds and wouldn’t be able to meet its obligations unless government stepped in with another huge bailout. This, after the government injected R23 billion in equity and and wrote off about R60 billion over the past five years.

Over the past five years or so, Eskom has been hit by a series of corporate governance breaches of the worst kind. These included the former CEO Brian Molefe trying to secure a R30 million payout for only 18 months at the helm.

And it’s become clear from the Gupta leaks that the power utility had come to play a central role in a raft of activities related to state capture. It appears to have served as a conduit to transfer government resources to well-connected and corrupt individuals and families in South Africa.

Given the damage that’s been done, the previous board at Eskom simply could not continue. It had no plan to turn the company around or stop corruption. Its only strategy was to lean on the South African government for more financial assistance.

The Eskom shake up is also significant because it’s a signal that the new president of the ANC Cyril Ramaphosa is committed to fighting corruption in both the public and private sectors.

Why does Eskom matter?

Eskom is arguably South Africa’s most important state owned enterprise. The South African economy depends on continuous and uninterrupted power supply. This puts Eskom in a different league to other embattled state owned enterprises like the national airline, South African Airways (SAA).

SAA is also dependent on government bailouts, but the South African economy will continue to function without it. Eskom, on the other hand, is a monopoly power supplier. All South Africans depend on it for power.

There seems to have been an urgency to make changes. Why?

It seems that Ramaphosa moved quickly to wrap up the Eskom shake up before he left for the World Economic Forum in Davos. It’s not difficult to understand why. South Africa has had some very bad headlines over the past few years, including downgrades by international rating agencies, and its economy is in the doldrums.

A significant portion of South Africa’s economic pressure originates from declining confidence of local and international investors in the country’s economy. This is evident from the South African business confidence index, which has plummeted. Since 2013 business confidence has been on a declining trend from above 50 to a current level below 35.

Replacing the Eskom board before the Davos meeting was a smart and necessary move. Davos is a rare occasion to showcase South Africa as an investment destination of choice for international investors. One condition for attracting international investment is a clear commitment to addressing corruption and instilling sound management in government enterprises.

What in your view is the long term solution around Eskom?

The long term solution to the problems at Eskom and other troubled state owned enterprises is a rethink of their role in the South African economy.

Some, such as South African Airways, are really unimportant and their disposal or even their closure would have little impact on the domestic economy. Disposal or closure are necessary options as these entities add an unnecessary burden on the national fiscus.

But others, like Eskom, are more strategic and matter enormously and the government should retain them.

It has also become necessary for South Africa to rethink the remuneration policies for executives of state owned enterprises. They earn salaries that aren’t commensurate with the risks they face. The consequences of failure are much more severe for executives in the private sector. Executives of state owned enterprises simply apply for bailouts when they’re in trouble.

So there’s no justification for exorbitant remuneration at state owned enterprises. And no executive at any state owned enterprise should get a bonus: how can a bonus be justified when the South African government provides the bailout in the event of financial difficulty?

The new Eskom board should urgently revise the company’s remuneration policy to restore some sanity in the level of remuneration. The board should also review business practices to ensure that Eskom remains financially viable without any financial assistance from the government.

It is also important that the South African government and the board of Eskom should make it clear to the general public and to investors that the proposed nuclear procurement project plan will not go ahead: neither the South African fiscus nor Eskom can afford such a project.

Jannie Rossouw, Head of School of Economic & Business Sciences, University of the Witwatersrand

This article was originally published on The Conversation.

Stability in southern Africa hinges on how leaders gain and lose power

Protesters demand Congolese President Joseph Kabila step down.
Reuters/Thomas Mukoya

While each country in Southern Africa has its own politics, recent developments involving presidents provide interesting contrasts across the region. Which presidents gain and lose power in 2018 – and how they do so – will have significance for the region as a whole, not least in helping determine its continued stability.

As 2018 begins, Joseph Kabila is clinging to the presidency of the Democratic Republic of the Congo (DRC), claiming that there is insufficient funding to hold an election, amid growing protests against him in Kinshasa and elsewhere. It remains to be seen if he will fulfil the undertaking he has made that elections will be held in December this year.

Other countries in the region start 2018 on a much more promising footing. In Botswana, President Ian Khama, approaching the end of his two presidential terms, is expected to step down in an orderly succession in April and will be suceeded by the vice-president.

In both Zimbabwe and Angola autocratic presidents who had been in power for almost four decades lost power in 2017 in very different ways.

Military intervention in Zimbabwe

In the case of Zimbabwe the country’s army intervened in November 2017 to force Robert Mugabe to give up power. This came after he had, under the influence of his wife Grace, sacked Emmerson Mnangagwa as vice-president. The Southern African Development Community did not need to intervene, and even the mediation mission it planned wasn’t required.

Instead, the Zimbabwe military acted, with the ruling party, Zanu-PF, to replace Mugabe with Mnangagwa. It did so peacefully, denying during the entire process that a coup was underway. The 93-year-old Mugabe, in office since 1980, initially refused to step down, but was finally removed both as president of the country and of the ruling party.

The country will go to the polls in mid-2018, and Mnangagwa, who was confirmed in December 2017 as Zanu-PF’s presidential candidate, has said that the election will be credible, free and fair, but he has yet to confirm that he will allow international and other observers.

With the military more obviously involved in government than anywhere else in the region, Zimbabwe’s opposition parties divided, and with Morgan Tsvangirai, leader of the Movement for Democratic Change Alliance seriously ill, there is little likelihood that Zanu-PF or Mnangagwa will lose power.

Angola

In Angola José Eduardo dos Santos, suffering from ill-health, agreed in early 2017 to step down as president of the country. He nominated a man he thought would be a trusted successor, hoping to continue to wield influence as president of the ruling MPLA.

After elections for the National Assembly in August, João Lourenço duly succeeded Dos Santos as president. To widespread surprise, he began sacking the heads of some of the country’s key institutions. These included Dos Santos’s daughter, Isabel dos Santos, who was CEO of the state oil company Sonangol.

Former Angolan President Jose Eduardo dos Santos, left, and his successor Joao Lourenco.
EPA/Manuel de Almeida

And in early 2018 her brother José Filomeno dos Santos, was removed as head of Angola’s sovereign wealth fund. Their father’s influence was rapidly slipping away.

In Angola, as in Zimbabwe, a change of leader to one with a more reformist approach probably means that the ruling party has consolidated itself in power.

South Africa

In South Africa in December 2017 the leadership of the governing African National Congress (ANC) passed from Jacob Zuma to Cyril Ramaphosa, who thus became heir apparent to the presidency of the country. While there is no two-term limit for ANC presidents, Zuma had brought the ANC into discredit and Ramaphosa, despite having worked closely with Zuma as deputy president, was seen as the one who would curtail the corruption and “state capture”.

For now, Zuma remains president of the country until general elections due to be held by June 2019. The country waits to see whether, how and when Ramaphosa can arrange to take over as president of the country as well as of the ruling party.

A presidential challenge defeated

In Namibia, Hage Geingob had to meet a challenge to his continuing as leader of Swapo, the governing party, in November last year. He was, however, confirmed in his position and will therefore be Swapo’s presidential candidate for the election scheduled to take place in November 2019.

Geingob supporters now fill all the key posts in his government, enabling him to make policy as he wishes. This is very different from South Africa, where the new ANC leadership remains divided and where Ramaphosa, when he becomes president of the country, will find it difficult to adopt new policies.

Malawi and Zambia

Malawi must hold elections in 2019 and the contest for the presidency then has already begun. It is not known whether Joyce Banda, the former president and leader of one of the country’s leading political parties, will return from self-imposed exile abroad to stand again. In 2017 she was formally charged with having been involved in the massive “Cashgate’ corruption scandal” that was uncovered while she was president.

Zambian President Edgar Lungu.
Reuters//Siphiwe Sibeko

In Zambia, by contrast, where the next election is not due until 2021, the question is how Edgar Lungu, who took over the presidency after narrowly winning the presidential election in August 2016, will try to consolidate his power.

In 2017 Lungu became more authoritarian. Hakainde Hichilema, the leader of the main opposition United Party for National Development, was arrested on what were clearly trumped-up charges. These were only dropped in August after interventions by the Secretary-General of the Commonwealth and inside Zambia by the local Catholic Archbishop.

Lungu wants to serve a third term as president, and the country’s Constitutional Court has been asked to rule on the matter.

Regional perspective

Too often developments in one country are seen in isolation from similar ones elsewhere. Given that South Africa is the most important country in the region, how the Ramaphosa-Zuma poser is resolved will be significant for the region. Elsewhere, how presidents gain and lose, and try to consolidate their power, will help shape the continued stability of the region.

Will political tensions be managed internally, as in Zimbabwe in late 2017? Or will they require some kind of intervention by the Southern Africa Development Community, in the DRC and perhaps elsewhere, to prevent them from escalating? Throughout the region, contests for presidential power are likely to keep political passions on the boil.

Chris Saunders, Emeritus Professor, University of Cape Town

This article was originally published on The Conversation.