SA Politics - From awareness to orange overalls

11 APRIL 2019

At a panel discussion in Stellenbosch recently, veteran prosecutor Gerrie Nel had a sobering reflection on the possibility of prosecutions following the reports of corruption surfacing almost daily. It is one thing to be aware of wrongdoing, he said, but something very different to secure a conviction in a criminal court. If anybody should know, it is Nel. Being indignant and outraged is one thing, having a solid legal case is something else.

Investors who have been trying to join the class action against Steinhoff can testify to the almost impossible hoops they have to jump through just to get into the court process. Again, one can be outraged at Steinhoff, but the preparation of a successful legal claim is onerous.

So, it is a long road from being aware of wrongdoing to seeing someone in orange overalls.

How long is illustrated by events in Germany. The first raid on Steinhoff offices in that country took place in November 2015. Nearly two years later, in August 2017, the German magazine Manager Magazin reported that the German authorities were investigating employees, including CEO Markus Jooste, for possible accounting fraud. The company famously denied the report as ‘drivel’. Four months later the company’s share price was an ash heap. To this day, the Germans have not yet brought charges.

Citizens are impatient to see looters and thieves in orange overalls, but it is inherent to legal processes that it will take time.

A LOT HAPPENING

That does not mean that in the meantime nothing is happening.

We keep a rolling list of people who have lost their jobs because of public scrutiny, even without any criminal proceedings (yet). It makes for very revealing reading.

Over the last two years, since May 2017 when the first resignations took place at Eskom, literally hundreds of people have lost their jobs. Irrespective of criminal conviction, this means the loss of reputation, status and income. Those people are unlikely to be employed any day soon. No orange overalls, but certainly punishment.

Just think of a few names: Brian Molefe, Anoj Singh and Matshela Koko at Eskom; Tom Moyane and Jonas Makwakwa at SARS; Hlaudi Motsoeneng and James Aguma at the SABC; Dan Matjila at the PIC; Dudu Myeni at SAA. We have forgotten how prominent many of them were in our daily lives. They are all gone.

Eskom particularly has seen even more action. This week Eskom chief Phakamani Hadebe disclosed that 1 049 disciplinary investigations have resulted in 300 people having left the organisation. This includes 14 senior executives and managers ‘believed to be involved in state capture’. Eskom and the SIU (Special Investigating Unit) are probing thirteen companies who were paid a total of R75 billion by Eskom. Eight of the companies were involved in building Medupi and Kusile. (Hadebe stressed that not all of the R75 billion was being targeted for recovery. McKinsey has already repaid R1 billion.)

In the private sector too, people lost their jobs at KPMG, McKinsey, Bain, SAP and others. An involuntary clean-up has taken place, thanks to public exposure.

POLITICAL PRESSURE

A howl of protest went up when some of the departed luminaries made it back onto the ANC election list as parliamentary candidates. Public reaction has been so intense that the party’s National Executive Committee has referred all the election lists to their integrity committee. Clearly “a vigilant jury of public opinion” is having an effect.

Once candidates are on the list with the IEC, nothing prevents them from being elected. But party and caucus pressure can. Fikile Mbalula, head of the ANC’s election campaign, reiterated that if the integrity committee decides that a candidate should step aside, they will have to do so. This matter will not be settled legally, but through party political pressure.

Significantly, Mbalula has admitted that the list issue is hurting the party. The Ace Magashule revelations, both in investigative journalist Pieter-Louis Myburgh’s book, Gangster State, and by witnesses before the Zondo commission, cannot help either. As is standard procedure, Magashule has denied all the allegations. Me thinks safe to say the jury on Magashule is still out.

TAKING A LONGER VIEW

During the secret negotiations between the ANC and the old South African establishment, a particularly interesting meeting occurred in December 1988 at Flitwick, Bedfordshire, England. In that meeting a member of the ANC delegation, Thabo Mbeki, said, ‘Liberation from a dictatorship inevitably entails corruption. South Africa’s liberation will be plagued by corruption.’ He referred to several states where post-independence elites had enriched themselves at the expense of the poor and made the point that people who have been oppressed and disadvantaged believe they are entitled to ‘make up for it’.

Mbeki’s prediction has come true in a way that he himself probably did not expect. Over a decade or more, brave journalists, whistle-blowers, public representatives and others alerted the nation to growing corruption and ways in which state institutions were being undermined. We grew accustomed to outraged denials from the suspects, who professed their innocence and tried to sweep the reports under the carpet.

Then in 2017 we reached a tipping point. Several developments came together: the many court judgements on the Nkandla saga; the Public Protector’s report on state capture; the persistent reports of shenanigans at Eskom and other SOEs; and then the Gupta emails and Jacques Pauw’s book, The President’s Keepers. The reaction against all the corruption helped to carry Cyril Ramaphosa into the presidency.

After President Ramaphosa’s inauguration in February 2018 things really started rolling officially. No fewer than four commissions of inquiry started their work. One commission’s report is public (SARS), one still under wraps with the president (two deputies at the NPA), and two are still hearing evidence (state capture and the PIC). The head of the NPA was replaced (remember Shaun Abrahams…?)

The new national director of prosecutions has already allocated prosecutorial resources to focus on cases arising from the commissions’ proceedings and the President has gazetted a special unit in the NPA for this. Next year promises to be the year of prosecutions.

It is sobering and gratifying to think that it was only two years ago, in May 2017, that the cleaning up processes started. Could it be that the liberation corruption plague that Thabo Mbeki referred to is running its course? We don’t know yet, but that there is a revulsive reaction, is for sure.

SO WHAT?

• Proving a case in law is very different from revelations at a commission of enquiry. The Germans have been investigating Steinhoff for nearly three and a half years now, but there have been no charges yet.
• Naming-and-shaming at commissions is having an effect. Many suspects have lost their jobs and livelihoods, their reputation and status. The fact that nobody is in orange overalls yet, does not mean that nothing is happening.
•  2017 was the year of exposure, 2018 and 2019 the years of confirmation of allegations, 2020 may very well be the year of prosecutions.
•  The public reaction to some names on the ANC election list has forced the party to take cognisance. This may not lead to anything, but the ANC is going against the tide.
•  The public response indicates that fighting corruption is also about developing common values. Maybe the exposures since 2017 are helping to reverse the trend Mbeki predicted in 1988. It is a space to watch.

JP Landman - Political Analyst

Courtesy: Nedbank Private Wealth

DISCLAIMER AND IMPORTANT NOTICE:

This communication is intended for clients of Nedgroup Private Wealth (Pty) Limited and Nedgroup Private Wealth Stockbroking trading as Nedbank Private Wealth (‘the companies’). The communication is proprietary to the companies and is intended for objective and general information purposes only. Any information contained herein should not be relied upon by a recipient as financial advice and any recipient seeking financial advice is requested to contact an authorised representative of the companies. The communication may not be distributed, transmitted or reproduced in whole or in part without the prior permission of the companies and may not be relied upon in any jurisdiction other than South Africa. Information contained in the communication has been obtained from sources believed to be reliable and the companies make no representation as to the accuracy, timeliness, completeness of the information. All opinions expressed and recommendations made are subject to change without notice. The companies accept no liability for any losses or damages (including direct, special, indirect, consequential, incidental or loss of profits) arising from or in connection with any reliance and/or use of the information contained in this communication (including any error, omission, negligence or otherwise). The companies, their directors, officers and/or employees may have positions or other interests in securities mentioned herein.