For a democracy that has long shed its belief in royal authority, beyond the purely ceremonial, South Africa continues its fascination with modern day aristocratic families. Holding fabulous wealth made in the private sector - and by the same virtue power - it is inheritance or stroke of luck or hard work or advantage (or a mix of all of these factors) that has empowered members of the Rupert and Openheimer families and most recently the Sisulu and extended Radebe families.

Some would argue to each family its (just) dues. However a relatively poor people can only sustain so many disproportionately wealthy individuals. The pertinence of this argument is brought home by the growing number of allegations of instances of large government contracts being awarded to the partners (incidentally often wives) of powerful elected officials. Is this corruption or just co-incidence?

This edition of Umqol'uphandle is peppered with such examples. The Mail & Guardian lead with this story some weeks ago (see National Administration) highlighting for example the fact that Nambita Stofile, wife of the former Eastern Cape Premier benefited from business in that province. She has denied having any unfair advantage. Similarly former premier of the Northern Cape's Manne Dipico's wife is linked to a company that received payments, in return for services rendered, from his government (See Provincial Administration). Another example is Mpumalanga's second largest metro, Enhlanzeni District, where more than one of the mayors alleged partners or 'wives' has benefited from a council tender (See Local Government). These examples all point towards the need for the Ministerial Handbook to go further in preventing conflict of interest. One proposed option is for partners and children of senior officials to be excluded from government business. They have a constitutional right to partake in the economy, however to avoid even the inference of a conflict of interest, they should focus on doing business with the private sector instead. Given the size of the South African private sector - this should be possible? This might be an example where the collective public good outweighs the potential, and unfortunate, infringement of an individual right? Worth considering unless we wish to continue dealing with the corruption or co-incidence conundrum.

Another approach is to ensure that the National Treasury's new Supply Chain Management Framework is effectively implemented (See Profile). Following years of deliberation this could be a real attempt at tackling the offside examples of the tender tango (of which well connected families are only a small part). To offer an early, and unsolicited, 'Tip for Trevor' - update the public regularly on the progress of this reform initiative, including in your budget speech - it is central to combating corruption. It is commendable to hear the Minister say 'ban corrupt firms' in Africa (See reform) but we need to see prevention at work as well. Less corruption in our democracy should mean that those citizens whose sole connection to power is through the ballot box - as opposed to blood, love or money - are its true beneficiaries.

The increasing number of spouses of senior politicians who are being awarded government contracts, at national and provincial government levels, concerns public service watchdogs who see this as opening the door to a possible conflict of interests. According to the Ministerial Handbook, for instance, an award of a contract to a spouse when the husband or wife is in charge of the relevant department amounts to a conflict of interests. In addition, tender regulations - as Yolandi Groenewald notes - "stipulate that spouses engaging in government business should declare their relationship to a state official before the tender is submitted." Maud Dikgetsi and Nambita Stofile - two prominent women entrepreneurs who consistently won government contracts while married to ministers - however have insisted that in their case no conflict of interests could arise, adding that, had there been a bias in their favour they would have won all the contracts, and that did not happen.
Full Article in Mail & Guardian (May 28 to June 3 2004)

A report recently tabled in parliament by the National Intelligence Agency "reveals massive corruption and inefficiency, [as well as] dismal and 'unnecessary red tape' " in the home affairs department. Chiara Carter notes that the report "identifies home affairs as a "prime target" of organised crime syndicates and other criminals because it provides an ideal way for them to obtain "enabling documentation." At present the department has to deal with both syndicated and convenience corruption. The latter refers to a situation where a member of the public finds it easier to pay a bribe than wade through the bureaucracy. The report has prompted a drafting of a plan to rescue the home affairs department from "collapse" including a counter-corruption strategy.
Full Article in This Day (June 10 2004)

As a result of "contravening two of his bail conditions by allegedly contacting a key witness and failing to hand over his passport", Cornwell Tshavhungwa, the suspended manager of Scorpions investigations in Limpopo and Mpumalanga, has been rearrested and "will remain in detention until his next court appearance on July 23 2004." Marlene Burger reports that the National Prosecuting Authority has announced a plan to review all cases investigated by Tshavhungwa including probes against former Limpopo premier Ngoako Ramatlhodi and former Mpumalanga MEC for health Rienna Charles, which Tshavhungwa closed without laying charges. According to Scorpions spokesperson Sipho Ngwema, "the review was warranted in the light of evidence that Tshavhungwa might allegedly have subverted investigations and illegally arrested certain individuals to promote his own interests."
Full Article in This Day (June 24 2004)

According to a report by Makhudu Sefara an unidentified insider revealed that "ANC MP's on the committee that considered the Public Protector's report into deputy president Jacob Zuma's complaint against National Director of Public Prosecutions Bulelani Ngcuka were "under instruction" to thwart any attempts to re-open the saga and thus create open season for the media." This was in order to avoid another Hefer-like saga, which culminated in the humiliation of some of the ANC's senior members. Cuba Mahaye, ANC spokesman in parliament, however was not aware of any instruction to foil "attempts to re-open the investigation."

Premier Sello Moloto's plan to tackle corruption in the Limpopo province has received a full backing from the province's business community. Though he disagreed with the Premiers allegation that business often initiates the first step of bribery, National African Federated Chamber of Commerce (Nafcoc) provincial leader, Joe Mogodi, reportedly expressed full agreement with the minister's vision on dealing with corruption. However, according to a report by Selby Makgotho, Mogodi also stated that in their view "no tender should be allocated to anyone who is not a member of the Chamber" because "[t]he problem with the tendering system is that people get contracts from their friends in government who also want to benefit from the same process." Mogodi also called for "lines of communication" with government to discuss issues such as corruption.
Full Article in Sowetan (May 31 2004)

Guthrie Dipico, wife of former Northern Cape premier Manne Dipico, reportedly received R150 000 in four months from Special and Dignified Events - a private company run by Dipico's mother in-law which won a contract while Dipico was still premier. According to the Sunday Times, the firm was one of the beneficiaries of a R1.2 million contract to provide tents at the opening of the new provincial legislature building in February 2003. Dipico has not denied his wife's involvement with the company but insisted that her role had been declared. However, according to a report by Mzilikazi wa Afrika, Jessica Bezuidenhout and Andre Jurgens "senior provincial officials were ... unable to supply the Sunday Times with any proof of public declaration by Dipico."

New allegations pertaining to the swindling of a Stellenbosch property developer by NNP senior officials following his refusal to donate R200 000 to the party have prompted the Democratic Alliance (DA) to call for an urgent judicial inquiry and a further Scorpions investigation into development planning in the Western Cape. The new development scandal implicates, amongst others, former premier and now Environment and Tourism Minister Marthinus van Schalkwyk and MPL Johan Gelderblom. They allegedly promised the director of C-max investments, Francois Derecksen, that his appeal against the Stellenbosch municipality's rejection of his building development would succeed on condition that he donate R200 000 to the NNP. According to a report by Nazma Dreyer, when Dercksen refused to donate the R200 000, Gelderblom - then agriculture, environmental affairs and developmental planning MEC - did not grant his appeal.

Public Protector's Western Cape representative, Gary Pienaar, has confirmed that the forensic audit division of the City of Cape Town received a request from the Public Protector to investigate two contracts for road construction in Gugulethu (worth R19.9m) and Tambo Village (worth R4.7m), which have been awarded to BTH Construction - "a contractor that city officials disqualified as a contender." Tony Weaver reports that a majority of councillors, drawn from all parties, in the tender and procurement committee ruled that both BTH bids were "non-responsive" - "meaning that they were disqualified from further consideration in the tender process." Members of the mayoral committee however allegedly overruled this decision by recommending BTH construction. DA Councillor Belinda Walker referred the matter to the Public Protector.

Mayor of Enhlanzeni District Municipality in Mpumalanga, Jeri Ngomane, came under the spotlight when some of his "wives" won tenders with his council while he was in office. According to a report by Fikile-Ntsikelelo Moya the Mail & Guardian has established that: Sanet de Klerk "was the financial manager of [Sisonke] - a land surveying company that won a R1-million contract with the council during [Ngomane's] mayorship; Milicent Sibiya's company, Vuthela Africa Development, "landed a contract to build 25 houses in Goba, Nelspruit, worth about R575 000; and Multilayer Trading 929 CC, registered in Nomsa Nxumalo's name, "won council fencing and electrification contracts worth R1,3- million." Despite evidence to the contrary, Ngomane has insisted that he does not have anything to do with these women, let alone a marital relationship. This comes after the Mpumalanga local government minister Jabu Mahlangu took effective control of the municipality following a KPMG report that revealed that between January 2000 and 2004, more than R30 million had been paid "entities in which councillors/officials hold direct/indirect interests."

Mandla Mnyakama reports that "residents of Brown's Farm informal settlement in Philipi (Western Cape) have disbanded a committee they accuse of corruption in the allocation of housing plots." The corruption allegations arose when it was discovered that the names of those who were to be relocated to the upgraded plots were "removed from documents that were forwarded to the housing department for approval, and replaced with people who were unknown to the community." A newly elected committee has now dedicated itself to the resistance of local corruption.
Full Article in Cape Argus (June 23 2004)

The Hout Bay Development Trust reportedly set up to empower and uplift the largely indigent Hout Bay fishing community is suspected "to have been a cynical con pulled on the mass of poor locals by a group of ANC elite, who have actively collaborated in ensuring that a small group of party friends and funders have become multi-millionaires - riding on the backs of the poor ..." This issue is raised in a noseweek article, which insists that life of the poor in Hout Bay has not improved in spite of the significant benefits - including five large fishing quotas - which government awarded to the Hout Bay Development Trust.

A group of aggrieved minority shareholders of New Kleinfontein Mining Company have asked the Scorpions to "probe allegations of fraud against top executives (CEO Neal Froneman and chief financial officer Marais Steyn) of gold-mining company Afrikander Lease (Aflease)." According to a report by Rob Rose, it is alleged that when Aflease purchased New Kleinfontein from a consortium led by Froneman and Steyn, who were not Aflease directors at that stage, certain facts about the transaction were concealed and minorities misled. Steyn has insisted that the allegations are baseless.

A sophisticated syndicate that was thriving on systematic soccer match-fixing in South Africa's Premier Soccer League and First Division for a number of years, has been incapacitated following the arrest of nine soccer referees on bribery and corruption charges. The arrest has brought fear within the circle of the cartel - which consists of referees and assistant referees in the PSL - as they are unsure who will be the next catch. A report by Mzilikazi wa Afrika, Kgomotso Mokoena, Dominic Mahlangu and Sazi Hadebe reveals that a warrant has been issued for the arrest of PSL club Hellenic boss, Dumisani Ndlovu, who "allegedly intimidated some of the referees who have blown the whistle on the match-fixing scandal."

The debate about "whether rules are needed to prevent the perception that business is "buying influence" in deals with politicians and their family members" has once again surfaced following the purchase of a 13% stake in Western Areas gold mine by the ANC-dominated Orlyfunt Holdings consortium, which includes the wife of Social Development Minister, the husband of the Education Minister. ANC veteran Andrew Mlangeni, ANC Youth League national executive member Songezo Mjongile, youth league member Lunga Ncwana and former ANC Western Cape MP and ANC Women's League member Hilda Ndude. Rob Rose reports that the R712, 8m deal is seen as a move that "would cement Western areas Chief Executive Brett Kebble's already close ties with the ruling party." Kebble, who donated R500 000 to the ANC in 2003, has been previously accused of attempting to obtain political favour with the ANC through business dealings with the party's prominent members.

Jan Myburg and Louis De Jager, the two policemen who stole an estimated R1 million from Jeanette Harksen's (wife of fraudster Jurgen Harksen) locker at the Green Point Health and Racquet Club in 1995, have each received a seven-year jail sentence, with three years suspended, in the Cape Town regional court. Objecting to the defending lawyer's plea to mitigate the sentence, State prosecutor Johanne Swanepoel argued that the accused "had been the authors of their own demise, had enjoyed luxuries and should be held responsible for their actions."

Fraud and corruption charges against five reinstated officials of a prison in northern KwaZulu-Natal are being investigated following the theft of departmental goods including seven TV sets and a gym machine, that were later found in a local gun shop. According to a report by Dumisane Lubisi the five officials - the former prison head, financial director, head of logistics and two senior warders - had been suspended for two months before the provincial correctional services department reinstated them, "insisting they should work instead of sitting at home and earning a salary."
Full Article in Business Day (June 3 2004)

Chief Executive of Chris Hani-Baragwanath Hospital, Dr Emma Bondareko, has disclosed that a number of the hospital's staff members - including nurses, clerks and security personnel - have been suspended over various allegations of graft, theft, corruption and negligence. According to a report by Themba Sepotokele, Bondareko, who took office in November 2003 after the redeployment of the hospital's management due to various management deficiencies, was not in a position to enumerate the number of staff suspended as investigations are still continuing. Since an interim management structure was deployed "projected overspending has been reduced from R150 million to R80 million." Bondareko's contract has been extended from an initial six months to two years.

A joint United Nations office on Drugs and Crime and Department of Public Service and Administration (DPSA) report into the anti-corruption capacity of the prisons administration reveals that the correctional services department "needs a restructured anti-corruption unit, better investigative capacity and a more thorough commitment to ethics if it is to turn around a prison system in which inmates feel more corrupt on release than they were when incarcerated." Nic Dawes and Chiara Carter report that this finding came shortly after correctional services minister Ngconde Balfour "told the national council of provinces in parliament that his department needed a "major shake-up" to dispel its image of being riddled with corruption and maladministration." According to the co-author of the report, Prof. Mollie Painter-Morland of the University of Pretoria's center for business ethics, transformation of the department is essential -but it has to go beyond just getting rid of a few bad apples.
Full Article in This Day June 30 2004

Director of Rand Afrikaans University's centre for the study of economic crime, Louis de Koker, has criticised the Prevention and Combating of Corrupt Activities act, which replaced the 1992 corruption act as it did not cover graft in the private sector, as a "turgid, badly written and ... vague" legislation. According to Alameen Templeton one of the reasons De Koker views the act as representing "a reprehensible piece of drafting" is the fact that its confusing language "could leave the law open to constitutional or high court challenge ... [a] process [that] could take years and further corrode South Africa's corruption fighting efforts." Furthermore the teeth which the new act gives to law enforcement agencies ("penalties include life imprisonment and there is no upper limit to the fines that the high court might impose") might turn out to be a popgun because they are designed to intimidate rather "than to provide law-enforcement agencies with an effective weapon." De Koker is also concerned about the fact that the new law has no provision for the protection of whistle-blowers, a deficiency that "means that not only can people be sent to jail for ten years for failing to report or notice corrupt activities, they can be sued by someone they might have wrongly accused.'
Full Article in This Day (June 24 2004)

Finance Minister Trevor Manuel told delegates at the Africa summit of the World Economic Forum that "companies that pay bribes to African officials should be "named and shamed", and banned from participating in further contracts on the continent." Quentin Wray reports that Manuel called for a collaboration between the private and public sectors to ensure that "the corrupters" suffer as much as those who accepted the bribes.

New national Housing Minister Lindiwe Sisulu has announced that a special in-house investigative unit is being considered for introduction, to tackle corruption in the Housing Department. According to a report by Sipokazi Maposa the minister envisages that the introduction of the internal unit (subject to the budget) "would help to accelerate delivery in the housing sector."

A draft Companies Amendment Bill that makes directors of the boards of companies liable for losses incurred by the delinquent directors they have appointed has been presented to parliament's ad hoc committee on trade and industry. According to a report by Lynda Loxton this is to "[prevent] known delinquent directors from being appointed to the boards of companies." The Bill also addresses the technical "issue of what happens to shares fraudulently taken from JSE's Securities Exchange's electronic share trade system, Strate, and sold to outsiders."
Full Article in Cape Times (June 10 2004)

In December 2003 the National Treasury promulgated the Framework for Supply Chain Management. This heralds a new procedure for the way in which government procures goods and services and may eventually replace the present state tender board system. Essentially the system ensures that the procurement of goods and services are monitored from the "cradle to the grave" - that is from the first point of demand to the final point of supply.

Issued in terms of the PFMA, Supply Chain Management forms an integral part of the financial management system of every institution and deals with the supply chain of goods and services.

To ensure uniformity in the application of the supply chain process National Treasury is in the process of issuing practice notes that deal with specific issues relating to Supply Chain Management. The practice notes include, among others, standardised bidding documents, directives for the appointment of consultants and a code of conduct applicable to all Supply Chain Management practitioners. This framework and the ensuing practice notes will be applicable to all national and provincial departments, constitutional institutions and public entities listed in schedules 3A and 3C of the PFMA.

Where before, the Regulations required that procurement of all goods and services must be done only through the State Tender Board, the amended Regulations now allow for accounting officers of national departments to procure goods and services either through the State Tender Board or alternatively in terms of the Public Finance Management Act.

The promulgated amendment is in line with the intention of the PFMA, which empowers accounting officers to manage their departments and accept full responsibility and accountability for all expenditures incurred by their departments. The promulgation of the Regulations allows national departments an option to arrange their ad hoc tenders through the State Tender Board, or alternatively in terms of the PFMA. This "dual system" will be available to accounting officers at national level until such time that the State Tender Board Act is repealed. At provincial level the various tender board acts will also be ultimately repealed and the various provincial tender boards will be dismantled. In some provinces this phased process has already commenced and certain provincial tender boards have already been dismantled.For more details consult the National Treasury website: http://www.treasury.gov.za

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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@issct.org.za - Tel: 021 4617211
Andile Sokomani(ISS Research Assistant)
Pilisa Gaushe (Manager: ISS Corruption Resource Centre)

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"Corruption and misadministration are inconsistent with the rule of law and the fundamental values of our Constitution. They undermine the constitutional commitment to human dignity, the achievement of equality and the advancement of human rights and freedoms. They are the antithesis of the open, accountable, democratic government required by the Constitution. If allowed to go unchecked and unpunished they will pose a serious threat to our democratic state". President of the SA Constitutional Court (Judge Arthur Chaskalson), 2000

Umqol'uphandle - SA Corruption Briefing, a monthly free e-briefing, aims to document and inform on instances of corruption in South Africa and the SADC region and assist in raising the debate around effective anti-corruption strategies - with a South African perspective. Published by the ISS - Organised Crime and Corruption Programme, Umqol'uphandle highlights the results of relevant research, initiatives to combat corruption as well as a snapshot of recent corruption related stories, which have appeared in the media. Each edition features the top corruption related story from the SADC region as well as a short profile on a key anti-corruption agency, organisation or instrument.

Umqol'uphandle is inspired by a Xhosa proverb meaning "the moment when something which has been hidden is revealed".