The Zondo Commission issued the first of its three reports on state capture last week, raising the chance that a wave of prosecutions and convictions will, at last, follow. So far, action against corruption has been pathetically lacking in South Africa. Indeed, prosecutions could have preceded or run in parallel with the Zondo Commission’s hearings.

As Business Day pointed out, the State has only managed to freeze the assets of some of those accused of fraud and corruption in the cases of alleged malfeasance in the Free State, Transnet, and Eskom. Not aggressively pursuing cases of corruption could be seen as a lack of political will, or the state being intimidated by threats and the mob violence of July last year.

Earlier this week the Justice Minister, Ronald Lamola, said the government is considering fast-tracking state capture cases with the use of a special court. He said it is also looking into setting up a team of investigators and prosecutors, like the disbanded Scorpions. When we will see these special measures is unclear. What is clear is that it will be very damning for the South African judicial system, should the Zondo Commission turn out to be a R1 billion piece of grand theatre.

Pillage

While the sheer scale of pillage, estimated at R1 trillion, under President Jacob Zuma and the Gupta brothers was unprecedented, it has not stopped under President Cyril Ramaphosa. Corruption is a chronic problem. Allegations about government procurement to help deal with the Covid-19 pandemic forced the health minister, Zweli Mkhize, to be placed on special leave last year.

The massive pillage by the Guptas should have provoked a new look at measures to counter corruption when Zuma exited, rather than only now. South Africa’s anti-corruption system broke down at the top and there was absolutely no mechanism to stop the Zuma-Gupta rampage through the state.

South Africa is in an inherently weak position in preventing official corruption.  The tight links between the ruling party and the state are an avenue that can be easily abused for the corrupt awarding of contracts. The “deployment” of ANC cadres has become a means for ANC networks being handed contracts. In addition the racial preferences used to award contracts narrow the field of bidders and this raises the chances of corruption. It also means the state is bound to pay more than market prices for much of what it acquires.

Enabler of state capture.

In its report the Zondo Commission noted that “cadre deployment” was a great enabler in state capture. “One of the defining features that has emerged in the evidence before the Commission is that in order to divert public funds for private benefit, it was necessary to populate key institutions with people who were going to comply with orders,” says the report.

Breaking the link between party and state will be very difficult after the many years in which the ANC has been able to entrench members in official positions. A law prohibiting “cadre deployment” would be difficult to enforce, as links with the party are far from transparent. South Africa would face a major problem in creating a civil service that serves the government of the day and is not politically aligned. A civil service that is prepared to serve the government of the day is the basis of every modern democratic  state which functions effectively.

In South Africa there are two big problem areas for corruption, the State-Owned Enterprises and government procurement. Most of the State-Owned Enterprises are loss-making due to their outsize procurement and staff costs. Eskom’s purchase of large amounts of diesel and of coal that is below the grade required for its boilers is an important factor in its slow demise, as well as the reportedly deliberate destruction of plant and machinery to ensure contracts.

Audits

Attempts to deal with corruption have not been helped by the frequent qualified and late audits these enterprises receive. Lack of information can be used as a cover-up. There is no realistic option of a turnaround of these entities if they remain in government hands. The best course is to privatise or liquidate them, thereby reducing the burden on the state and the costs of corruption.

Research by the International Monetary Fund suggests that corruption is one of the main reasons private companies tend to be better run than state-owned firms. In less corrupt countries, the type of ownership is less relevant to performance.

Government procurement, and particularly large infrastructure projects, are the other large honey pots that attract corruption. Dramatically cutting the size and role of the state is one decisive way to deal with the corruption problem.

Greater transparency in the awarding of government contracts and freedom of the press could also help. Chile and South Korea have successfully introduced digital procurement systems to improve transparency. Increasingly, thought is being given by many public procurement agencies to the use of blockchain, the technology behind Bitcoin. The blockchain creates a distributed ledger of transactions that cannot be changed. Depending on how it is set up to monitor procurement, blockchain technology could be used to determine whose relative has been able to receive multiple contracts.

International evidence

There is much international evidence on how to break corruption. According to this paper, Singapore has much to teach the world in how to deal with corruption, despite its unique features as a city state and its tough government.

One of these lessons is that the fight against corruption cannot be gradual – it requires a comprehensive strategy and an effective anti-corruption agency.  The Justice Minister’s plea, reported in Business Day, for government to be given a chance in its fight against corruption is extraordinary given the urgency and the lack of action so far.

One lesson is that the special investigative and prosecution anti-corruption agency should not be located in the police. In addition, the anti-corruption agency must be incorruptible and its staff should be above reproach. The Scorpions were independent but were disbanded by leadership that saw them as too powerful.

Another lesson is that the incentive for corruption that might be provided by low salaries and bad working conditions in government departments needs to be reduced. Government departments where there are chances of corruption need to be closely monitored and procedures constantly reviewed to reduce opportunities for officials to be on the take.

But above all, the paper says Singapore’s success in reducing corruption was due to strong political will. The author Jon S.T. Quah says the political leadership must show “exemplary conduct, adopt a modest life-style and avoid indulging in corruption themselves.”

Without strong political will, exemplary leadership, and urgency, the fight is lost.

The views of the writer are not necessarily the views of the Daily Friend or the IRR

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