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Rot starts at the top, it is often said. This metaphor is a favourite among anti-corruption theorists. If you want to stop corruption, start at the top. This is the implicit counsel. Emphasis on un-corrupting the ‘big fish’ and preventing the head from rot is the hallmark of the contemporary discourse on anti-corruption, which rightly laments the netting of small fry while the big ones get away. The ‘rot starts from the head’ approach pervades the mainstream understanding of institutional corruption and informs corrective responses to it.

South Africa is no different. We have seen the enactment of disclosure regulations pertaining to Members of Parliament and provincial legislatures, Members of the Executive, Members of Senior Management Services, councillors and municipal officials. Presently there are calls for the net to be cast even wider, to include judges. The perception is that they are highly influential and ipso facto susceptible to conflicts of interest between their public roles and their private pursuits.

As a concrete demonstration of how judges’ impartiality and freedom from outside influences can be called into question, reference is made to the recent case of John Hlope, Judge President of the Cape Provincial Division. Hlope allegedly received extra remuneration from a private company without express permission from the Minister of Justice. Judges may not do this. Even more disconcerting was the allegation that in a separate judgment, Hlope found in favour of this company. This incident, and the realisation that this may be a systemic problem, was the impetus behind the Judicial Services Commission Bill, which envisages a code of conduct for the judiciary as well as a register of financial interests for judges.

Individual government departments are also up in arms, in a bid to preempt decay at the top. This edition features an initiative by the Department of Correctional Services to ensure that its senior managers are well versed in corruption-resisting strategies (see Crime and justice: Prison). The Department, most recently the focus of the Jali Commission of Enquiry, is no stranger to allegations of corruption (see National administration: Parliament to probe catering deal).

The introduction of the Prevention and Combating of Corrupt Activities Act saw the ‘rot starts from the top’ approach also embracing the private sector. Like their public sector counterparts, influential individuals in the private sector are now legally bound to take up the onus of reporting corruption, particularly where substantial amounts of money are involved.

This focus on netting the ‘big fish’ is not unwarranted. More than anyone else, senior officials are most likely to succumb to corruption. The stories in this newsletter bear testament to that. After all, corruption involves the use of entrusted power for private benefit and this power is primarily vested in senior officials.

But while an emphasis on cleaning the rot from the top is essential and long overdue, it should not be at the expense of neglecting the belly – which, as any fishmonger would point out, is where decomposition really begins. Like their senior counterparts, middle managers are vulnerable to unscrupulous influence. They are usually tasked with taking or recommending official action with regard to sensitive matters like procurement, administration of social grants, land developments, licensing and similar responsibilities.

Adequately addressing corruption hinges not only on preventing rot from the top, but requires an equally strong emphasis on the often-sidelined area of middle management.

Twenty-nine MPs and travel agents are to be tried for allegedly defrauding Parliament of R25 million. The accused include the Free State Premier, Beatrice Marshoff, who has admitted to claiming R8,000 from Parliament for private travel. Inkatha Freedom Party MP Bonginkosi Dhlamini and ANC MP Muntu Ntuli made similar admissions amounting to R71,000 and R11,573 respectively, the Cape Times reports. In a related story, the paper reports the seizure of assets belonging to the directors of the implicated travel company, Bathong Travel, including a R2.9m luxury house. The state alleges one count of fraud against all 29 accused and one alternate charge of theft Lawyers for all the accused were poised to apply for separate trials for their clients in rejection of the state’s proposed group trial. If convicted on the main charge of fraud, MPs and travel agents could face up to 15 years imprisonment.
Full articles in the Cape Times (27 and 28 July 2006).
The Star (4, 26 and 27 July 2006).

The Democratic Alliance (DA) has questioned the Department of Arts and Culture over alleged irregularities in the awarding of a R60m contract, The Star’s Thokozani Mtshali writes. The contract in question pertains to the showcasing of South African art talent in Germany during the recent FIFA world cup. The budget of R60m has been called “excessive” by DA national spokesperson, Motlatjo Thetjeng, who claims the Department has sidestepped his enquiries into whether correct tender processes were followed in the awarding of the contract. Sandile Memela, spokesperson for the Ministry of Arts and Culture, maintains that the allegations are unfounded.

An enquiry into the allegedly irregular extension of a Department of Correctional Services catering contract emerged after DA MP James Selfe confronted Correctional Services Minister Ngconde Balfour in Parliament. The contract was awarded to the Bosasa group of companies, which were earlier in the spotlight after winning departmental tenders worth R800m. Selfe alleges that the R82m contract, which sees a 34.3% increase on the prior contract, was extended without being put out to tender, Linda Endsor of Business Day reports. Department officials were due to respond to the allegations at the next Parliamentary meeting.
Full article in Business Day (14 July 2006).

The National Prosecuting Authority (NPA) achieved its first victory in the forthcoming Jacob Zuma corruption trial when the Pretoria High Court upheld the legality of contested search and seizure operations conducted at the premises of Zuma’s co-accused, defence company Thint . Three other searches against Zuma, as well as his current and former attorneys, were previously ruled illegal. The NPA has lodged appeals in these rulings. The latest decision highlights a need for final adjudication in the Appeal or Constitutional Courts in matters pertaining to such searches, the Mail & Guardian’s Sam Sole observes.
Full article in the Mail & Guardian (7 July 2006).

July saw the headquarters of German steel giant Thyssen Krupp raided by German authorities amid allegations that the company paid a R130m bribe to secure South Africa’s R7 billion warship contract, write the Sunday Times’ Rowan Philp and Wisani wa ka Ngobeni. Suspicions have centred around Thyssen’s late entry and the ousting of other contenders very late in the tender process following a visit to Germany by Mbeki in 1995 when he was still Deputy President, and around R130 million ‘useful expenses’ listed in the company’s balance sheet. Listing tax-deductible bribes as ‘useful expenses’ was, until 1999, a legal and common practice among German companies. In 2001 a letter from a South African businessman received by German authorities claimed that a 1999 meeting between Thyssen and an ANC representative in Geneva had seen the handing over of an amount similar to that listed in Thyssen’s books. Transparency International has questioned the German authority’s failure to request assistance or co-operation by South African authorities on the issue.

Mbeki previously came under fire in relation to the arms deal for alleged meetings with French defence company and arms contract bidder, Thomson-CSF, in 1998. Mbeki claims to have no recollection of such meetings. Documents seized by the Scorpions suggest the French company was convinced of the need to secure political support, including that of Mbeki. Some ANC officials believe Mbeki has been made the target of a smear campaign.

In a related story published in The Star, Public Enterprise Minister Alex Erwin said there was nothing untoward in what he called a “well managed” and “successful” arms deal. Similarly, military analyst Helmoed Romer Heitman argues in the Sunday Independent that the late addition of Germany to the arms deal resulted from re-evaluated defence needs rather than corruption. Nevertheless, the DA is pressing Barbara Masekela, the former ambassador to France, for clarification on whether Mbeki did in fact meet with Thomson-CSF in Paris in 1998.
Full articles in the Mail & Guardian (16 July 2006), The Star (5 & 17 July 2006)
and the Sunday Independent (9 July 2006)

Stirred by the impending Zuma trial, the Congress of South African Trade Unions (Cosatu) and Young Communists League (YCL) have called for the reopening of investigations into the arms deal. Buti Manamela, the Deputy Secretary of the YCL, said it didn’t make sense for Zuma to be prosecuted when the government had claimed the deal was above board, the Cape Times reports.

In a related story, Business Day earlier reported that the South African Communist Party called for renewed investigations into the matter following reports in a German national daily, Die Spiegel, which alleged that in 1999 a top South African politician had received millions for his assistance in the deal. The Citizen also reports that Independent Democrats (ID) leader Patricia de Lille had made a formal request to the NPA to reopen the arms deal investigations.
Full articles in the The Citizen (13 July 2006) and Business Day (7 July 2006)

The Sowetan reports that corruption in the ranks of Gauteng’s Shared Services Centre (GSSC) has cost the provincial government tens of millions of rands over the past six years. Kingdom Mabuza writes that at least 18 officials are believed to have been involved in drawing and redirecting the salaries of over 150 retired teachers, nurses and social workers in the province. According to the City Press, two days of investigations had uncovered 150 cases of ‘ghost’ employees with average salaries of R45,000 per month. The investigations have also established that a sophisticated syndicate collaborated with corrupt officials and a few GSSC employees in the scam.

In a related story in the City Press, a government official and four teachers are charged with defrauding the Mpumalanga Department of Education of more than R110,000. Sibusiso Nkosi, an employee of the Ehlanzeni regional circuit office in KaNyamazane, allegedly made payments of up to R24,184 to himself and the four teachers. The five were arrested last year after a joint operation between police and the provincial Department of Education. Departmental spokesman, Hlahla Ngenya, said the Department was committed to dismissing corrupt officials. He added that it reserved the right to force guilty employees to repay fraudulently acquired funds.
Full articles in The Sowetan (25 July 2006), City Press (9 & 23 July 2006)

The end of the three-year corruption trial of the former Western Cape Premier, Peter Marais, and the former MEC for the Environment, David Malatsi, is in sight after Marais declined to testify in his own defence, writes Chris van Gass of Business Day. Final arguments will be heard on September 26. The two have been charged with accepting a R400,000 bribe on behalf of the New National Party to speed up approval of a R550m golf estate near Plettenberg Bay. The money was allegedly paid by Italian Count Riccardo Agusta who, admitting he bribed the two, entered a plea bargain with the state and paid a R1m fine before leaving the country. Both Malatsi and Marais are confident the judge will rule in their favour.
Full Articles in Cape Times (20 July 2006), Citizen (14 July 2006).Business Day (18 & 20 July 2006)

Emily Kekana, the Assistant Manager of Special Programmes at Tshwane Metropolitan Council, will not lose her job despite being found guilty of stealing bricks worth R26,000, writes Sonia Molema of City Press. Instead, she will be suspended without pay for ten days before being transferred to a different but equal position. Sylvia Magoba, Director of the Kingdom for Life Centre for abused children, whose position Kekana had fraudulently claimed as her own, said of the outcome, “It shows that people can just steal from the poor and get away with it". Sabrix manager Elfranco Swart, from whom Kekana fraudulently claimed a R26,000 donation of bricks, added that “It is a bit unfair for her to get away with this”.
Full article in City Press (23 July 2006).

A former major of Delmas in Mpumalanga, Juby Makhabane, has entered a plea bargain with the state, reports City Press’ Sizwe samaYende. He and a former local councillor, Norman Mogapi, were charged with trying to solicit a R80,000 bribe from a property developer in 2004. A forensic audit also found that Makhabane embezzled R173,000 from the mayoral discretionary fund and irregularly appointed his wife as an administrator. Both Makhabane and Mogapi have agreed to pay a R10,000 fine each and commit to a year of community service.
Full story in City Press (9 July 2006).

The former Speaker of the Rustenberg municipality, Elizabeth Seduke, is on trial following her involvement in a scam in which cellphone contracts issued by the municipality were illicitly renewed and handsets illegally sold. The scam was uncovered when ID councillor Agnes Tsamai discovered that phones allocated to deceased and former councillors were still active. Police believe the scam amounted to the theft of twelve cell phones worth R12,000, of which only four have been recovered. The case has been postponed until November 30 and the accused are all on bail of R1,000 each.
Full article in The Citizen (6 July 2006).

Nyalala Pilane, the Chief of the Bakgatla Ba Kgafela tribe in the North-West Province, is due to be tried on two counts of fraud, 43 of theft and one of corruption, the Star’s Baldwin Ndaba writes. The state alleges that between March and September 1998 Pilane secured a lone of R40m from the Land Bank under the false pretence that he did so on behalf of his tribe. He is also alleged to have made personal use of a further R70,000 earmarked for the purchase of tribal land and of making a false claim of R50,000 from the Premier’s office.

Tiego Moseneke (attorney, businessman and the brother of Deputy Chief Justice Dikgang Moseneke), is lobbying the state to drop corruption charges amounting to R40m against him and his associate, Gopalang Makokwe, reports Business Day’s Rob Rose. The two are charged with conspiring to ‘steal’ a company, New Platinum Corporation, by transferring its 1 000 shares into their own names. Following a 1999 meeting of high profile shareholders in New Platinum Corporation (NPC), it was agreed that an empowerment subsidiary, New Diamond Corporation (NDC) would be established with NDC owning the shares in NPC. Moseneke was entrusted with seeing this implemented. Instead it is alleged that he and Makokwe appointed themselves as sole directors of NDC before selling 15% of a NPC project in 2004. Moseneke disputes the allegations, saying there are no written agreements relating to the formation of NPC. The case has been postponed to August 24.

Writing in the The Citizen on the present state of both blue- and white-collar crime and corruption in South Africa, Barry Sergeant summarises a number of pressing issues facing government. These include the recently published PricewaterhouseCoopers global economic crime survey, which, among other things, reveals that 83% of companies in South Africa have been victims of economic crime. Acknowledging the prioritisation of the national security strategy to combat crime Sergeant avers that the plan “must reach far beyond violent crime, into the equally unimaginably huge swamp of exploding white-collar crime”. Sergeant also urges Mbeki to demonstrate his seriousness about tackling crime by releasing the findings of the Jali Commission of Inquiry into corruption and maladministration in South Africa’s jails.
Full Article in The Citizen (28 July 2006).

A major investigation has been launched to ascertain whether Saambou defrauded the Johannesburg Metro council of land worth more than R20m, reports City Press’ Msimelelo Njwabane. A Saambou subsidiary, Saambou Wonings Properties Limited, became the owners of the land prior to completion of work to which it was contractually bound. This makes the transfer illegal. Despite neglecting to oversee the installation of water and electrical infrastructure as agreed, Saambou Wonings proceeded with opening the township register. This occurred after the company submitted allegedly fraudulent completion and acceptance certificates claiming that absent infrastructure was in fact in place. Johannesburg Metro has enlisted the services of KPMG to conduct a forensic audit into the matter while Graeme Polson, Saambou Bank’s receiver of creditors, said “It appears that corruption cannot be ruled out as a possibility”.
Full article in the City Press (9 July 2006).

Aubrey Mokadi, the Vice-Chancellor of the Vaal University of Technology, has been found guilty on 161 counts of corruption and nepotism by an internal tribunal, the Star reports. The university council plans to both lay criminal charges and sue Mokadi to recover misappropriated money and assets. Mokadi plans to challenge the tribunal’s decision on the basis of perceived ‘procedural unfairness’.
Full Article in the Star (13 July 2006).

The former head of housing in KwaZulu-Natal, Mduduzi Khoza, and Jayandarn Pillay, an advocate and estate agent, plan to appeal their conviction for corruption. The two are currently serving ten-year sentences having been found guilty of defrauding taxpayers of R800,000. Sowetan’s Mhlaba Memela writes that “the corruption charges against the two emanate from the purchase of properties worth R72,6 million by the housing department when Khoza was in charge”. Both Khoza and Pillay are currently serving time in the Westville Correctional Centre.
Full article in the Sowetan (13 July 2006).

Following auditor-general (AG) Shauket Fakie’s report on irregular housing grant applications worth R3.5m, the Minister of Housing, Lindiwe Sisulu, has requested the aid of the Public Prosecutor’s Special Investigation Unit (SIU) in cracking down on corrupt officials within the housing subsidy scheme, writes Roy Cokayne in the Star Business Report. Fakie had pointed out that, “of the approvals he had tested, money was granted improperly to government employees earning salaries in excess of the subsidy threshold and to government pensioners; approvals were given to people after they had died and to people with invalid identity numbers; duplicate subsidies were given for the same property; and applicants aged under 21 were given grants”. This amounted to R323 million in illegal applications. Director-General of Housing, Benny Kotsoane, said the Department is planning to investigate and take action against perpetrators in each case mentioned in the AG’s report.

A SIU probe into 400,000 individuals may save the country an estimated R1.5bn. The investigation into irregularities in the awarding of social grants by the Department of Social Development has already resulted in the completion of more than 1,300 criminal cases including 650 convictions of government personnel. Fourteen thousand other beneficiaries of the corruption are also being considered for prosecution. Concerns have arisen that guilty culprits are getting off lightly, as almost 3,000 have agreed to pay their debt to the state in monthly instalments. Meanwhile SIU head, Willie Hofmeyr, has expressed concern over the limited human resources at his disposal to continue with investigations. An extra 100 investigators are expected to be added to Hofymeyr’s personal complement in 2007.

Social Development Minister Zola Skweyiya has refuted reports that public servants who defrauded the public grant system would be treated leniently and escape interest payments on stolen monies, writes BuaNews’ Nozipho Dlamini. According to Skweyiya, they would be treated as harshly as members of the public who had committed the same acts. SIU head, Willie Hofmeyer, said that the decision to allow the repayment of stolen money, with interest, was made in light of the impracticality and expense of prosecuting all 400,000 fraud offenders, which would cost the state more than it had lost to fraud. ‘To date 110 000 irregular grants were cancelled through the joint efforts of the SIU and the department, saving the taxpayer more than R400 million per year.”
Full article in BuaNews (27 July 2006), Cape Times (28 July 2006).
Online at allAfrica.com (28 July 2006).

The Department of Correctional Services has launched a skills and ethics development training programme in an effort to clamp down on corruption among its members, a report compiled by the Government Communication and Information System reveals. The programme will see 880 managers trained over a three-month period. A 2003 survey by Ernst and Young showed that 85% of prison fraud and corruption was committed by insiders, of which over half was committed by management. This included taking bribes, selling guns and drugs to prisoners and p rostituting younger prisoners to older ones. Last year the Department budgeted R88m for the upgrading of security systems at high security prisons while in 2001 it established the Jali Commission to investigate corruption, maladministration, nepotism and gangsterism in South Africa’s prisons.
Full articles in BuaNews Online (5 July 2006); Businessday (06 July 2006).

The Jali Commission into prison corruption and maladministration appointed in 2001 submitted its report to President Mbeki in November last year. Now the DA is calling for the 1,000-page report, described as “disturbing” by Correctional Services Minister Ngconde Balfour, to be released to the public. DA leader Tony Leon expressed concern that Cabinet would edit the report without giving parliament and the public access to the full facts, reports The Citizen’s Vusumzi ka Nzapheza.

Two members of the South African Police Service (SAPS) who were arrested after it was alleged they were harassing, threatening and extorting money and s ex from members of the public, are still on the beat, The Star’s Graeme Hosken writes. The woman who pressed the original charges now says she fears for her life, believing that somebody in the SAPS is protecting the two accused. SAPS spokesperson Superintendent Morne van Wyk said the organisation did not tolerate corruption and that an investigation into the matter was being conducted. Steve Mabona of the Independent Complaints Directorate said attempts were being made to ascertain why the two men had not yet been suspended.

In the ongoing fraud saga that resulted in the abandonment of the Laila Ali bout in South Africa, Minister of Sport Makhenkesi Stofile has accused his secretary of forging his signature on official correspondence, David Isaacson reports in the Sunday Times. The alleged forgery took place on two letters, one to the SABC and another to Western Cape MEC for Sport, Whitey Jacobs. Stofile’s secretary, Mondli Nohashe, denies having forged the signatures. The letters were part of a pack compiled by event promotion director, Malick Ajouhaar. Four other letters in this pack contain clear forgeries of letterheads, combining the Ministry’s logo with that of Ajouhaar’s company, Sta-Trade. Questions have also been raised about how the underqualified bout organiser, Joe Manyathi, acquired the license needed to host the fight. The Ministry and Boxing SA are both investigating the collapse of the fight separately and without the assistance of the South African Police Service.

With funding from the German government, Business Against Crime (BAC) is set to conduct research into the state of white-collar corruption. Writing in the Star Business Report, Ronnie Morris notes that “corruption has been identified as one of several threats that face business”. Last year a PricewaterhouseCoopers study also found that a lack of internal controls resulted in almost 50% of economic crime while BAC estimated that in 2004, 82% of businesses were likely victims of corruption.
Full Article in Star’s Business Report (17 July 2006).

Following concerns raised around the Auditing Profession Act (APA) launched in April 2006, the Independent Regulatory Board for Auditors (IRBA) has issued new guidelines for the reporting of irregularities. Reversing old legislation, the APA now requires that auditors report irregularities to the IRBA before reporting them to the management of the audited company. Auditors who failed to comply with the IRBA’s guidelines could face up to a ten years in prison, writes Tonny Mafu in the Star Business Report.

With billions of people still mired in poverty and delivery on the promises of many new governments and anti-corruption campaigns yet to materialise, it is time for the anti-corruption movement to ask itself some serious and probing questions. After nearly two decades of research, advocacy and reform, why is corruption still such a huge problem? There is an urgent need to reflect and regroup, to look beyond our traditional coalitions, to find new voices and new faces and to energise this vital fight, upon which justice and the welfare of the global community depends. The IACC provides an excellent context for an honest and rigorous examination of these questions so that together we can move towards a fairer world.
Date: 15-18 November 2006
Place: Guatemala City and Antigua, Guatemala
Organisers: IACC Council, Transparency International, The Government of the Republic of Guatemala, Acción Ciudadana, TI National Chapter in formation

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 Cape Town based ISS Corruption and Governance Programme, and funded by the Danish Development Agency (DANIDA) through the Embassy of Denmark as well as the Norwegian Development Agency (NORAD) through the Embassy of Norway.

Editorial Team:
Andile Sokomani (Researcher: Corruption & Governance Programme)
asokomani@issafrica.org
Hennie van Vuuren (Head: Corruption & Governance Programme)
hvanvuuren@issafrica.org - Tel: 021 4617211
Pilisa Gaushe (Manager: ISS Cape Town Corruption Resource Centre)
pgaushe@issafrica.org
Andrew Faull (ISS Research Intern)

Visit the Southern African Internet Portal on Corruption
http://www.ipocafrica.org
please email: umqoled@issafrica.org

"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". Former 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".