"The moment when something which has been kept hidden, becomes exposed"

Issue No 005
26 June 2003

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The Scorpions have been stung

This perhaps best sums up recent attempts to investigate officials within the ranks of the Directorate of Special Operations (DSO) who allegedly hired ‘ghost workers’, essentially banks accounts which enabled them to defraud the State (See Public Service headlines). Four officials have thus far been charged. Just another corruption story – or perhaps an indication that if the Scorpions have a problem in preventing corruption, the rest of our society stands little chance in becoming victims of graft?

Clearly neither – the Scorpions are just as susceptible to graft as any other organisation (public or private) in this country. To believe that we will ‘eradicate’ corruption is a fallacy– we can however improve our capacity to control its occurrence. The decision to suspend the entire Human Resources department represents a serious attempt at nipping the problem in its infancy. If anything this provides the basis for public confidence in this key anti-corruption agency – not the opposite. Failure to act in a speedy manner when corruption starts to creep into an organisation is perhaps best exhibited by the recent case of the Hout Bay Fishing Industry (PTY)Ltd. (See Industries section). In the mix are multimillionaire company directors and their top executives, skippers, boat owners and the entire Sea Point office of Marine and Coastal Management's fishery inspectors. All were involved in corrupt activity including poaching until the entire house of cards came tumbling down. This sort of systemic corruption – unless stopped early on - will result in a loss of public confidence in such institutions in the long term. Moreover, unsustainable fishing practices (facilitated by corrupt payments) are likely to be felt by workers whose livelihoods are threatened as a result. These job losses are absorbed by the shacks long before the price hikes reach the sushi bars.

On a separate matter, the World Economic Forum (WEF) recently released its Africa Competitiveness Report, ranking African countries according to indicators such as corruption (see Research section). The ISS Corruption programme contacted the WEF requesting a copy of the basis of its findings only to be told that they would only be available late this year. The WEF has now responded by placing the details on its website (See link in Research section) – which we are very pleased with. It does however, leave one wondering as to how many journalists simply recycled press releases when reporting this story – and if any had actually questioned the manner in which a Swiss based organisation has produced findings which rank over 21 African economies according to their competitiveness.

PUBLIC SERVICE

National Administration: Scorpions swoop on their own staff

South Africa’s elite corruption-busting unit, The Scorpions, swooped on its own colleagues within the human resources department after falsely creating low-level temporary posts for which salaries were paid into bank accounts they collected. Four officials were charged internally, including a deputy director, and a fifth person was criminally implicated. A special team has been appointed to investigate staff appointments across the country over the past two years, and an audit of salaries and temporary positions to establish how many ghosts’ workers were employed and how much taxpayers’ money has been stolen. The suspensions of 35 employees come in the same week that the Scorpions themselves were rated 100% clean by the Integrity Management Unit (IMU), a statutory watchdog set up in 2001 to keep a watchful eye over the Scorpions. This internal investigation has lead to the IMU’s mandate to be extended covering the entire National Prosecuting Authority (NPA).
Full article in the Sunday Times: www.sundaytimes.co.za...

Provincial Administration: New Nat funding list row

The New National party plundered provincial files for information on developers who had submitted planning and environmental applications and then targeted them for donations. The issue burst into public view last year when it was revealed that former environment and planning MEC David Malatsi and former premier Peter Marais, now facing criminal corruption charges in the respect to this case, had secured donations to the NNP of R100 000 and R300 000 respectively from the developer of the Roodefontein golf estate at Plettenberg Bay, Count Riccardo Augusta. The Roodefontein application was approved in controversial fashion just days after the donations were made. Neil Warmenhoven, the developer of Suiderstrand, confirmed that he had been asked for a donation to the NNP at a fund-raising meeting last year and did not consider it a strange request, as this is what political parties do.
Full article in the Cape Argus: capeargus.co.za...

Provincial Administration: Fraud scandal comes back

Former housing MEC for KwaZulu-Natal, Dumisane Makhaye, could be dragged into the corruption quagmire of his former housing department with the KPMG forensic auditors due to approach him “to clarify certain grey areas”. KwaZulu-Natal premier Lionel Mtshali confirmed that the forensic auditors, who was called in to investigate the department which lead to the subsequent arrest of senior official Emmanuel Khoza and an alleged accomplice on R70m fraud and corruption charges, would question Makhaye on his involvement in the department during his nearly three-year tenure. Included in the fraud and corruption scandal is an investigation into why the housing department allegedly purchased 27 properties worth R70m in less than four months. An ironic twist was that the largest deal, where the department paid R15m for a property that an independent evaluation had valued at R3, 5m, was concluded on the day Makhaye was ousted.
Full article in Business Day: www.businessday.co.za...

Provincial Administration: Top official held for alleged bribe

A senior Health Department official in charge of procurement was arrested by the elite Joint Anti-Corruption Task Team for allegedly accepting a bribe for department tenders. He had allegedly asked a businessman for R5000 to approve a tender for the delivery of food and medicine in the Eastern Cape. According to Senior Superintendent Piet Wolvaard the official was arrested shortly after accepting the money, which was found in his possession near East London Airport. Other tender documents implicating other businesses involved in bribes were also recovered in his possession, indicating that paying bribes appears to be an acceptable form of conducting business in departments.
Full article in the Dispatch: www.dispatch.co.za...

Local Government: Municipal manager suspended for misuse of taxpayers’ money

Mpumalanga municipal manager Thamsanqa Nkosi has been suspended ahead of a probe into misuse of taxpayer’s money in Ermelo. Nkosi’s suspension follows media reports that he masterminded a rewrite of the council’s vehicle loan scheme to enable himself and senior officials to use tax funds as ‘private bank’ to grant themselves extremely low interest loans. Private forensic auditors firm, PriceWaterhouseCoopers, are investigating the municipality on a myriad of corruption and nepotism allegations, which include irregular awarding of tenders, embezzlement of public funds, nepotism and favouritism in the allocation of state-subsidised houses.
Full article at AllAfrica.com: allafrica.com...

INDUSTRIES

Crook, line and stinker: the story of Hout Bay Fishing

No case has illustrated the breadth and depth of corruption in the fishing industry like that against Hout Bay Fishing Industry (PTY)Ltd. After national and international investigations, a string of prosecutions and court cases, The Hout Bay Fishing case uncovered corruption involving multimillionaire company directors and their top executives, skippers, boat owners and the entire Sea Point office of Marine and Coastal Management's fishery inspectors. One of the 14 Marine and Coastal Management (MCM) fisheries inspectors who turned state witness told how inspectors had taken bribes from a few hundred to a few thousand rand, to turn a blind eye while poached fish were landed. Arnold Bengis, head of Hour Bay Fishing pleaded guilty of 28 charges, including poaching rock lobster worth R125 million. Collin van Schalkwyk, a director pleaded guilty to 301 charges of corruption. Between October 1997 and December 2000, Van Schalkwyk was involved with more than R425 000 in bribes paid to MCM inspectors. Five boat owners pleaded guilty to receiving payment from the company in return for poaching more than 40 500kg of West Coast rock lobster with the market value of more than R3, 2m.
Full article in Cape Times, Friday, June 20, 2003 ...
Full article on News24: www.news24.com...

Oil slick tars bigwigs

Sharp new questions over conflicts of interest have emerged about the controversial private company SAOC that secured a ‘government-to-government’ deal to buy Nigerian crude oil. It has emerged that the man behind SAOC, Nigerian-American Kase Lawal, also planned to set up an oil refinery in East London with the assistance of senior South African politicians, whose relations stood to benefit from the project. According to the Mail & Guardian, prospective parties to benefit from the deal include the Minister of Provincial and Local Government Sydney Mufamadi, whose wife was a director of and 5% shareholder in SAOC; the Premier of the Eastern Cape Makhenkesi Stofile, who had a number of business relations linked to SAOC, his brother-in-law Hintsa Siwisa who was chairperson of the local SAOC and held 11% stake in the company, his wife Nambita who heads the Eastern Cape Anti-Poverty Foundation who holds a 2% stake in SAOC, and Stofile’s sister-in-law Nosipho Damasane, a 3% shareholder in the company.
Full article in the Mail & Guardian: allafrica.com...

Dutch firm’s bribery allegation rankles FSB

The Financial Services Board (FSB) has hit back at allegations of ‘bribery’ levelled at it by Dutch company, Massena & Partners, as it is alleged that FSB was willing to grant ‘favours’ to Massena in exchange for information about SA citizens who contravened the law by investing money offshore in Mendes Prior. FSB wanted details of SA citizens’ unreported dealings with Mendes Prior and overseas banking details in return for giving the company a rightful evaluation. Massena has since prepared a report which include proper evidence of the meeting between themselves and FSB, to be issued to the South African national public protector’s office to investigate the improper methods and behaviour of the Financial services Board with regards to this case.
Full article at AllAfrica.com: allafrica.com...
Full article in Business Day: www.bday.co.za...

SOCIAL JUSTICE

Education: Gauteng education dept officials fired

The Gauteng education department dismissed five officials accused of theft, fraud and corruption, which had taken place since January 2003. A senior departmental manager was fired for allegedly violating tendering and procurement processes and financial mismanagement. The department suspended a further three officials earlier this year after it was alerted of their alleged illegal practices in awarding tenders, mismanagement and not complying with policies that govern procurement.
Full article at SABCNews.com: www.sabcnews.com...

Education: Clerk arrested for defrauding education department

XW Knunjuzwa, a 31-year-old junior clerk in the Eastern Cape department of education was arrested by the Joint Anti-Corruption Task Team for allegedly defrauding the department of more than R37 000. Between September 1998 and May 1999 Khunjuzwa had fraudulently deposited the monthly salary of a retired teacher of more than R37 000 into a bank account while at the then East London regional office of the human resource section of the department of education. Department of Education director of communication Professor Danie Breytenbach said that Khunjuzwa would be suspended for 30 days and the department would deal with his case in terms of its disciplinary procedures. Breytenbach mentions that the suspension illustrates the department's commitment to eradicating all forms of corruption and running a clean administration.
Full article at Allafrica.com: allafrica.com...

Social Development: Eastern Cape social development department may lose millions

The Eastern Cape social development department, which has been riddled with irregularities and corruption, is expected to lose millions through a contract it signed with a private company to pay pensions and social grants in the province. This follows a report presented by the Interim Management Team (IMT) deployed in the province to sort out chaotic administration in four provincial departments – health, education, social development and public works. The report revealed that social grant and pension payouts were a serious problem, especially with regard to the department’s contract with Cash Paymaster Services (CPS). CPS has allegedly not adhered to its service level agreement. In its first report the IMT revealed high vacancy levels, poor financial management, corruption, excessive use of consultants, and managers’ failure to maintain discipline and performance.
Full article in the Dispatch: www.dispatch.co.za...

CRIME AND JUSTICE

Forfeiture law needs beefing up - Ngcuka

National Director of Public Prosecutions Bulelani Ngcuka wants asset forfeiture laws to be strengthened following the high court ruling that allowed controversial businessman Billy Rautenbach to move assets worth more than R40m out of the country allegedly to Zimbabwe. Rautenbach, the former head of Hyundai SA faced charges of fraud, money laundering and theft, with assets facing forfeiture including a luxury home in Johannesburg, a farm in Paarl, a yacht, as well as various bank accounts. Ngcuka said that taking the profit out of crime remained one of the key objectives of the prosecuting authority. The number of seizures, made by the unit in terms of the Prevention of Organized Crime Act, had increased from 25 in 1999 - 2000 to 147 in 2002 - 2003. In those four years the assets frozen amounted to R500m, and 129 forfeiture orders involving R76m had been granted.
Full article at Allafrica.com: allafrica.com...

Policemen guilty of murder never served sentence

The North West province is investigating a case of corruption after two policemen, who were given jail terms of eight years for the murder of a young boy, failed to serve their sentences. Former Sergeant J Mokgatlhe and former Constable C Molete killed Daniel Letsie, from Bodibe Village in the former Bophuthatswana in 1992, and were convicted for the crime in 1994. However, the two were only incarcerated for the first time on the 15th June 2003 after the boy's family brought the matter to the attention of the North West Department of safety and Liaison.
Full article at Allafrica.com: allafrica.com...

Correctional Services commissioner dismissed for fraud

The correctional services department has dismissed the Eastern Cape Commissioner Raphepheng Mataka, for defrauding the department of about R34 000. Mr Mataka was found guilty by a disciplinary hearing yesterday after allegations of fraud surfaced during the tenure of the Jali Commission of inquiry into prison corruption in the Eastern Cape. Three more Bloemfontein Grootvlei Prison correctional services officers have been dismissed for bribery and corruption. The latest dismissals bring to more than 40 the number of employees discharged from the service since the start of the anti-corruption campaign in correctional services.
Full article at AllAfrica.com: allafrica.com...

Research: Botswana ‘best governed’ in Africa

Botswana was placed first in a new survey by the World Economic Forum (WEF) rating African countries for good governance, pushing its neighbour, South Africa, into fourth place. The study ranked 21 countries on the rule of law, impressions of corruption, and the enforcement of contracts. According to the WEF, the overall impression of South Africa was dragged down by the perceived costs linked to organised crime. The index was calculated from almost 2 000 responses to the Swiss-based forum's Executive Opinion Survey 2003, which captured the impressions of national business leaders on the quality of the business environment in which they operated.
Full article in Mail & Guardian: www.mg.co.za...
See the WEF website for the full details on the report: www.weforum.org...

Reform: SA’s corruption busters save the state R128m

The special investigating unit (SIU) on corruption recovered or saved the state R128-million in the past financial year, of which R37, 5-million were recovered due to corruption, saving the state R90, 5-million. The biggest single successes were R17-million from the department of correction services and R14-million in illicit payments recovered during an investigation into “ghost” workers in Limpopo. To date the SIU had secured R17-million in acknowledgements of debt from six doctors colluding to defraud medical aid schemes with false claims. One doctor alone had defrauded schemes of R7, 6-million.
Full article at AllAfrica.com: allafrica.com...

Reform: Public Service Accountability Monitor gives thumbs-up to S&S

The department of Safety and Security has received a thumps up from the Public Service Accountability Monitor (PSAM) for it’s “prompt response” in updating information on corrective action taken against it’s officials reported for misconduct. One of the cases revealed that current spokesperson for the national parliament, Lupumzo Kebeni, continued to act as a spokesperson for the department of Safety and Security for two years after his conviction for fraud before resigning. In congratulating the department of Safety and Security for its response the PSAM pointed out that by working together in communicating action taken in response to cases of misconduct, corruption and maladministration the PSAM and the provincial government can help build confidence in the provincial administration and improve investor perceptions of the province.
Full article at AllAfrica.com: allafrica.com...

Reform: Joint Anti-corruption task unit’s major advances in war on corruption

The Joint Anti-Corruption Task Unit (JACT) has made major advances in its war on government corruption in the Eastern Cape since starting operations in December last year. Statistics by JACT spokesperson Superintended Mzilisi Fatyela revealed that the unit’s 40 detectives and 10 state advocates have so far succeeded in obtaining 15 convictions against corrupt civil servants. A further 140 civil servants, mainly top officials largely from the departments of social development, health and education, have been arrested and will be going to trial. The JACT also has 130 cases of fraud and corruption, ranging in individual amount from R1, 5 million to R90 million and totalling more than R5 billion, currently under investigation. Despite these advances, the JACT is sitting on a mountain of 4 000 reported cases of fraud and corruption that still need to be individually evaluated before decisions can be made on whether to launch full scale investigations. Fatyela issued a special call to members of the public to become involved in the struggle against corruption by reporting suspected cases of fraud, corruption and theft and by supplying the JACT with information on such cases.
Full article at AllAfrica.com: allafrica.com...

Research: Strong support for De Lille – Survey

More than half of metropolitan South Africans are “in favour” of Patricia de Lille’s new political endeavour to root out corruption, according to Research Surveys, a Cape Town-based research company. Research Surveys revealed in their poll that city-dwellers saw corruption as a huge problem in politics. A total of 82 percent of all respondents believed corruption was a major problem in political parties.
Full article at Iafrica.com: iafrica.com...

NGO: The Public Service Accountability Monitor (PSAM)

Based at Rhodes University in Grahamstown, the Public Service Accountability Monitor (PSAM) is a non-profit independent monitoring unit which has as its mission the promotion of efficient and accountable management of public resources and to improve government service delivery in South Africa, particularly within South Africa’s Eastern Cape province.

Established in 1999 PSAM has done some excellent work in gathering information on the management of public resources and the handling of misconduct and corruption cases by government departments. This information is collected in a rigorous, objective and politically impartial fashion. By publishing this information the PSAM hopes to give members of parliament, civil society organisations and ordinary citizens the tools necessary to hold government ministers and public officials accountable for their performance.

The PSAM aims to promote accountability and efficiency in the management of public resources by:

Monitoring reported cases of public sector misconduct, maladministration and corruption, and the corrective action initiated in response to these cases.



Monitoring the budget allocations of government departments, their strategic plans, problems experienced in the implementation of these plans, and whether the resulting services delivered by these departments constitute value for money.



Surveying public official’s knowledge of regulations and codes of conduct and their attitudes towards transparency, accountability and corruption.



Empowering civil society through the provision of information about the responsibilities of public officials and appropriate mechanisms for voicing complaints about poor public services.



Evaluating the policy framework governing the accountability of public officials and the management of public resources in South Africa.

PSAM programmes include case monitoring, performance monitoring, and civic empowerment. The PSAM has also developed a Citizen’s Advice Manual as well as a mechanism for registering complaints about poor public services which is available at www.myrights.org.za
See the PSAM website: www.psam.ru.ac.za...

The ISS Organised Crime and Corruption programme is finalising the soon to be launched online SADC Corruption Resource Centre. This free to use service will provide anti-corruption material, legal documents and good practice material from the SADC region and will be the first of its kind in Southern Africa. It is targeted at researchers, policy-makers, the media, academia and anti-corruption practitioners and is set to be launched in mid-July 2003. More details will follow in Umqol’uphandle.

The Institute for Security Studies (ISS) is an applied policy non-profit research organisation with a focus on human security issues on the African continent.

This e-briefing is produced by the SA Anti-Corruption Strategies component which is located within the ISS Organised Crime and Corruption programme in Cape Town and funded by the Danish Development Agency (DANIDA) through the Embassy of Denmark.

Editorial Team:

Hennie van Vuuren (Senior Researcher: Anti-Corruption Strategies)
hvanvuuren@iss.org.za
Paul Arendse (Research Intern)
Pilisa Gaushe (Manager: ISS Corruption Resource Centre)

For more about ISS please visit our website at: www.issafrica.org...
To contact us, or if you should have any comments, please email: umqoled@iss.org.za or Tel: 021 4617211