11th October 2022by Michael Appel

South Africa is on the brink of greylisting not because we don’t have the ability or legislative means by which to effectively combat crime – there’s just very little political will to do so. Yes, there has been the purposeful erosion of South Africa’s ability to combat crime – especially complex financial schemes – under Jacob Zuma’s presidency. Arguably, not too much has changed under Ramaphosa. But, surely those skills are still available should a new, truly independent, and constitutionally protected crime fighting body be established? Accountability Now’s Adv Paul Hoffman explains in the piece below that you can count the number of big fish the Hawks and NPA have put away on no hands. There have slowly been arrests of some alleged to be involved in state capture but I think we know better than to celebrate arrests in South Africa (although that’s how low the bar for accountability is). Former ANC bigwigs in orange overalls. That’s what sends a message that crime doesn’t pay, and equality before the law exists. That Markus Jooste is still running around a free man is similarly stomach churning. Equal rigour in pursuing the corrupt in the public and private sector must happen. Hoffman says, “the president would do well to demonstrate an appreciation of the fact that the absence of proper enforcement of the laws applicable is at the root of the problems that have caused the Financial Action Task Force to consider greylisting SA.” – Michael Appel

Tightening up on enforcement is what will forestall greylisting

A report regarding answers given by President Cyril Ramaphosa to questions raised in parliament around the thorny topic of the possible greylisting of SA next year deserves further attention.

The report, as conveniently summarised in Legalbrief Today reads:

“President Cyril Ramaphosa has, in reply to a parliamentary question, moved to reassure the nation that government has placed the highest priority on averting a greylisting by the Financial Action Task Force (FATF). This is demonstrated by the recent introduction in the National Assembly of two Bills in July and August to ensure SA complies with the 20 FATF recommendations to address deficiencies. They are the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill and the Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Bill.”

The FATF greylists countries in which money laundering and terrorist financing is out of control or has reached proportions that give it justifiable cause for alarm or concern.

As the report of the State Capture Commission vividly demonstrates, the processes involved in the attempted capture of the state in SA during the Zuma era involved a great deal of money laundering through the banking system with the connivance of banks that ought to know better. The downside of greylisting for SA is that the GDP will take a knock of about 1%, which, given that the increase in the GDP for the year ahead is widely expected to be less than 2%, has dire consequences for the financial well-being of the fiscus.

As the director of the Financial Intelligence Centre of SA has foretold, it is likely, without dramatic interventions, that SA will be greylisted next year.

The recurring theme in the criticisms of SA’s defences against money laundering and terrorist financing is not that the substantive laws in place are the problem. SA has many good substantive laws aimed at countering the type of activities that are involved in money laundering and terrorist financing. 

The lack of proper enforcement is the nub of the problem, not the lack of a legal framework within which to deal with the problems that have attracted the attention of the FAFT and indeed the personnel at the OECD, who are tasked with keeping tabs on the various risks to peace and prosperity that arise when money laundering is the order of the day.

These features have already been drawn to the attention of both the executive and the legislature in the submissions for reform made by Accountability Now in response to an invitation from the Constitutional Review Committee in the National Assembly. The submissions are available for perusal and consideration by any interested parties and will be supplemented when the oral hearing in parliament is set down for hearing by the committee. They are available here

In the discussion of Non Trial Resolution (NTR) of international bribery and corruption claims the following point is made:

“Another important principle that underpins the efficacy of any NTR framework is the oft quoted ‘carrot and stick’ analogy. NTR systems will only be effective in countries which have the capacity and ability to carry out enforcement actions and effectively prosecute wrongdoers. As explained in the OECD Report, “the carrot is only as enticing as the stick is menacing. If a NTR framework is implemented in South Africa, businesses must be alive to real risk of prosecution by the SA National Prosecuting Authority. Business must have an incentive to enter into an NTR. As such, an effective NTR framework goes hand in hand with an effective prosecuting agency. If effective investigation and prosecution is compromised, businesses will have little incentive to settle matters and instead take their chances in fully defending a matter.”

The basic problem in SA is that the “sticks” we have are not menacing at all. The investigation of the type of offence that concerns those tasked with greylisting countries is left to the Hawks. Previously this type of work was done well by the Scorpions. The Scorpions were dissolved when Jacob Zuma came to power. Go figure. The Hawks have never landed a “big fish” in their entire existence.

The prosecution of these offences is the work of the National Prosecuting Authority. While in theory the NPA should operate “without fear, favour, or prejudice”, in truth it is a hollowed out and thoroughly gutted institution. The Zuma era “saboteurs” are still in the NPA, “disappearing” the dockets, suborning the witnesses and generally making sure that no big fish involved in kleptocracy is ever made to face trial for corrupt activities. To date only one rather obscure and pitiful former cabinet minister has been charged. None have been convicted. The NPA itself acknowledges that it has a ten-year backlog of corruption prosecutions. It has no will to take on those still in high places who are suspected of corruption. The Investigating Directorate of the NPA, which has some investigative capacity, is unwilling to investigate the slam dunk case of corruption against Bheki Cele for his involvement in the notorious World Cup police headquarters’ leases. There is simply no capacity to work off the backlog and there never will be if the current structures and operations are persisted in by government.

The underlying pathology is attributable to the lack of political will to get on top of corruption. The lack of resources and capacity in both Hawks and ID is deliberate. When the matter was litigated by Bob Glenister, the government went out of its way to do as little as possible while pretending to comply with the requirements and orders of the courts. While this may have been an understandable response while Zuma was busy with state capture, it is baffling that his anti-corruption successor persists in the incomplete and improper implementation of binding court orders in the Glenister litigation. This omission is actionable at the instance of any public interest litigant concerned to uphold the rule of law.

Relying on OECD research, the Constitutional Court laid down the criteria by which to measure the anti-corruption machinery of state. The Hawks and NPA do not measure up to the standards required, as is shown by their ten-year backlog and lack of success. An entity staffed by properly trained specialists who are adequately independent, properly resourced and secure in their tenure of office is what is required. No such entity exists at present. A blueprint has been suggested to government as long ago as August 2021. The executive is mute and unresponsive. It says no plans to reform the limping criminal justice administration are pending. The NPA has somewhat enigmatically “noted” the suggested new Chapter Nine entity with a mandate to prevent, combat, investigate and prosecute serious corruption. The legislature via the Constitutional Review Committee is at least open to the suggestion made by Accountability Now and wants to consider a comprehensive presentation on the topic.

If he genuinely wishes to avoid greylisting, as he should, the president would do well to demonstrate an appreciation of the fact that the absence of proper enforcement of the laws applicable is at the root of the problems that have caused the FATF to consider greylisting SA.

The best step forward for the president now is to announce an intention to debate the suggestions for reform with a view to creating a new body. A professional, ethical and effective entity which is able to deal with serious corruption economically and efficiently in the manner prescribed, in binding terms, by the highest court in the land is required. This step would accord with the values and principles which are applicable as laid down in section 195 of the Constitution.

Only by demonstrating a firm intention to enforce the law against the money launderers and terrorism financiers – by putting an operational structure in place – can the spectre of greylisting be avoided. The new laws of which the president speaks, provided they are able to pass constitutional muster, will be helpful only if there is specialised personnel available equipped to enforce them. It is plain that currently that is not the case. If the lack of enforcement capacity is not addressed urgently, greylisting will surely follow.

Paul Hoffman SC is a director of Accountability Now

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