Theme of forum: Strengthening the role of business in the call for collective action - the role of Business in the call for collective action towards a corruption free environment - Is collective action working?
Allow me to express our gratitude at being invited to take part in this very important occasion to discuss how best to confront and defeat the scourges of corruption. As government, we have prioritised combating corruption for the simple reason that it undermines the integrity and efficacy of our institutions and programmes.
It is particularly more so with regards to undermining the efficacy to deliver on programmes aimed at empowering the poor. Imagine as example a scenario of a tender shoddily granted to some unqualified person to build houses, how that ultimately would then rob the poor of adequate or quality houses. The same could be said on a number of other deliverables by government, particularly those pertaining to the poor. It is for this reason that we have put up measures, both in terms of legal instruments as well as relevant institutions, to ensure that we defeat this malice of corruption.
We are therefore very excited that Business has continuously heeded the call to partake in the fight against corruption and your role is essential for any victory or success against this scourge.
Allow me to start by saying the obvious, which is to say corruption is a crime and no lesser than any other crime. Often the case when corruption is committed, the fact that a crime is actually being committed seems to elude those involved when corruption has reached the stage where it is taken to be a way of life by its perpetrators.
By virtue of diverting resources from their optimal use in government, in the private sector and amongst Non-Governmental Organisations NGO’s, corruption is practically no lesser than other crimes such as outright theft or robbery, except that it could be less violent.
In the instance of corruption, the resources may seem to have been duly allocated to the budgeted expenditures. However, the fact that some dodgy “tenderpreneur”, as some have coined corrupt recipients of governments’ tenders, has been appointed to deliver as per the budgeted allocations, that in itself may undermine the actual realisation of the objective or output as per the budget priorities.
According to the World Bank, corruption is defined as “behaviour on the part of officials in the public and private sectors, in which they improperly and unlawfully enrich themselves and/or those close to them, or induce others to do so, by misusing the position in which they are placed.”
In this sense, corruption therefore is like cancer that disables the efficacy of our institutional programmes to realise our goals, and hence we must all fight it to ensure we achieve a corruption free environment. Corruption is contagious, often the case it requires at least two to tango. As others observe those involved in corruption to be living large with impunity, that in itself attracts them into this contagious social disease and these are the factors that fuel the perpetration of corruption. Nipping corruption in the bud must mean confronting these very same challenges by ensuring that any unlawful gain is forfeited to the State.
Experiences show that most of the corruption in government is with regards to departmental relations with the private sector, hence I say it takes two to tango with regards to the commission of corruption. This is when government work is outsourced through tendering, that corruption comes into play. In as much as we could say that some government officials corrupt their business counterparts in such tendering processes, the same could be said of how business people corrupt their counterparts in government in the same manner.
This also involves NGO’s such as those that are Non Profit Organisations, on how funds consequently get embezzled through corrupt liaison with donors. Corruption can therefore be seen as some tango between those at the coalface of government - private sector tendering as well as the disbursement of donor funds. Of course businesses also do outsource in their own right services that are not their primary business concern such as cleaning, security, transport and all sorts of business production and services.
Therefore business is at the heart of activities that may prompt or attract corruption, and similarly business must be at the centre of any strategy or programmes to combat corruption. This is by virtue of the role that businesses play in government tenders as well as separately in their own outsourcing of those procurements that do not constitute the core of the given business activities. Nipping corruption in the bud must involve a concerted focus on these segments of business activities where business interface with government tenders. Of course focus must also be on businesses’ own procurement processes.
This is because at other points of the business, it is usually difficult to engage in corruption, as it is business financial transaction processes that involve expenditures that usually get corrupted. Other diversion of business resources is often by ways of simple outright fraud or theft, which is often easier to detect than the complexities attended to corruption.
This brings me to my next point, which is to say corruption usually takes place by ways of seemingly following all the due processes as façade to cover up the actual misdeeds. If advertising is a requirement for instance, that would be followed to the letter.
Where specific bid process requirements are stipulated, likewise those would be followed to the letter. But as others would say, the devil is in the detail. And as jurists would allude, with regards to the notion of the letter and spirit of the law or the constitution, in this instance the letter would be followed but the spirit would be subverted to unfairly enrich other parties at the expense of the said programmes as expended through procurement or tenders.
Corruption, like cancer, in the meantime spreads as the logic of self-enrichment at whatever costs, and as this becomes prevalent and self-evident, others consequently join into the loot. Corruption therefore has the potential to drive its own logic of existence to the extent that it becomes socially acceptable to do such crime amongst the circles of those involved in it. This is yet another reality that as business we must be aware of as we fight corruption. We must drive the message amongst all employees that corruption is a serious crime.
We must also accordingly demonstrate the consequences of corruption to the efficacy of the given institution as well as the consequences to those who commit such crimes. Where government is concerned, this may mean poor service delivery in many ways. In this instance, it also has the political cost of service delivery protests.
Business must therefore make sure that all those involved in procurement and government tenders have their activities closely scrutinised. For instance, where safety on matters of high security are concerned, it is common knowledge and practice that vetting of those involved or employed in such areas is a must. This is to ensure that those known to be security risk do not work in such closely monitored security zones or areas as that may undermine the security of the State.
The same principle must be applied where finances are concerned, as corruption undermines the existence of businesses. We have seen how giant companies such as the American energy company ENRON fell due to the corrupt acts of its Executives, many who later languished in prison as a consequence.
It may be proper for instance to know the friends, relatives and assets of those involved in procurements as part of the data base of employees who play such critical roles in a company. It could be, for instance, that at the time of this specific person being employed as Procurement Manager, his own cousin was at the time unemployed and poor. Yet suddenly that cousin now owns a business that procures services to the same company that this new employee of this company is responsible for. That could be sign of the possibilities of corruption.
Ladies and gentlemen,
These are but snippet viewpoints around the matter of corruption, which I am throwing on the table to consider in your debate, not as actual solutions, but as means to interrogate and unravel the intricate underworld of corruption. I am certain that as business people, you understand better the possible loopholes that could lead to corruption.
My point here is to say we must pay special attention to such loopholes and creatively seek relevant solutions. Also, we need to be perpetually on the guard against corruption, as the virus of corruption mutate to changing conditions that seeks to combat it, and in doing so, seeking other creative ways to continue to exist despite being cornered. My point is to say there can never be permanent solutions on corruption. In as much as scientists would tell you that there is no permanent vaccine against flu, as flu viruses continuously mutate to evade any drug formulated against them.
In order to effectively combat corruption, business must always be a pace ahead. The Information Technology (IT) industry knows this logic better, as they must be perpetually ahead of computer viruses and therefore there is no permanent anti-virus guard or software programme. It is an unfortunate truth that there will always be people prone to corrupt acts as the same applies to all other forms of crimes. However, it is our duty to continuously work towards zero corruption at all times, and the balance between the presence and absence of corruption at any given stage would be reflective of the efficacy of the measures we put in place to put corruption at bay. It is a balance that must be carefully kept continuously without cease.
The same applies to all other forms of crimes. And as I have said, enforcing a new culture where corruption is increasingly detested or disdained, that in itself is a giant step towards victory against corruption.
When corruption is rife, it could be a signal that a culture of corruption thrives on the basis that its existence has been normalised or made acceptable by acts of precedence. Where others have succeeded in committing corruption and continue to live large with impunity, this itself send the wrong message that corruption pays.
It is for this reason that as government, we have taken measures to ensure that we unequivocally send the message that corruption, like all other crimes, does not pay! We continue to support the work of the Asset Forfeiture Unit in the seizure of assets acquired through the commission of crime.
Previously, it was normal that a known thief or fraudster would face legal penalties but continue to live large on the proceeds of crime once out of prison. The message we send through the work of the Asset Forfeiture Unit is that all assets acquired in this manner would be forfeited to the State, whose resources will then be used to fight corruption.
Recently, as we celebrated the 10th Anniversary of the Asset Forfeiture Unit, we noted that criminals employ some of the most sophisticated methods of committing crime. Beyond this, they make use of some of the intriguing methods to hide or disguise their assets, which in fact are the proceeds of crime. We also noted that the introduction of the Prevention of Organised Crime Act (POCA) has proven to be one of the most effective legal instruments to combat especially organised crime.
The achievements of the Asset Forfeiture Unit prove without doubt that economic crimes can be successfully fought within the Rule of Law. For the first time in the history of this country, the so called “top dogs” of crime are made to face justice and give account of their assets. It is therefore necessary to do an appraisal of the achievements of the Asset Forfeiture Unit (AFU), with the recall of some of the important cases such as;
- The Gems case where the AFU achieved a settlement that involved over R60 million in excess interest charges being paid back to over 30 000 workers by a micro lender.
- The freezing of an estimated R1.5 billion of alleged proceeds of crime in the David King matter.
- The Delport case, in which the AFU obtained a freezing and seizure order of R80 million and to date this is the largest value of assets ever seized in a single case within South Africa.
- The Boekhoud case where the AFU seized assets worth about R100 million, including a platinum refinery in the United Kingdom.
- In two of its most important matters to date, the AFU has also seized property worth more than R10 million from Cape Town attorneys Mohammed and Chohan who had allegedly defrauded the Road Accident Fund (RAF) and impoverished accident victims of their money.
In the past 10 years, working with its partners, the AFU has made a significant impact on crime and there has been a constant increase in the number and value of cases done. We can be proud that we are making progress.
To date, the AFU has:
- frozen assets to the value of more than R3.35 billion in more than 1 700 cases
- forfeited assets to the value of more than R950 million in more than 1 400 cases
- obtained nearly 1 200 other orders in the cases it fought
- deposited more than R230 million into the Criminal Asset Recovery Account
- repaid more than R400 million to victims of crime
- maintained a success rate of over 85% in all cases
- clarified the law by obtaining 243 judgements, including 6 judgments in the Constitutional Court and 23 in the Supreme Court of Appeal
Other institutions other than the AFU established that play key role in combating corruption and ensure the integrity of our institutions and programmes include the following:
- Department of Public Service and Administration (DPSA)
- Independent Complaints Directorate (ICD)
- The Hawks
- National Prosecuting Authority of South Africa (NPA)
- Office of the Auditor-General
- Office of the Public Protector
- Public Service Commission (PSC)
- South African Police Service (SAPS) – in particular, the Commercial Branch of the Detective Service
- South African Revenue Service (SARS)
As government, we have enacted a number of legislations that empower business, government and NGO’s to act against corruption, working in tandem with the institutions I have just mentioned, and these include the following:
- The Public Service Act, 1994 (Proclamation No. 103 of 1994)
- The Public Protector Act, 1994 (Act No. 23 of 1994)
- The Intelligence Services Control Act, 1994 (Act No. 40 of 1994)
- The Special Investigating Units and Special Tribunals Act, 1996 (Act No. 74 of 1996)
- The National Prosecuting Authority Act, 1998 (Act No. 32 of 1998)
- The Criminal Law Amendment Act, 1997 (Act No. 105 of 1997)
- The Executive Members Ethics Act, 1998 (Act No. 82 of 1998)
- The Witness Protection Act, 1998 (Act No. 112 of 1998)
- The Prevention of Organised Crime Act, 1998 (Act No. 121 of 1998)
- The Public Finance Management Act, 1999 (Act No.1 of 1999) and the Municipal Finance Management Act, 2003 (Act No. 56 of 2003)
- The Promotion of Access to Information Act, 2000 (Act No. 2 of 2000)
- The Protected Disclosure Act, 2000 (Act No. 26 of 2000)
- The Financial Intelligence Centre Act, 2001 (Act No. 28 of 2001)
- The Prevention and Combating of Corrupt Activities Act, 2004 (Act No. 12 of 2004)
- The Income Tax Act, 1962 (Act No 58 of 1962)
We acknowledge however that there are still huge challenges. The fight against crime must devolve down to the other tiers of government, as well as business and the NGO sectors. There are presently a number of pending cases in various courts across the country at various stages of prosecution ranging from corruption, money laundering, fraud etc.
As part of ensuring broader stakeholder participation in combating corruption, as government we presented our Perspectives on the Institutional Arrangements to Prevent and Combat Corruption, as part of the interactive discussions held at the Third National Anti-Corruption Summit in 2008.
The theme of that important Summit held in 2008 was “Towards an Integrated National Integrity System, Consolidating the Fight against Corruption”. The Summit, hosted by the National Anti-Corruption Forum (NACF), provided an opportunity for the public, business and civil society sectors to collectively reflect on crafting an “Integrity Framework” for the country, as well as the values underlying such a Framework.
This is evidence that as government we are committed to working with business and civil society to fight against corruption. Statistics of those arrested and appearing in court demonstrate that we are making inroads against corruption. Even the media has participated fully towards combating corruption, through reporting and consequently awareness.
As the Justice, Crime Prevention and Security cluster, we utilise the Anti-corruption Tasks Team to achieve the goals of zero corruption. Part of our targets as the JCPS has been to ensure the submission of a Baseline Report by 31 December 2010, detailing data for the period 01/04/2009 to 31/03/2010. Progress has been made. The baseline report was completed. The Cluster has committed itself to a Zero Tolerance approach to corruption within the cluster.
The Anti-Corruption Task Team (“ACTT”.) is understood by the JCPS cluster as the coordinated multidisciplinary capacity required to achieving the target set in Outputs 3 and 5. Vetting of all Senior Managers is receiving attention. Each department within the cluster has finalised fraud prevention and anti-corruption strategies/plans. A dedicated capacity has been created in the provinces to investigate and combat corruption within local government
A total of 362 cases were investigated and 291 arrests were made (167 public officials and 124 members of the public); all have appeared in court with 155 convictions achieved thus far. The challenge remains to establish an integrated database that contains corruption data for all the components of the Criminal Justice System.
Departments were individually tasked with improving data collection tools. The Anti-Corruption Task Team is to be strengthened with specialised technical investigative capacity from National Treasury, Department for public service and administration (DPSA), Special Investigating Unit (SIU) and Directorate of Priority Crime Investigation (DPCI), to fight corruption more effectively. This will include finalising a holistic strategy and action plan with timeframes.
One of the consequences of corruption is the decline of investor confidence. One of our targets therefore is to ensure investor perception, trust and willingness to invest in South Africa improves.
Our target has been that we successfully convict 100 people who have assets of more than R5million obtained through illicit means by 2014. The Anti-Corruption Task Team has made some progress in establishing the necessary analytical, investigative, prosecutorial and forfeiture capacity required to meet the target.
The integrated operational team is led by the Directorate for Priority Crime Investigation, commonly known as the Hawks, composed of 90 people. The team has identified and registered 42 corruption cases that potentially meet the R5 million criminal asset requirements. Of this number 20 priority cases are in court. The total value of assets restrained is R579 015 689. To date 28 suspects have been arrested. The under-reporting and detection of serious corruption cases has caused a slow inflow of cases to the Anti-Corruption Task Team. Strengthening of the operational relations with the National Treasury led Multi-Agency Working Group (MAWG) is work in progress.
As part of combating corruption, we have set ourselves goals to ensure integrity of the National Population Register (NPR). Our goal was to implement new procedures and a supporting regulatory framework to effectively deal with late registration of births by 2011. Progress has been made regarding this output and new processes have been implemented.
More births were registered (0-1yr) during the period. Also, more births are being registered within 30 days as per our targets. We also set as our goal to issue ID’s to all citizens 16 years of age and above and that by 2013 we should have issued ID’s to 99% of citizens turning 16 years of age. This is work in progress. The cumulative total from 1 April 2011 to 30 June 2011 is 296 453.
These are some of the targets more relevant to combating crime as spearheaded by the JCPS cluster.
Ladies and gentlemen,
As I conclude, allow me to emphasise the points I have alluded to here today. Firstly, it is important that we pay special attention to the areas where corruption is more pre-eminent, without losing focus altogether on other areas. This is particularly more so on government tenders to businesses and the procurements that businesses themselves outsource to other specialised business parties.
Secondly businesses must mobilise against corruption within their own ranks to galvanise the fact that corruption is a crime and that it is not cool to be corrupt. Thirdly, to focus on the people who are charged with financial matters of procurements within businesses as they are the ones mostly tempted to divert finance for self-gain.
Fourthly, to support the work by the Asset Forfeiture Unit in ensuring that crime does not pay. Corruption must be considered one of prime risk management issues of any business venture. And for the simple reason that businesses exist within an environment where each entity must liaise with other businesses, government and the NGO sector, that means partnership or collective action towards combating corruption is imperative.
That is why the National Anti-Corruption Forum is important platform to ensure synergy in this regard. The role of business will be made stronger by actions that recognise that the threats are both from within each entity and with regards to its individual liaison with other entities, be they other businesses, government or NGO’s. Programmes to combat corruption must be tailored to deal with all these scenarios.
As South Africa, we have ratified the UN Convention Against Corruption, and we agree with the United Nations Development Programme (UNDP) Comparative study on corruption where it assigns as ideal key functions the following roles for any anti-corruption combating unit, and those are:
- investigation
- prosecution
- education and awareness-raising
- prevention
- coordination.
These are functions which must be holistically pursued to ensure success, and as government, business, NGO’s and civil society at large, we must cooperative with the relevant law institutions, as empowered by the law, as they perform these important functions to ensure our collective success.
Ladies and gentlemen,
Once more, I exceedingly thank you for inviting us to partake in these deliberations. I trust you will have successful further deliberations.
I thank you!
