There appears to be little progress on any criminal cases relating to the collapse of household goods retailer Steinhoff, which may explain why former chief executive Markus Jooste appeared relatively unfazed in Parliament this week.
A self-assured Jooste, flanked by four legal representatives, told MPs he knew nothing of “accounting irregularities” at the firm.
Jooste’s testimony, his first public appearance after what has been described at the largest corporate scandal in South Africa, came a week after the head of the Hawks’ specialised commercial crimes unit told MPs of the stumbling blocks in the Steinhoff cases.
Major General Alfred Khana told the standing committee on finance “there is a not a shred of evidence” given under oath in the three main Steinhoff dockets opened with the police that would allow the Hawks to question individuals or to approach a prosecutor for a warrant of arrest.
The issue has come at a time when the police unit is having to deal with other large corruption cases stemming from state capture allegations, all of which involve complex financial transactions.
Civil society organisations and criminal justice experts have raised concerns about the ability of the Hawks and other law enforcement agencies — after years of being hollowed out under former president Jacob Zuma’s administration — to successfully manage and investigate these complex matters.
In mid-August, at a meeting of the portfolio committee on police, the newly appointed head of the Hawks, Lieutenant General Godfrey Lebeya gave a 54-page presentation detailing the many high-profile crimes the unit is dealing with, all of which involve complicated financial manoeuvring and vast sums of money.
They include the fraud, corruption and money-laundering investigation of Transnet’s procurement of 1 064 locomotives, involving R36.8-billion; fraud, corruption and money-laundering investigations at Eskom relating to the prepayment to Tegeta to enable it to buy the Optimum Coal Mine, involving more than R2-billion; and the infamous Estina dairy case, involving more than R280-million.
These cases come on top of investigations recently launched into the collapse of VBS Mutual Bank and the Steinhoff matter.
Lebeya told parliamentarians the Hawks did not have enough financial investigators, according to minutes from the Parliamentary Monitoring Group (PMG) and, as a result, outside forensic firms had to be contracted to assist in complex investigations. But, he said, the Hawks were addressing this as part of an overall restructuring to “capacitate the institution”.
The Hawk’s spokesperson Brigadier Hangwani Mulaudzi said there was “an exodus of members” from the Hawks, which had a direct effect on service delivery. The new head has embarked on aligning the agency’s organisational structure, Mulaudzi said, adding that internal appointments are in the pipeline, which will enhance the Hawks’ efficiency But where there have been challenges “they were mitigated immediately” and these cases are receiving “serious attention” he said. The agency however could not divulge more detail on its “investigative methodologies”.
Khana told MPS last week that there were three open Steinhoff cases – opened by the Progressive Professionals Forum, Black First Land First and Benguela Global Fund Managers — as well as a report made by Steinhoff to the Hawks under section 34 of the Prevention and Combating of Corruption Act (Precca). But the three original cases were based largely on media reports.
The Hawks were still waiting on an adequate statement from Steinhoff to accompany the section 34 report, Khana said, which would provide greater detail on what transpired at the company and “set the tone” of investigations. The Hawks are also waiting on a final report from auditing firm PWC which was tasked by Steinhoff to investigate the accounting irregularities. Another case had also been opened last month by Steinhoff’s chairperson Heather Sonn, relating to a single transaction Khana said.
Steinhoff has denied not co-operating with the Hawks.
Members of the finance committee were disturbed by the Hawks’ performance. Its chairperson, Yunus Carrim, said that, given the many investigations being conducted by other regulators, including the Financial Services Conduct Authority and the JSE, the Hawks appeared to be the “weakest link”.
But Khana said the Hawks had dedicated significant resources to the case, given its magnitude, including six investigators and three prosecutors. Mulaudzi confirmed that the four cases were “receiving attention” but they could not be dealt with “piecemeal or separately”.
Gareth Newham, head of justice and violence prevention at the Institute for Security Studies, said this sort of crime “certainly poses a challenge to the Hawks. One of the ways in which state capture was enabled was to weaken the criminal justice system, particularly those organisations established to fight corruption.”
Former head of the Hawks Berning Ntlemeza made extensive changes to senior leadership and management posts, but many of them were “problematic because they don’t have the experience to manage and oversee complicated cases such as Steinhoff”, Newham said.
The appointment of Lebeya was an excellent one, he added, but “he finds himself in a situation where he has to fix a car that is moving”.
Although there were many excellent investigators at the Hawks, “there are too many people still … occupying key positions who have neither the ability nor the interest in investigating these kinds of cases,” Newham said.
Lawson Naidoo, the executive secretary of the Council for the Advancement of the South African Constitution, said: “All this all points to the hollowing out of the capacity of institutions like this.”
Structures such as the anti-corruption task team, formed during Zuma’s reign, was an attempt at a multi-government agency approach to combating these kinds of crimes, said Naidoo.
But the performance of the task team, which included the Hawks, the National Prosecuting Authority and the Independent Police Investigative Directorate (Ipid), has been questioned.
According to the PMG, the head of Ipid, Robert McBride, told the police committee in April that “there is nothing going on [in the task team]”.
Bringing in expertise from the private sector was another way to address capacity constraints “while the institutions beef up its own internal capacity”, Naidoo said. Nevertheless, it would take time to root out the rotten apples and build a formidable team again, he added.