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

Issue No 007
15 August 2003

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Strengthening our democratic institutions

When Mac Maharaj, a man of formidable integrity allegedly gets a free nights accommodation in Disneyland from arms dealer Shabir Shaik while doing business with an affiliate of Haliburton (a US corporation closely linked to the Bush government and profits in post-war Iraq) it is no wonder that the public is left a little dumb-struck by recent events surrounding the arms deal.

As the integrity of the arms deal continues to unravel even Deputy President Jacob Zuma – the Kwa-Zulu Natal Peace Maker - is being dragged into the spotlight less than a year before our third democratic election (See National Administration). Shaik, Maharaj, Ngcuka, Zuma – four names which feature prominently when media analysts ponder who has what motive and who will profit at who’s expenses. Indeed the notion that all or any of the individuals involved in the current furore has a ‘hidden agenda’ plays into the hands of those who believe that a conspiracy is afoot to oust the deputy president (either from above or below depending on your vantage point). Given our history, as a nation we are for good reason suspicious of the motive of others. However, the factor left out of this equation is that after ten years of democratic rule– South Africa now has a set of well grounded instiutions which can, and in most instances do, make a major contribution to ensuring government is held to account for its actions by the governed.

Surprisingly – and arguably short-sightedly - many analysts are now starting to predict that the head of one functionary or another will roll as Bulelani Ngcuka “takes-on” Jacob Zuma. This is however to miss the point. Given its resources and mandate the Directorate of Special Operations known as the Scorpions, and by necessary implication its boss (Ngcuka) does appear to stand head and shoulders above the Police. However, we should not confuse public persona with the matter at hand. The Scorpions are grappling with one of the most high profile cases any institution has yet to deal with – and as Mondli Makhaya (National Admin Section) points out a Nation is now on trial.

The Scorpions need to take extra care when dealing with this thorny issue, equally however everyone interested in combating corruption should use this opportunity to encourage institutions such as the Scorpions in this process, not because doing so is to support a witch-hunt, rather because strengthening such institutions will ultimately deepen our democracy. The notion that somebody will have to ‘pay’ for asking the question must indeed be nipped in the bud. To validate the nature of our democracy, we collectively need Bulelani Ngcuka not to be required to pay with his job – or to sacrifice the relative independence of the institution he heads– for crossing some imaginery line. By the same token the Deputy President should be considered to be innocent until proven otherwise - by a court of law.

Below this weeks substantial National Admin section encouraging signs are emerging of joint initiatives by the Special Investigating Unit and the Penuell Maduna’s Department of Justice to root out what appears to be substantive graft in many of the nations court rooms (See Crime and Justice & Reform). Similarly international co-operation is bearing fruit as the crooked South African fisherman Arnold Bengis is being realed in from his good life in New York for plundering the seas at the ultimate expense of the Livelihood of small-scale fishermen. (See Industries). Evidence that behind the front-page news - progress is being made.

PUBLIC SERVICE NATIONAL ADMINISTRATION

A Nation on trial
Mail & Guardian editor, Mondli Makhanya, writes that South Africa is on trial; “The main trialist is the South African conscience, whose approach and attitude towards corruption and impropriety and the values of good governance are under scrutiny”. Evidence in support are: one, “the public face of South African corruption, Tony Yengeni, who received a slap on the wrist”; two, “party activists closing ranks behind Zuma and perpetuating the whispering campaign against Ngcuka”; and three, “the emergence from hibernation of the Shaik brothers, whose names have popped up in almost every allegation of impropriety against ANC leaders.” The national psyche of South Africa need not quiver in times of judgement as the writer points out that "we have built something unique on the southern tip of the African continent. Out of the ruins of a despotic, corrupt state we have, in less than a decade, constructed a nation with institutions and values that took other peoples decades and centuries to mould. The trick is to make these institutions and values work, and not let them buckle under any pressure. We will know the resilience of our democratic infrastructure only when we face challenges like the current one.”
Full article in Allafrica.com: allafrica.com...

Going easy on Yengeni sends wrong message
"The punishment given to former African National Congress (ANC) chief whip Tony Yengeni for contravening the party's code of conduct has left analysts questioning the ANC's promise to act against corruption and misconduct."
Full article at AllAfrica.com: allafrica.com...

Ethnicity and ambition cloud the Zuma affair
The investigations into deputy president Zuma, according to Sunday Times reporter Dumisani Hlophe, is more complex than election conspiracy theorists would want us to believe. Various theories have emerged: a “ character assassination to ruin Zuma’s chances of ascending to the position of President”; a ethnicity theory, “Zuma is a Zulu, and holding the position of deputy president makes him an inevitable target for the Xhosa conspirators”; a power theory, “President Thabo Mbeki intends to serve a third term. Therefore, the Zuma investigation is assumed to be part of the mission to eliminate any possible successor”. Using these kinds of theories “undermines the sanctity of elections and weakens their value as a means for society to choose its government”; “ it weakens the value of institutions created to safeguard democracy”; “the importance of the media in a democracy is eroded, since it is assumed that it is being used to undermine certain senior government figures”. The report concludes, “elections are not a sum total of political events. Taking such an approach misses out on the complexity of political actors, organisational principles and the operation of democratic institutions.”
Full article in the Sunday Times: newsdirectory.com...

The questions Zuma is being asked
The Sunday Times has published a copy of the list of 35 questions sent to Jacob Zuma’s attorney relating to the deputy President’s relationship with his financial adviser, businessman Schabir Shaik, and Shaik’s company Nkobi Holdings. He is asked to provide details of all expenses he paid on behalf of the ANC since 1994 as well as his personal income since then. Other questions are related to: the arms deal, financial benefits, Nkandla Development, financial positions, relations with the Nkobi Group and relations with the Thomson/ Thaler Group.
Full article in the Sunday Times: www.suntimes.co.za...

There will be only one survivor
Questioning the president’s public silence on the Zuma matter, the Sunday Times reported that “ Mbeki’s concern was that while the investigation into his deputy was pending, his hands were tied in dealing with the Scorpions. Police Commissioner Jackie Selebi has been calling for some time for the Scorpions to fold and its investigating arm to be incorporated into the police. ANC Secretary General Kgalema Motlanthe in turn opened the floodgates by condemning Ngcuka's "Hollywood" theatrics. Ngcuka knows it is a matter of time before ANC heavies are trundled out to deal with him. Both Zuma and Ngcuka have been severely battered by the recent events. According to the Sunday Times “it is no longer who will triumph. It is now a matter of survival and, clearly, only one of them can.”
Full article in the Sunday Times: www.sundaytimes.co.za...

Zuma: The Charge against me is baseless
Deputy president Zuma responded to the allegations by stating, “the allegation are utterly baseless. I have said before on record, and repeat, that I have nothing to hide and reject with contempt any suggestion that I solicited or in any way agreed to accept or even discussed accepting a bribe.” The statement comes on the eve of the deadline he was given to provide the answers to the questions from the Scorpions. Zuma said “ he considered many of the questions invasive of his privacy but that he will nevertheless respond on it.”
Full article at All Africa: allafrica.com...

Mbeki: Calls for quick end to bribery investigation into his deputy
President Thabo Mbeki called for a speedy conclusion to the investigation into bribery allegations against his deputy Jacob Zuma, for this to happen he states that “ the law-enforcement agencies must do their work as they think is right. Indeed, if there is any course to charge any person, of course they must proceed and do so.”
Full article at iAfrica.com: iafrica.com...

Zuma questions leaked to discredit Scorpions?
According to Scorpions boss Leonard McCarthy: ‘When you shoot at the king, make sure you don't miss…' That's how he characterises his approach to the investigation of deputy president Jacob Zuma and others linked to alleged corruption in state contracts, including the R50bn arms deal.” Although the media was often used to put pressure on the conviction of the crime elite, the Scorpions are more cautious in their management of the high level Zuma investigation. Thus the suggestion that the questions were leaked to the Sunday Times on July 27th by the Scorpions “has probably been more damaging to the Scorpions and their overall boss, national director of public prosecutions Bulelani Ngcuka, than to Zuma or Shaik”, as “the rather vague questions suggest the Scorpions still have a long way to go to make a prosecutable case.” The questions focussed mainly on “ Zuma’s business and personal relationship with Shaik and his companies, such as Nkobi Holdings, which the businessman owns or co-owns, and whether the deputy president has direct or indirect interests in any of them”.
Full article in the Financial Mail: free.financialmail.co.za...

Shaik paid Maharaj Disneyland bill
Former transport minister, Mac Maharaj, is under investigation and is due to respond to findings of an audit by Deloitte & Touche of payments and gifts while being a minister, including a family holiday to Disneyland paid by Schabir Shaik's company, Nkobi Holdings. The Scorpion investigation lead to an international company ‘Halliburton’ after it emerged that its construction and oil subsidiary, Brown & Root, had arranged the Maharaj’s family trip to Disneyland” (US Vice Pres Dick Cheney has in the past had close ties with Halliburton - which in turn benefited from reconstruction contracts in Iraq following the US invasion of that country.)
Full article in the Sunday Times: allafrica.com...

Mac Maharaj to resign from FirstRand
“Mac Maharaj, the former minister of transport, will resign from FirstRand this week, his wife, Zarina Maharaj, revealed on Saturday. In an interview with The Sunday Independent, she said Maharaj – FirstRand’s highest-paid non-executive director – had decided to step down because the public furore around him was causing embarrassment to the bank and its shareholders.” Zarina Maharaj also claimed that Bulelani Ngcuka, the NPA head, had repeatedly told Maharaj and others, including Kgalema Motlanthe, the ANC secretary-general, that the Scorpions had cleared Maharaj of all allegations levelled against him, including finding no link between payments and the awarding of tenders while Maharaj was minister of transport. Ngcuka said he would publically clear Maharaj if he helped the Scorpions with their investigations into deputy president Jacob Zuma and Shaik. According to Zarina Maharaj, Ngcuka said: "I need you to help me on the Zuma and (Schabir) Shaik matters before I publicly announce that you and your wife Zarina are clear of any charges. I need you to get Zuma to answer the questions."
Full article in The Sunday Independent: www.iol.co.za...

Shaik wins leave to appeal
The Durban High Court has granted businessman Schabir Shaik leave to appeal against a previous ruling forcing him to answer questions relating to allegations of bribery against Deputy President Jacob Zuma. Shaik's lawyer, Reeves Parsee, said on Wednesday they would have to apply to the Constitutional Court within 10 days. He said according to the ruling, it was in the interests of justice for the matter to be brought directly to the Constitutional Court. Parsee said he was fairly confident of the outcome. Shaik told Sapa on Wednesday he doubted his actions would slow down the Scorpions investigation into allegations that Zuma solicited a R500 000 bribe from a company involved in the country's multi-billion rand arms deal.
Full article at News24: www.news24.com...

PROVINCIAL ADMINISTRATION

Corruption clampdown promised in North West
Swai Mangope, of Tswaing Consulting Company, was arrested by the Commercial Crime Unit of Mafikeng for allegedly defrauding the North West Province's Department of Transport, Roads and Public Works with which it had several contracts of an estimated R10 million over two years. The arrest comes timingly after a warning by premier and MEC Jerry Thibedi " that corruption will be rooted out and clean governance will not be compromised." According to Thibedi this act as “a stern warning to any individual who finds comfort in robbing our government of resources and denying our people decent infrastructure”.
Full article in the Sowetan (30 July 2003) ...

LOCAL GOVERNMENT

CTN council staff arrested on corruption charges
Cape Town police arrested 34 City of Cape Town employees, among 66 officials implicated in welfare fraud, allegedly defrauding the province of R251, 000 by illegally claiming child support and disability welfare grants. “The arrests followed months of investigation and are aimed at curbing social grant fraud estimated at R9 million annually in the Western Cape”. Department of social services spokesperson Eric Ntabazalila said " that a special investigation by the Office of the Auditor-General and a private auditor led to the mass prosecutions”. The public is encouraged to phone the Fraud Hotline at 0800-220250 with any information about people receiving state benefits illicitly.
Full article in the Cape Times: www.capetimes.co.za...
Related Article: www.capetimes.co.za...

INDUSTRIES

The one that didn’t get away
The United States authorities arrested prominent Capetonian Arnold Bengis, head of the now defunct Hout Bay Fishing company, on charges of plundering and smuggling “South Africa’s fish stocks and breaking US environmental laws”. He is accused with four others on “21 counts of illegally catching and exporting to the US rock lobster caught in SA waters and Patagonian toothfish ….. The latter is a species endemic to islands in the southern Atlantic, where the decline in stocks has been attributed to over-fishing by Bengis's boats”. The US legal fraternity seeks a fine of $11.5-million as punishment. Quoting Horst Kleinschmidt, director of SA Department of Marine and Coastal Management, “many of them would cover alleged offences withdrawn as part of the plea-bargain agreement. Also, the R40-million fine paid in South Africa was small change for Bengis, who ‘still has fabulous properties’ in the US and UK”. Bengis has now also fallen out favour with some of his beneficiaries who benefited from his largess including the upmarket Herzlia High School, where the cricket pitch is named after him.
Full article in the Sunday Times: www.sundaytimes.co.za...
Related link: US arrests ex-SA fishing company chief www.sundaytimes.co.za...

Management crooks cost SA business R48bn/year
“ White collar criminals are robbing South African companies of considerably more than all the bank heists combined, according to the National Directorate of Public Prosecutions – better known as the Scorpions. Business Against Crime (BAC) puts the figure at around R48bn/year, or 3% of SA’s gross domestic product, and estimates that 3% to 5% of losses in most companies can be put down to crooked employees – with the largest losses attributed top management crooks”. Although ambivalently “police, forensic experts and analysts say most corporates would rather prosecute shoplifters and petty criminals to the maximum but give golden handshakes to directors who’ve lifted millions from them”.
Full article in Finance Week (23 July 2003) ...

Mbeki oil letter: The discrepancies
The director-general in the presidency, Frank Chikane, denied any wrong doing over the Nigerian oil deal that the Mail & Guardian reported benefited only an offshore company and a few people with ties to the ruling party. The letter written by Mbeki to Obasanjo concerning the oil deal has been publicized, after opposition party, the Democratic Alliance, used the Promotion of Access to Information Act for its release. The letter in the Mail & Guardian indicates “ a specific deal had been arranged: the South African Oil Company (SAOC), which, in spite of its official-sounding name is a private company, had applied for an allocation from the Nigerian state oil company (the NNPC) and Mbeki had written to Obasanjo to support the application. There has also been speculation that “the SAOC was favoured by the South African government because of a kickback to the African National Congress”
Full article in Allafrica.com: allafrica.com...

CRIME AND JUSTICE

Judiciary:'Bad guys' ripped off R100m from poor
They are the upholders of the law. Yet they are under investigation for swindling about R100-million meant mainly for the poor. According to The Star’s Makhudu Sefara Magistrates, prosecutors and court clerks in the country's 40 worst-managed courts are being investigated by the Special Investigative Unit (SIU), headed by Willie Hofmeyr. Hofmeyr confirmed that his unit would try to recoup the money from Justice Department officials following a recent presidential proclamation. The R100-million, which has gone missing, was part of about R1,5-billion held in trust by the state for people who receive child maintenance through the courts and those who pay bail and traffic fines. Due to the seriousness of the investigation, Hofmeyr is now assembling a team of 25 lawyers, forensic auditors and investigators for the probe and will be recruiting from the Scorpions, police and auditing firms."We can't lose this war. We are even more encouraged by the fact that the Justice Department is offering us about R6-million to investigate its officials," said Hofmeyr. Due to its complexity, he anticipates that it is likely to take about two years to complete. Preliminary investigations point to syndicates operating in the major cities, while bad auditing and lack of internal controls in rural areas make it easy for corrupt and unscrupulous officials to steal," he said. “And, in the unlikely event they are caught, they would get a light sentence because the courts have not yet come to the party. Courts do not take economic offences serious, yet it is a festering sore," said Hofmeyer.
Full article in The Star: www.thestar.co.za...

Police: Cop faces bribery charge
A policeman, Inspector Mandla Mkhwanazi, 39, from Montclair, allegedly accepted a bribe of R3 000 to steal a case document. The planned act apparently went all wrong “ when he arrested the prisoner’s brother and again demanded money…. It is alleged the brother, whose identity cannot be divulged as he is in the Witness Protection Programme, refused to pay up and reported Mkhwanazi to his colleagues.” According to The Independent, “Mkhwanazi is the 25th policeman to be arrested for alleged corruption and bribery since the launch of Operation Bogus, aimed at rooting out police corruption.” Police have appealed to the public to report police corruption at 031 325 4396.
Full article in The Independent: www.iol.co.za...

SOCIAL JUSTICE

Education: Three officials probed for spending R60 000 in hotels
“The KwaZulu-Natal Parliamentary Public Accounts Committee is investigating alleged fraudulent actions by three education ministry officials, who allegedly spent 100 days in hotels at the cost of the taxpayer. The trio allegedly claimed R61 039 for the period at a time when the education MEC had not stayed in the hotels. Records in the possession of the Public Accounts Committee show that the personal secretary, bodyguard and driver of Gabriel Ndabandaba, the former KwaZulu-Natal Education MEC, claimed the money for the period July 2001 to September 2002. During this period the three officials spent 129 days in hotels while the MEC only stayed at the hotels for 29 days. One official even spent two days at the Alpine Health Resort in the northern Drakensburg and claimed R1 750 for the stay. Another official stayed at the Sheraton Hotel in Pretoria when he was not allowed to do so. The African Christian Democratic Party's (ACDP) Jo Ann Downs, a member of the Public Accounts Committee, says the actions of the three officials amount to corruption. Downs has called for a full inquiry and says action taken against the officials should they be found guilty. Narend Singh, the current KwaZulu-Natal Education MEC, has welcomed the investigations. He says corruption of any sort will not be tolerated.”
Full article at SABC News: www.sabcnews.com...

Health: Former Santa accountant admits to fraud of over R1m
“A former SA National Tuberculosis Association (Santa) bookkeeper pleaded guilty in the Port Elizabeth regional court to defrauding the organisation of more than R1-million. The court convicted Priscilla Commando on all 185 counts of fraud totalling R1 005 823. The fraud took place over a seven-year period between 1994 and 2001.Commando admitted that R793 652 was paid into her own account and that she used the money for personal expenditure. Commando said as an accountant she was able to pay the salaries of non-existent Santa employees into four different accounts which she controlled. The case was postponed to August 25 for a probation officer’s report.”
Full article in the Herald: www.epherald.co.za...

Reform: Public sector essential for NEPAD – AU chairman
Mozambican President Joaquim Chissano, who is current chairman of the African Union (AU), addressed the opening session of an ‘ International Conference on Management, Policies and Development of the Public Sector’ in Maputo describing “ the public sector as essential in all implementation stages of the New Partnership for Africa’s Development (NEPAD).” He expressed the opinion that “ the NEPAD strategy can only work through the strengthening of democratic institutions, the justice system, and mechanisms for good governance to reduce corruption, closer cooperation between governments, the private sector, and civil society ... He also called for decentralization and democratisation in African countries, in order to modernize the public administration, and ensure greater citizen participation in governance.”
Full article in All Africa.com: allafrica.com...

Reform: New social grant administration system to be piloted in E-Cape
According to the Chairperson of the Social Cluster, Health Minister Manto Tshabalala-Msimang, a National Social Security Agency is to be piloted in the Eastern Cape, to take charge of the management of the distribution of social grants throughout South Africa. “The Eastern Cape was selected to pilot the agency because of its poor service delivery regarding the distribution of social grants.” According to the social development minister, Zola Skweyiya “government’s desire is to strengthen public works programmes, job creation, the establishment of a comprehensive social security system for the country that will further enhance self-reliance amongst individuals, families and communities and give impetus to sustainable socio-economic development.”
Full article at: allafrica.com...

Reform: Justice department tackles graft, launches hotline
A forensic investigation at the department of justice has resulted in 299 cases of criminal conduct of fraud and theft being reported to the SA Police Service, Alan Mackenzie, chief operating officer said yesterday. In addition, more than 300 employees in the department were under criminal investigation. Mackenzie said suspicions that syndicates were operating in the justice department had resulted in a presidential proclamation being passed to enable the department to use the Special Investigation Unit (formerly known as the Heath Unit) to investigate 40 courts countrywide. The department has also launched a fraud and corruption hotline, managed by independent auditors, to which reports could be made. Mackenzie was seconded from Business against Crime where he was the chief executive, to the department to assist government to improve the management of the courts. Fraud and corruption can be reported to the department's hotline at 0800 005 93
Full article in the Cape Times: www.capetimes.co.za...

Research: Idasa calls for re-opening of the arms inquiry
The Institute for democracy in South Africa (Idasa), released its third report on the controversial multibillion arms deal. Key findings suggests that “certain elements of the investigation were ‘overlooked’, such as inconsistent criteria used for contracting, uncertainty over whether the promised benefits of the contracts would be realized, the enforceability of contracts”. Recent allegations include “ the current investigation into Zuma and the Shaik brothers as well as the alleged provision of discounted motor vehicles to key public and national figures, including former chief whip Tony Yengeni, by the European Aeronautic Defence and Space company, a beneficiary of the arms deal. Also mentioned is the allegation that British Aerospace had paid the ANC an amount of R5-million before the awarding of tenders.” Judith February, Idasa researcher, highlights the importance of parliament's continued oversight role since “the arms deal binds South Africa contractually for 12 years”, and therefore should not be a “once-off exercise”.
Full article in The Sunday Independent: www.iol.co.za...
Idasa: www.idasa.org.za...

Southern Africa Online Corruption Information Centre
Knowledge is key to an effective anti-corruption strategy. The Southern African Corruption Information Centre – Online is the first portal of its kind on the African continent. It aims to provide policy-makers, researchers, activists, academics, the media as well as public and private sector officials with access to material on corruption as well as strategies to combat graft and corruption. The centre, which is a free to use service, provides information with a specific Southern African focus.

Over 500 abstracted documents which include legal documents, government/civil society reports, journal articles and conference paper appear on this online resource centre which will be constantly updated. Although there is a current bias towards information from South Africa we are working at closing the gaps and have as a start ensured that all corruption legislation from every country in the region is included in the database. We are in the process of making all documents available on the website in PDF format. If you need a copy of any document please mail us and we will forward you an electronic copy of the document. Users in the Cape Town area can also visit the physical Information Centre in Cape Town by prior arrangement.

New material will constantly be added to the site. If you have any material you think we should include please contact us (see website for details). The web site does not include abstracted news articles on corruption – we will however be adding indexed case-studies at a later stage, drawing on a wide variety of media sources.

The Southern African Corruption Information Centre – Online is located within the ISS organised crime and corruption programme in Cape Town, South Africa. The Centre is an initiative of the South African Anti-Corruption Diagnostics project, which is funded by the Danish Development Agency (DANIDA) through the Embassy of Denmark.
To use the Southern Africa Online Corruption Information Centre go to: www.issafrica.org...

Publication: SA Crime Quarterly
The June 2003 Edition of the ISS SA Crime Quarterly features an article by Gareth Newham and Lulama Gomomo of the Centre for the Study of Violence and Reconciliation which discuses the closure of the SAPS Anti-corruption Unit (‘Bad Cops Get A Break’). “In 1996 the SAPS established its first internal anti-corruption unit to tackle what was identified as a growing problem of police corruption. Seven years down the line, combating corruption is still a national priority of the SAPS. But recently the SAPS announced that it is closing the anti-corruption unit and integrating some of its members into the organised crime unit. International experience suggests, however, that a specialised unit dedicated to investigating police crime and corruption is crucial if these problems are to be tackled effectively.”
Full article in SA Crime Quarterly: www.issafrica.org...

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