Jacob Zuma: Challenging the corrupters

In a week of fire and fury at the allegations of corruption levelled against Deputy President Jacob Zuma, national attention has focused inward - will he go, or won’t he, did he do it or didn’t he?

But a crucial part of the debate has received only scant attention: the share of guilt of those who pay the bribe, as opposed to those who receive it. In Zuma’s case, French multinational arms company Thales was the alleged corrupter. In the Tony Yengeni case, it was allegedly DaimlerChrysler sister company Eads.

In South Africa, the focus has not been there, but tiny Lesotho may show the way.

In a courtroom less than a slingshot’s distance from Ladybrand in the Free State, David has an almost unbroken record in beating Goliath.

With limited resources, a solid case and what appears to be an exemplary belief in the notion of legal equality, Lesotho Attorney General Lebohang Maema and his team of prosecutors have hauled some of the world’s largest construction and engineering companies before the Bench. South Africa should take a page from the tiny mountain kingdom’s book.

The multinationals stand accused of making numerous bribe payments to Lesotho official Masuphe Sole in order to secure contracts linked to the multibillion-rand dam project.

Thus far the Maseru High Court has not only convicted both a South African “intermediary” and a senior Lesotho official of corruption, in the past 10 days it has upheld a R15-million fine for bribery against Canadian firm Acres and on August 26 it fined the German company Lahmeyer R10-million for its “sweeteners” that served to corrupt part of the Lesotho Highlands Water Scheme.

Six other multinationals including Swiss-Swedish engineering group ABB and French groups Bouygues, Spie Batignolles and Dumez International are now facing similar charges in a trial unparalleled in an era of corporate-dominated globalisation.

The prosecution has conducted this expensive trial largely at its own cost — despite as yet unfulfilled promises dating back as long as four years by the World Bank, the European Union and the South African government to provide financial assistance.

The Lesotho courts, bolstered by resources from the country’s meager fiscus, have taken a grim view of the impunity with which multinationals often operate.

In handing down his sentence to Lahmeyer, Judge Gabriel Mofolo notes “the courts in Lesotho took a serious view of bribery, in that corruption attacked the administration of the public service and bedeviled good governance”.

Lesotho has put into practice a principle that in order to break the cycle of corruption it is necessary to punish both the bribe-payer as well as the corrupt public official.

Since 1999 almost all of the Organisation of Economic Cooperation and Development (OECD) countries have ratified a convention that prohibits the bribery of foreign officials abroad. Often hauled out by officials from development ministries as an example of their commitment to root out bribery that distorts markets and favours the already wealthy in gaining unfair advantage, the truth is that very little has been achieved by this paper tiger — thus far.

This could change. When Bulelani Ngcuka informed the public last week that the National Prosecutions Authority (NPA) had forwarded the French authorities documentation pertaining to the alleged payment of a bribe by the local representatives of Thomson/Thales he, in effect, publicly challenged the French prosecution to act on the matter.

According to a report in The Guardian earlier this week the French Foreign Ministry refused to comment on the case, explaining that it was “not in its jurisdiction”.

Wrong. France in fact has legislation prohibiting the bribery of foreign officials abroad — and one can only hope that this mistake can be blamed on the French heatwave and not a lack of adherence to the letter of the law.

The French prosecuting authority is bound by its national law to investigate the payment of a bribe to “JZ” or another public official by the representatives of Thomson/Thales. If its representatives Alain Thètard and Jean-Pierre Perrier were to be found guilty they could face a maximum of 15 years in prison.

However, there is a large “if” in this equation, particularly given the manner in which France (and a host of other wealthy countries including the United States) has turned a blind eye while “its” multinational corporations, aided by the grease of large bribes, plunder huge profits in the arms, oil and other industries to the benefit of local elites and at the expense of the poor.

Ngcuka has, therefore, provided us with an interesting opportunity to test the commitment of the French government and its prosecuting authority to the rule of law. The French press and civil society will now need to sit up and take notice and apply sufficient pressure on the Ministry of Justice to investigate the case.

This is, however, not the first multinational company that stands accused of attempting to provide a “carrot” in the South African arms deal, and it is unlikely to be the last, given estimates by Transparency International that 10% of revenues paid in this $40-billion-a-year industry go to “commissions”.

Michael Woerfel was a name closely associated with Yengeni. He was the German arms peddler representing Eads in South Africa who arranged for discounts on Mercedes-Benz vehicles for more than 30 top South African officials including Yengeni, his wife, General Siphiwe Nyanda (chief of the defence force) and the former head of Armscor, Lew Swann. Fortunately for Woerfel, DaimlerChrysler co-owns Eads, which may explain its willingness to provide the discounts.

Although Yengeni faces a four-year jail sentence, the NPA decided to drop all charges of corruption against Woerfel shortly after Yengeni was handed a guilty verdict.

There has still been no explanation from Ngcuka as to why a decision was taken to allow Woerfel to walk free.

In some respects Woerfel is in fact the big fish, he had intimate knowledge of who the other 25 officials are who received a car discount — details that still remain secret.

The trial, particularly if Yengeni were to have assisted the state as a witness following a plea-bargain, would also have allowed a South African court to follow the Lesotho example and try a representative of a foreign multinational with corruption on “home ground”.

Given the vigour with which the NPA has investigated other aspects of the arms deal - such as Zuma and Schabir Shaik - the decision to let Woerfel fly back to Frankfurt appears out of character.

However Woerfel may not be off the hook yet. Unlike the arguments regarding “jurisdiction” provided by the French authorities, Germany’s Munich state prosecutor has since October 1999, almost surprisingly, been resolute in investigating Woerfel and Eads on the allegation of bribe payment. It is also investigating Nyanda and Swann for their complicity in a corrupt transaction.

If brought to trial this case could provide not only fresh evidence on allegations surrounding corruption in the arms deal - it could help to give teeth to the OECD convention and thereby give hope to citizens in many countries who are the victims of a cycle of transactions between greedy local elites and profit-at-any-cost, bribe-paying multinationals.

The South African Parliament is now also seriously considering a legal provision that prohibits the bribery of foreign public officials abroad. Bad news for South African multinationals who may be involved in bribe payments while trading in cellphone networks, groceries, beer or banking services across the African continent.

The South African Prevention of Corrupt Activities Bill is now nearing finalisation and lawmakers have included stiff penalties for corruption and bribery - with a maximum term of life in prison being provided for.

The portfolio committee on justice and constitutional development earlier this month requested the legal drafters to also include a provision governing the blacklisting of corporations involved in bribery and corruption. Despite the apparent lukewarm approach by South African prosecutors in tackling alleged bribe-paying multinationals, Parliament may well provide the framework for a serious challenge to “business as usual”. If this is matched by the political will to implement the law we may well have learnt something from prosecutors from our landlocked neighbour.

Large corporations have at present everything to win and little to lose from dangling very attractive carrots in front of public servants and elected officials. The time is ripe for countries in both the South and the North to apply the stick to such behaviour.

Hennie van Vuuren is senior researcher focusing on anti-corruption strategies at the Institute for Security Studies in Cape Town.