Head of the Hawks, Lieutenant-General Godfrey Lebeya was presumably not impressed by the porn hack. (Photo by Gallo Images/Beeld/Felix Dlangamandla)
Participants at a highbrow anti-corruption conference in Cape Town this week stopped short of standing in a circle singing Kumbaya, such was their unity of purpose around beneficial ownership transparency (BOT).
BOT is not to be confused with a computer robot, the type that was probably responsible for the porn film that hackers briefly projected onto the screens at the start of the conference.
Scenes from the fleshy flick made for a lively start to a meeting that flourished in spite of the cyber sabotage attempt — perhaps initiated by a crook not keen on the spotlight BOT shines.
In simple terms BOT means knowing who the people are who own companies and in whose bank accounts the filthy lucre lands at the end of corrupt deals.
The conference, organised by Open Government Partnership and others, attracted a high level audience: state agencies, blue-chip global and local non-governmental agencies and public accountability experts.
Among them was head of the Hawks, Lieutenant-General Godfrey Lebeya who, along with other government heavy hitters, was involved in a flurry of earnest talks about how South Africa, mired in endemic corruption, could well be on track to meeting global commitments around BOT.
It was a technical discussion around laws, harmonising state data sets and privacy issues to help see beyond complicated corporate structures, trusts and other mechanisms used to mask the real ownership or control of companies.
The goal might be clear, said the Financial Intelligence Centre’s Chris Malan, but ironing out the complexities was another. Data sets from various state agencies like the Master of the High Court, the Deeds Office, the company registration office, SARS and more had to work in concert.
“It’s not so simple when you talk nitty gritty,” he said, referring to what seized the conference for half of the two days it sat.
The FIC was one of a host of state agencies whose experts came out in force at the event together, with a phalanx of civil society boffins, all with deep knowledge of accountability law and data management.
Kathy Nicolaou-Manias, an economist specialising in illicit financial flows who advises government, said stakeholders had to come up with an “agile and adaptive” solution rather than a massive masterplan because South Africa had deadlines to meet in becoming compliant with global standards.
“Government can do stuff if there is pressure. There is technology to do so.”
The state needs to stitch together various databases, create tiered public and private access to this and then allow for intelligence tools to be plugged into the system for machine learning to pick up trends on crooks moving money.
The challenges can’t be underestimated, Nicolaou-Manias said.
“A lot of our data is bad, it is not cleaned and we certainly aren’t analysing it enough.”
Effective BOT is more complicated than cleaning up and harmonising data sets, there are complex legal issues around who the custodian of the data is and standards around access.
Nicolaou-Manias said the capacity to run a system like this, monitoring it effectively and enforcing non compliance all come into play.
“Unless you catch companies behaving badly and penalise them you can’t start changing behaviour.”
In implementing BOT systems, South Africa might look to Ghana, Kenya and Britain for lessons in “how to”.
In 2016 Britain was the first country in the world to establish a register detailing “persons of significant control (PSC)” in companies.
The PSC creation was aimed at “shining a light into dark corners to see who is pulling the strings,” according to Lee Robins, the manager for intelligence & enforcement at the UK’s Companies House who addressed the Cape Town conference.
The British register was used 10 billion times a year. In April this year alone, 640 000 inquiries were made on the system that holds information about 4.7 million companies in the country that are controlled by 5.9 million people. The register doesn’t include public information on stock exchange-listed company ownership.
Robins said his office had moved from being a “largely passive recipient” of information to an “active gatekeeper and a custodian” of reliable data.
Legal enforcement on companies to disclose accurate ownership had resulted in 99% compliance and more than 400 prosecutions in the last four years and 9 000 investigations in 2021.
Robins said collaboration with civil society groups had improved BOT significantly.
“Our relationship with lots of BOT stakeholders has been an evolving one. There are many partners, some had more of a hand in shaping processes.”
The government, private sector and civil society had forged relationships that didn’t exist.
“We have become critical friends. They rightly hold us to account, but it is a better working relationship to resolve things together rather than have a battle.”
Joyce Koech from the Kenya Registry of Companies said her country began the BOT process in 2016 and its registry was constantly evolving, helping in the fight against money laundering, terrorism funding and corruption.
“Our partnerships have been critical.”
Ghanaian consultant Samuel Bekoe said: “Our experience underscores the need for partnerships and co-operation. Ghana tried to implement BOT, but only when a multi-stakeholder group came in was the process swift.”
Accountability Lab’s Sekoetlane Phamodi congratulated the conference. “Holding a multi-stakeholder event on such a pernicious set of issues is not easy. Everyone has a hot take on corruption. To be able to have a gathering like this demonstrating clear alignment of purpose and scope is praiseworthy. The level of detail and specificity inspired confidence.
“BOT is vital to corruption risk mitigation. It requires all of society to be involved. We all need to help in what is an immense task that won’t happen overnight. Government is a singular beast made up of numerous bodies and they have to function in the ambit of procedures that protect us. There is political will to do this.
“We are seeing the needle shift. We want a corruption-free society and BOT can get us there.
“This is linked to South Africa’s status as a credible investment destination. We have lost a lot of investor confidence … by corruption and brazen patronage. Turning this around is not only about the government’s accountability to us, but also assuring foreign investors.”
Phamodi said government action on the appointment of a National Anti-Corruption Advisory Council would bolster BOT implementation, a sentiment echoed by Corruption Watch’s Karam Singh who also applauded the conference.
Singh said the conference reflected critical cooperation between civil society and government. “Having said that, I would hesitate to say we’re on the cusp of a breakthrough.”
Singh, like Phamodi, rued the fact that President Cyril Ramaphosa promised to establish the council in February 2021 and had still not done so.
He said the country had all the right anti-corruption policies in place but needed a “biting” response to endemic corruption.
“It’s not like we are down a blind alley unaware of where to go in South Africa in respect of BOT. Our national anti-corruption strategy is admirable and approved by cabinet. The fact that state agencies and civil society come together like this at the conference is encouraging but we are politically are far away from where we need to be.
“We need an aggressive anti-corruption champion. The president speaks with passion about economic growth but not corruption. He doesn’t link the two, you can’t have growth with corruption. If he appointed an anti-corruption council as envisaged by the strategy it would give everything discussed at the conference momentum. It could be the basis on which to align the efforts of various agencies and give some coherence.”
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