(John McCann/M&G)
The failure of investigative bodies and prosecuting authority to secure accountability for high-level corruption and economic crime is one of many serious risks to South Africa’s future.
While reforming these agencies will take more than money, the government’s commitment to austerity risks undermining efforts to challenge the impunity enjoyed by the wealthy and powerful.
The Zondo commission’s final report made strong findings on the systemic causes of state capture and called for institutional and legislative reform. But it also called for criminal investigation and prosecution of hundreds of politicians, companies and fixers that facilitated and benefitted from corrupt deals during the era of Gupta-led state capture.
I am writing this just shy of two years after the release of the first volume of the report. In that time, while several high-profile criminal cases have been enrolled by the National Prosecuting Authority (NPA), no convictions have been secured.
The first high-profile case to reach trial — the Nulane case in the Free State — fell apart. The case was dismissed without the accused having to present a case and the judge excoriated the NPA and police’s failings. In other instances, cases have been enrolled but repeatedly delayed, often at the NPA’s request.
One of the causes for these ongoing failures is a key characteristic of state capture that the Zondo commission elected not to address. This was the decades-long interference and capture of key law enforcement institutions, including the NPA and the Directorate for Priority Crime Investigation (the Hawks).
Some of this interference, including the disbanding of the Scorpions and interference at the NPA, predated Jacob Zuma’s presidency. But evidence presented to the commission showed how this pattern continued during the Zuma administration.
Senior officials were appointed to the NPA and the Hawks to act as deliberate bottlenecks to slow down or undermine cases. In a report on this issue, titled Bad Cops, Bad Lawyers, Open Secrets showed how these bottlenecks instituted charges against corruption fighters without sufficient evidence and unduly delayed important cases. The report argued that holding these officials accountable was vital for any true reform of these agencies.
Given the above, it will take more than money and resources to reform these agencies. Yet properly resourcing them is an essential part of empowering them. The government’s steadfast commitment to austerity puts this at risk.
In a statement on the recent Medium-Term Budget Policy Statement, the Institute for Economic Justice described government’s pursuit of growth by cutting spending on basic services and other important areas as akin to “trying to drive uphill with the handbrake on”. The institute’s argument is that an obsession with cutting spending ignores the potentially catastrophic social and economic consequences that will result in the short and long term.
This metaphor of trying to drive uphill with the handbrake on is apt when considering the government’s stated support for accountability alongside its failure to adequately resource the Hawks and the NPA.
Over the past few years, these agencies have repeatedly argued that real-term declines in their budget allocations have left them with insufficient skills and resources to do their work.
In 2021, the NPA warned that it would not have sufficient budget to pay the prosecutors that it needed to undertake its work. In 2022, it called for more than R2 billion extra over three years to “successfully prosecute state capture cases”. In September this year, after further budget cuts, it abruptly announced the suspension of any intake for the 2024 aspirant prosecutor programme because of “government-wide budget cuts”.
In its 2020-25 strategic plan, the NPA explicitly says budget cuts and austerity have “dented” initiatives to improve skills and strengthen the organisation. While the government has argued that making the Investigating Directorate a permanent institution is a key part of its efforts to address corruption, there are concerns that there will be no money to properly resource it when it is made permanent.
It is a similar story when it comes to the Hawks. The Hawks is, in theory, the elite police unit tasked with undertaking investigations into the most complex and important cases linked to corruption, corporate criminality, illicit financial flows and organised crime.
In 2022, the Hawks told parliament that it was operating with less than half the staff it required and that it had insufficient investigators to take on complex cases.
This came a year after it was revealed that Steinhoff had provided R30 million towards the investigation of the fraud at the company because the NPA and Hawks didn’t have the budget for such a complex investigation. Not only did this mean the investigation was “irretrievably contaminated by conflicts of interest”, but there has still been no criminal charge brought against Markus Jooste, the former Steinhoff chief executive who masterminded the fraud and who has been indicted in Germany.
The government’s failure to provide these institutions with adequate resources reflects two important facts about the status quo.
The first is this government’s poor, and sometimes bizarre, prioritisation. In the current financial year, the state is shelling out R3.76 billion for VIP protection services for a couple of hundred politicians. It is providing only R2.2 billion for the Hawks. This is just one example.
Over the past 10 years, the state has spent nearly R50 billion on bailing out the mismanaged state airline SAA, while spending on law enforcement agencies and other social spending has plateaued or been cut in real terms.
The second is the government’s short-termism that ignores the real long-term cost of weakened law enforcement institutions. In purely monetary terms, skilled and resourced law enforcement agencies are better able to retrieve stolen assets and recover the proceeds of crime for the state.
By February this year, the NPA had obtained R13 billion in freezing orders, nearly triple the NPA’s annual budget. Ensuring that all of these assets are subsequently forfeited to the state requires the NPA to be properly resourced. Further, delayed investigations and prosecutions allow other stolen assets to be dissipated and undermine the chance of recovery.
There are also important systemic benefits to having law enforcement agencies able to investigate and prosecute the powerful and wealthy. It breaks cycles of impunity and disrupts the corrupt and criminal networks who are integral to efforts to undermine and capture law enforcement agencies.
It is also essential to rebuild public trust in the state. Further, while individual prosecutions can’t bring about immediate systemic change, regular convictions of private and public actors is vital in changing the calculus for those involved in crime by ensuring consequences for criminal conduct.
We should also not forget the international consequences of South Africa’s law enforcement failures for the country. This month, Finance Minister Enoch Godongwana admitted that the single most important obstacle to South Africa’s removal from the Financial Action Task Force’s “grey list” is the ongoing failure to demonstrate that the country can investigate and prosecute complex money-laundering and other financial crimes and recover the proceeds.
As argued above, more money alone will not turn around agencies such as the NPA and the Hawks. Both are undermined by their lack of institutional independence from the executive, as Open Secrets and others in civil society have recently argued to parliament.
Neither have shown sufficient desire to get their own houses in order and pursue accountability for their own who are implicated in malfeasance and a failure to do their jobs. Nonetheless, the evidence suggests that any efforts at reform are also undermined by the government’s programme of austerity.
As with all the consequences of austerity, this has inequitable outcomes. The greatest beneficiaries of weakened law enforcement are powerful politicians, large corporate actors and their executives, who are implicated in often complex economic crimes and state capture.
While they often bemoan state failure, they benefit from the continued failure to investigate and prosecute their conduct. The wealthy and powerful are also better able to protect themselves from the other negative consequences of the failure of law enforcement and prosecuting agencies.
South Africa’s history lays bare the price of impunity for economic crimes. The treasury insists the country can’t afford to properly fund these institutions. It should ask if we can afford not to.
Michael Marchant is the head of investigations at Open Secrets.
This article forms part of the fourth instalment of The Fiscal Cliff, a monthly series by the Mail & Guardian on the state of South Africa’s public purse. The series looks into the effect of fiscal consolidation on public services — which have steadily deteriorated over the years — and considers this policy’s impact on the country’s growth prospects.