Corruption in South Africa

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Corruption in South Africa includes the private use of public resources, bribery and improper favoritism.[1] The 2017 Transparency International Corruption Perceptions Index assigned South Africa an index of 43 out of 100, ranking South Africa 71 out of 180 countries.[2] This ranking represents a downward trajectory with a drop of two points from 45 (2016 CPI).[3] Countries with scores below 50 are believed to have serious corruption problems.[4] Recent scandals surfacing since 2016 involving former South African President Jacob Zuma have drawn attention to corruption in South Africa. Cyril Ramaphosa, the newly elected South African President, has undertaken to root out existing corruption and further the development of anti-corruption initiatives.[5]

South Africa has a robust anti-corruption framework however, laws are inadequately enforced and accountability in public sectors such as healthcare remain below par.[6] In addition, internal sanctions have been employed to discourage whistle-blowers from reporting corrupt activities in both the public and private sectors. A scandal involving the Gupta family and former South African President Jacob Zuma pushed Zuma out of office as a long list corruption complaints against the former President resurfaced.[7] Complaints against Zuma range from the former leader's lavish spending of state funds, to delegating contracts based on nepotism and businesses with familial connections or close ties benefiting through their association with him.[8]

Perception of Corruption in South Africa[edit]

In 2013, the Afrobarometer report showed a substantial increase in the public's perception of corruption since 2008.[9] While 56% of all people on the African continent believe that their country could be doing more to curb corruption, 66% of South Africans believe that the government could be taking more steps to restrict corrupt activity.[10] South Africans' experience of first-hand corruption ranks among the least on a first-hand basis in Africa. At one stage only 15% of South Africans admit to having paid a bribe. The average percentage of all Africans having paid a bribe to government officials was around 30%.[11]

Between 2011 and 2015, approval of the electorate of former President JG Zuma had halved to 36% due to reports of corruption and inadequate leadership.[12] The majority of South Africans believe that various branches of government should oversee other branches' of government's work. Around a quarter of South Africans feel they should be allowed to be responsible for holding elected representatives and leaders accountable.[13]

Apartheid and Corruption[edit]

Apartheid, a system of discrimination and segregation on racial grounds, dominated the ideology and political system in South Africa from 1948 to 1994. This system, which intentionally excluded non-Afrikaners from civil service jobs, government positions, and politics entirely, came to an end in 1994 when the African National Congress headed by Nelson Mandela conducted negotiations with the South African government at the time.[14] Before the abolition of Apartheid, civil service was a pervasive medium for rent-seeking and the preferential treatment of Afrikaners.[15] Policies favoring Afrikaner cultural and educational systems, the awarding of government contracts to Afrikaner businesses and the funding of parastatal Afrikaner organizations was a common phenomenon during the era of Apartheid. The building of rural homeland states in the 1980s created ideal projects for rent-seeking with many homeland leaders presiding over massive networks of patronage.[16]

Around the same time, the ANC was receiving funds from foreign donors in order to build up stronger opposition parties to protest against South Africa's National Party and Apartheid. These leaders were given large sums of money without formal book-keeping. Even though there is no evidence of corruption or rent-seeking, the informal habits and the notion of ANC leaders were above being held accountable remained with the party which rose to power after the transition.[17] The ANC's tradition of loyalty to the organization was shaped in the Apartheid era, with clear implications in modern-day ANC politics. In the years leading up to the inevitable transition of power, corruption was rampant in most government departments, intelligence agencies, the police and the military.

There is much ongoing debate regarding the origins of corruption and the definition of corruption in South Africa. The inherited bureaucracy and political culture which originated in the Apartheid era has rendered corruption issues hard to trace and tackle.[18] The creation of a new economic elite of ANC members or associates following 1994 created an environment where corruption has flourished under the new regime.[19] Both the new and old political order created their own types of corruption, benefiting those in their inner circles. Although forms of endemic corruption were passed on to the new order since 1994, new forms of corruption have emerged adding new layers of theft from the State's purse.

Types of Corruption in South Africa[edit]

Although South Africa is subjected to various types of corruption, three prevalent forms are tenderpreneurism, BEE fronting and wasteful expenditure. Recent scandals involving South African politicians and the Gupta family have brought these types of corruption into the public spotlight. Petty Corruption is another relevant issue affecting public services and day-to-day life in South Africa.

Tenderpreneurism[edit]

A tenderpreneur is an individual who enriches themselves through corrupting the awarding of government tender contracts, mostly based on personal connections and corrupt relationships, although outright bribery might also take place and often involves an elected or politically appointed official (or his or her family members) holding simultaneous business interests.[20] This is often accomplished by overpricing and/or shoddy workmanship and/or excessive 'under the table' advances termed "commissions". The previous case involving the Gupta family and their close ties to the Zuma regime can be classified as tenderpreneurism.

BEE Fronting[edit]

BEE-fronting is an abuse of the rules governing Black Economic Empowerment (BEE), where qualifying persons are given a seat on the Board of a company while having no decision-making power in the company, in order to qualify the company for government contracts in terms of BEE.[21] In June 2017, Netcare, a company which operates the largest private hospital network in South Africa, was accused of BEE fronting.[22] Since then, 17 other complaints have been filed against various South African companies regarding BEE-fronting.[23] Related to this is Cadre deployment and employment, which is an official ANC policy to colonize government with officials loyal to the ANC.[24]

Petty Corruption[edit]

Petty corruption is a prevalent issue in South Africa's public service sphere. A survey conducted by the ISS National Victims of Crime tested the extent and nature of petty corruption in South Africa.[25] One of the main issues highlighted by this survey is South Africans' lack of access to information regarding how to report corrupt acts.[26] The fear of facing repercussions for whistle blowing and the pervasive belief that reporting corruption will not cause change are two other concerns revealed by the 2011 survey.[27] Respondents of the survey were most likely to pay bribes to traffic officials, followed by police officers and officials in employment offices.[28] These findings support the notion that the perception of corruption in local government departments such as traffic and municipal policing is high.[29] The frequency of bribes involving police officers is concerning due to their role in tackling corruption and illicit behavior. Only 5.6% of South Africans reported experiencing forms of petty corruption involving either money, favors and gifts.[30] Even though the percentage of experienced corruption is low, the high perception of corruption has led respondents to prioritize corruption as the second most prevalent crime in the country.[31]

Corruption Scandals[edit]

Jacob Zuma and Corruption[edit]

In 2018, South Africa's highest court found Mr. Zuma guilty of violating the constitution in regard to the lavish spending of 246 million Rand of State funds towards Zuma's homestead in Nkandla.[32] After a home invasion and the subsequent rape of one of Zuma's four wives, Zuma accessed the means to upgrade security measures of his homestead.[33] A report by South Africa's public protector in 2014 found Zuma had inappropriately allocated state funds to finance additional home improvements such as the addition of a swimming pool, amphitheater, visitor center and cattle enclosure to his property (among others).[34] Zuma's time in office has been marked by controversy and accusations of corruption. Zuma's close relationship with the Gupta family has been highlighted in the former South African Public Protector's report on State Capture.[35] Zuma's resignation on February 14 comes after months of pressure from the ANC.[36]

In a recent turn of events, Former President Jacob Zuma will be prosecuted on 12 counts of fraud, one of racketeering, two of corruption and one of money laundering. Zuma will face corruption charges involving the 2.5 billion dollar South African Arms Deal.[37]

Gupta Family Scandal[edit]

In 2016, the Public Protector, Thuli Madonsela, investigated the Gupta Family Scandal after receiving a formal complaint from a Catholic priest, called Father Stanslaus Muyebe. The State of Capture report released by the Public Protector in 2016 reports on the dangers of state capture in the case of South Africa.[38] The 355 page document reports Mr. Zuma's preferential treatment of the Gupta family and the involvement of Jacob Zuma's son and the Gupta family.[39] The allegations reported include the Gupta Family's involvement in the appointments and removals of members of the South African cabinet, the unlawful awarding of state contracts to Gupta linked companies or persons, the banks’ preferential treatment of Gupta owned companies and Zuma's conflict of interest concerning his position and business dealings.[40] The Gupta brothers, who have been major players in South African business for over a decade began growing their relationship with former President Jacob Zuma in 2003 as he occupied the Office of Deputy President. Since 2003, both parties benefited from an understanding wherein the Gupta family financed the Zuma family while President Zuma appointed friendly officials and awarded lucrative state contracts to the Gupta empire.[41] South African authorities are seeking to recover up to US$4.07 billion lost to these Gupta deals.[42] Jacob Zuma's son, Duduzane and Gloria Ngeme Zuma, one of Mr. Zuma's wives, received large transfers and monthly salaries for positions held at one of the Gupta firms.

The Gupta family has engaged in a numerous suspicious transactions involving a series of shell companies and state-owned enterprises.[43] The OCCRP has reported on Transnet's contract with South China Rail and subcontracts with Gupta run organizations. State controlled companies like Eskom and Transnet are in the center of illicit deals with Gupta companies.[44] Eskom, the state electricity provider, deposited over R1.8 billion into various Gupta accounts. Eskom paid Trillion, a Gupta-controlled enterprise, over R466 million for managerial help at a time when Trillion had only a few employees. Other companies sub-contracted by Eskom reveal dealings with Tegeta, another Gupta-run company. Eskom spent double the average amount purchasing coal from Tegeta, becoming the most expensive supply contract in Eskom history.

An arrest warrant for Ajay Gupta was issued in February 2018.[45] The Gupta family mansion was raided in the same month, all three Gupta brothers are on the run.[citation needed]

Bank of Baroda Scandal[edit]

The Bank of Baroda, an Indian state-owned bank, has played a crucial role in the Gupta family's business dealings.[46] According to a report by the Organized Crime and Corruption Reporting Project (OCCRP), the Bank of Baroda allowed the Gupta family to move millions of dollars in alleged corrupt business transactions to offshore accounts.[47] Although the Bank of Baroda denies the illicit behavior, the documents report that the bank's South African branch issued unapproved loan guarantees, ignored internal compliance efforts, and averted regulators from learning about suspicious transactions in a way that benefited the Guptas’ network.[48] Around 4.5m Rand has circulated around a handful of Gupta-associated companies between 2007 and 2017.[49] Due to the volume of Gupta owned accounts, the majority of the bank's transactions in Johannesburg involved Gupta family funds.[50]

Reports reveal that inter-company loans provided an untraceable and inexplicable technique used by the Gupta brothers to transfer money from the Bank to various Gupta-owned companies like Trillion Financial Advisory and Centaur Mining. The suspicious activity reports (SARs) filed by workers at the Bank of Baroda related to Gupta transactions were often voided by managers and higher-level bank officials.[51] Most SARs failed to reach the South African Financial Intelligence Centre as a result.

The Arms Deal Scandal[edit]

The arms deal, formally known as the Strategic Defence Package, was a multi-billion dollar deal involving arms acquisitions from countries such as Germany and France.[52] This arms deal set a precedent for cases of large-scale corruption and high levels of bribery and embezzlement in the African National Congress. This arms deal came at a time when the AIDS epidemic was rampant throughout Africa and poverty and inequality in the region still remained among the highest in the world. Taxpayers protested the arms deal through a public interest lawsuit claiming that the deal was unconstitutional and irrational.[53] Various South African and international evidence teams have been investigating the arms deal since the early 2000s.[54] Rumors of embezzlement, bribes and kick-backs by and between the external players in this procurement and that of the ANC, have prompted further investigations. In 2011, Former President Zuma appointed a Commission of Enquiry headed by Judge Seriti.[55] to investigate allegations of impropriety, fraud and corruption around the 1998 Arms Deal.[56]

As of March 2018, Jacob Zuma has been facing 16 charges of corruption, racketeering and fraud involving the 1998 Arms Deal.[57] In total Zuma has been accused of accepting 783 illegal payments, including receiving bribes from a French Arms firm via his financial advisor.[58] In April 2018, two months after resigning from office, Zuma was charged with graft by a national jury.[59]

Anti-Corruption Initiatives[edit]

Government initiatives against corruption are coordinated by the Department of Public Service and Administration.[60] The Public Protector also plays a role in fighting corruption. A disbanded independent anti-corruption unit named the Scorpions was replaced by the Hawks.[61] The Hawks are South Africa's Directorate for Priority Crime Investigation (DPCI) designed to target organized crime, economic crime and corruption.[62] The group was established by the Zuma administration in 2008.[63] South Africa has a well-developed framework and legislation outlining corruption initiatives. The Prevention and Combating of Corruption Act (PCCA) criminalizes corruption in public and private sectors and codifies specific offences making it easier for courts to use the legislation.[64] This act especially condemns bribery, extortion, abuse of power and money laundering while obliging public officials to report corruption offenses.[65] Like many corruption regulations in South Africa, the PCCA is poorly implemented and the Act does not include any protection measures for whistle-blowers.[66]

The National Anti-Corruption Forum provides an online guide to the Prevention and Combating of Corruption Act (PCCA).[67] Other acts like the Promotion of Access to Information Act calls for an increased access to public information.[68] The Public Finance Management Act examines government expenditures and the Code of Conduct for Assembly and Permanent Council members calls for the full disclosure of members to report gifts.[69] Enforcement mechanisms remain weak for many of these preventative Acts, allow for corrupt actions to go unreported. South Africa has ratified the United Nations Convention against Corruption, the African Union Convention on Preventing and Combating Corruption and the OECD Anti-Bribery Convention.[70]

In 2018 the Zondo Commission of Inquiry was set up to investigate allegations of State Capture and corruption during the administration of President Jacob Zuma. Testimony given during the inquiry implicated Bosasa,[71] the Gupta family and associates of former President Zuma.[72] During the inquiry hearings a joint memorandum signed by the embassies of the United States, the United Kingdom, the Netherlands, Germany and Switzerland representing countries that make up 75% of foreign direct investment into South Africa warned that if unaddressed corruption would have a negative impact on future investment in South Africa. It called for President Ramaphosa at act against perpetrators of corruption.[73] The South African government responded that it was disappointed by the memorandum not following "acceptable" diplomatic practices.[74]

Past Notable Incidents of Corruption[edit]

  • Tony Yengeni, the ANC's chief parliamentary whip, was found guilty of fraud in 2005 after Yengeni received a large discount on a luxury car from a firm bidding for a government contract.[75]
  • Former President Jacob Zuma's financial advisor, Schabir Shaik, was sentenced to 15 years in 2005 for soliciting a bribe from a French arms company named Thales. The bribe was solicited on behalf of President Zuma.[76]
  • In 2005, the Travelgate scandal exposed Members of Parliament who were found to have illegally used parliamentary travel vouchers in a fraud exceeding R37,000,000 for personal use. As the CFO who identified the fraud reported: "I, Harry Charlton FCA, JP can confirm 6 travel agents and 435 then past and present MP's including 3 members of Mbeki's Cabinet were implicated - most of them ANC MPs. 50 plea bargained for sentences that would allow them to remain as MPs. There were 3 formats of fraud totalling in excess of ZAR37 million (USD12million). The investigation went back 15 months but there was clear evidence that the fraud had been operating for a longer period. As I would not cooperate my services were terminated by Secretary Dingani in January 2016". http://www.saflii.org/za/cases/ZASCA/2011/132.html Dingani was himself was terminated for fraud https://ewn.co.za/Topic/Secretary-of-Parliament-Zingile-Dinganicase%7Curl=https://www.theguardian.com/world/2005/jan/24/southafrica.andrewmeldrum%7Cwebsite=The Guardian}}</ref>
  • Former South African President Thabo Mbeki and Sepp Blatter agreed to a $10m deal in 2007, which US prosecutors say was a "bribe" to secure the 2010 World Cup.[77]
  • The Goodwood police station commander, Siphiwu Hewana, was found guilty of attempting to defeat the ends of justice by tampering with the docket for convicted fraudster Tony Yengeni's arrest for driving under the influence in 2007.[78]
  • Former National Police Commissioner and ex-President of Interpol, Jackie Selebi, was charged with graft in July 2010, for receiving (at least) R120,000 from alleged crime-syndicate boss, Glenn Agliotti.[79]
  • The collapse of the VBS Mutual Bank in 2018 due to fraud and corruption created a scandal that implicated municipalities,[80] the ANC,[81] and the Economic Freedom Fighters.[82]

See Also[edit]

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Further reading[edit]