Take countering corruption seriously in order to get off the FATF Grey list

Paul Hoffman says none of the existing or planned entities, the ID, IDAC and the Hawks in particular, are properly independent

Between December 2007, when Jacob Zuma was elected to lead the ANC, and February 2018, when he was dumped by the avowedly anti-corruption/pro-renewal Ramaphosa led ANC, there was little hope that government would honour its anti-corruption obligations. These pre-requisites are both international treaty obligations and its duties in regard to the implementation of the decisions of the Constitutional Court in the Glenister litigation. Both require an independent anti-corruption entity duly equipped, structured and empowered to stand up to the ravages of rampant serious corruption in SA free of the choke-hold that the executive clings to so tenaciously.

In the Zuma era, what his successor has dubbed “the nine wasted years” with scant regard both to the calendar dates mentioned above and the ongoing looting now, the state capture project he entertained, with the help of cronies in the business sector and the broader public administration, held sway. It is estimated that more than R1,5 trillion was lost during the state capture feeding frenzy and to that total the billions lost to covidpreneurism in the post-Zuma period should be added.

The sheer numbers, the recommendations of the Zondo and other commissions of inquiry, and the current financial status of the country all point to a slide toward failed statehood that needs to be addressed urgently. Already strategic reserves are being tapped just to keep going.

In February 2023 the Financial Action Task Force (FATF) placed SA on its grey list in the company of countries with which South Africans would prefer not to be associated such as Syria and Yemen. Remedial measures that are effective are required if SA is to be restored reputationally by removal from the grey list. It does not help that SA’s worst score ever on the Transparency International Corruption Perception Index was achieved in 2024.

Work has been done to get SA off the grey list, more work is required to achieve this worthy goal. At present the FAFT remains unsatisfied because SA must still show it can implement a modern and comprehensive strategy to counter the financing of terrorism.

SA must also do more to curb money laundering and show it can investigate and prosecute complex financial crimes. The grey list is an index of  countries that are not fully compliant with international anti-money laundering and terrorist financing standards. SA was added to the list at the start of 2023, putting the country in the same category as worn-torn states like Syria and Yemen. Paris-based FATF acts as a watchdog to set global standards to combat money laundering and terrorist financing. While few believed SA would be removed from the grey list at the FAFT's plenary meeting in Paris last week, analysts were still keen to hear if the task force believed the country was addressing the identified gaps effectively.

In a statement on Friday, the FATF identified key ‘strategic deficiencies’ that it said SA still had to work on. These include:

* Implementation of ‘a comprehensive national counter financing of terrorism strategy’.

* Sending more mutual legal assistance requests to foreign countries.

* Better supervision of casinos, real estate agents and accountants.

* Making sure police can quickly find out who the beneficial owners of companies are.

* Showing the country can investigate and successfully prosecute people accused of financial crimes and terrorist financing.

*  Confiscating the proceeds of financial crimes.

* Becoming better at using targeted economic sanctions.

The common thread running through most of these outstanding requirements is the capacity of the state to bring to bear the type of expertise that was within its remit before the Zuma era but has not been seen since, not even since Ramaphosa succeeded Zuma as president of the ANC and SA.

The dysfunction in the system of the criminal justice administration is attributable to the closure of the crack Scorpions unit the minute Zuma swept to power. While a rearguard action which included litigation, in which the constitutionality and the rationality of the scheme to replace the investigative functions of the Scorpions with a mere police unit (now known as the Hawks) was unsuccessfully impugned, held up the closure for two years, the Zuma tsunami swept all before it. So named by Zweli Vavi, the trade unionist who has lived to regret his and Cosatu’s support for Zuma, the tsumani now finds expression through the doings of the new MK party.

The underlying reason for the grey listing of SA is the unwillingness of the ideologues within the governing alliance to relinquish executive control of the anti-corruption entity. All the opposition parties of any moment in parliament are against the continuation of the current system. Those in the MPC favour the establishment of a Chapter Nine entity that will both investigate and prosecute serious corruption. It will naturally be equipped to attend to all of the points that still trouble the FATF. It will do so with the expertise of specialised knowledge, free of the strictures of executive influence and interference. The EFF favours the conversion of the National Prosecuting Authority (NPA) into a Chapter Nine body, also for the purpose of escaping the choke hold of the executive that has been in place since the dawn of democracy.

The current system is not acceptable to the FAFT because independent action by the anti-corruption entity is impossible to achieve. There is unanimity that the Hawks have not been a success in countering serious corruption. The ANC favours the transfer of investigative functions to the NPA. The trouble with this stance is that the minister of justice has “final responsibility over the NPA. He has to concur in all prosecution policy formulated by the leadership of the NPA and his director general is the accounting officer of the NPA which is run as a programme within the department of justice. This configuration suits the tenets of the national democratic revolution which informs all policy making by the ANC. Hegemonic control of all levers of power in society obviously includes control of the anti-corruption entity.

The Ramaphosa administration has attempted to paint a little lipstick on the pig. At first, in 2019, it created, via presidential proclamation and Investigating Directorate (ID) within the NPA with a view to transferring investigative functions away from the Hawks. This system has not worked well and accordingly, adjustments are overdue. Now, the ANC approach is to tinker with the ID by turning it into the Investigating Directorate Against Corruption (IDAC) a body that is indistinguishable from the Scorpions of old and just as vulnerable to summary closure as they turned out to be.

The trouble with the ANC’s approach is that it ignores the obligations of government in respect of treaty obligations and also ignores the binding nature of the criteria for the anti-corruption entity that were laid down in the Glenister litigation as long ago as 2011.

These flaws have been pointed out to parliament in the course of its processing of the IDAC bill and to the president in correspondence with Accountability Now.

The Hawks will not be able, while they remain part of the police, to acquit themselves efficiently and effectively as the slayers of the seriously corrupt. Without a successful investigation a successful prosecution cannot follow. The NPA has been gutted by state capture. The institution is infested with what its own leadership call “saboteurs” who see to it that impunity is still in place for the well-connected who are involved in kleptocracy, state capture and tenderpreneurism in all its various forms. It will take many years to rid the NPA of its saboteurs. These are years SA does not have available given the downside of remaining on the FAFT grey list.

The binding Glenister decisions of the Constitutional Court require of government that it establish a single specialised body with trained operatives who enjoy independence, guaranteed resources and secure tenure of office. These characteristics of effective and efficient corruption busters have become known as the stirs criteria. They are not in place and have not been at any time since the court so ruled. On the watch of Jacob Zuma this was understandable. After all, closing down the Scorpions was rapidly achieved in order to enable the state capture project that flourished during his two terms in the presidency. The government’s plans in relation to IDAC are not constitutionally compliant. .

In recent correspondence with the presidency the following issues have been raised by Accountability Now:

“The reference by the president to the independence of the existing and planned anti-corruption machinery in his SONA reply yesterday requires scrutiny because, inter alia:

1. The NPA is firmly under the final responsibility of the minister of justice who must concur in all prosecution policies; his DG is the accounting officer of the NPA, and it is operated as a programme within the ministry of justice. [C 179 refers]

2.  Control of the police service is dealt with in C 207 which envisages executive control via the president, his appointee the national commissioner of police and his minister of police.

3.  The SIU and FIC are not part of the criminal justice system. The SIU can only operate when directed to do so by a presidential proclamation and the collection of financial intelligence does not directly result in the incarceration of the corrupt or in the recovery of their loot. An independent entity is legally required for this important work.

4. The IDAC bill currently before parliament does not properly address the need for compliance with the independence requirement as spelt out in Article 6 of UNCAC and in  the Glenister litigation.

In short, none of the existing or planned entities, the ID, IDAC and the Hawks in particular, are independent due to the operational and structural constraints listed in the four numbered points above.

Chief Justice Mogoeng spurned the multi-agency approach in his majority judgment in Glenister Three.  He held:

“We are in one accord that SA needs an agency dedicated to the containment and eventual eradication of the scourge of corruption. We also agree that that entity must enjoy adequate structural and operational independence to deliver effectively and efficiently on its core mandate.”

None of the post Zuma era reforms properly address the issues I have raised in this correspondence; SA remains bereft of an entity able to counter corruption. What is clear from the reports of the Zondo and other recent Commissions of Inquiry is that serious corruption in all its manifestations continues in SA due to the inability of existing (and planned) structures to deliver effectively and efficiently. Hence the success of state capture. The executive persists in the multi-agency approach despite being bound by the findings of the courts.”

The presidency, and indeed NACAC too, have yet to answer the central question raised by Accountability Now in the said correspondence. If an answer is forthcoming it will be given publicity.

The question is:

“Mr President, when is your government going to take seriously its treaty obligations under Article 6(2) of the UN Convention Against Corruption, and also its duties in terms of the binding joint judgment against it in the Glenister litigation, by establishing the independent entity they both require for countering corruption in SA effectively and efficiently?”

Article 6(2) of UNCAC reads as follows:

“2. Each State Party shall grant the body or bodies referred to in paragraph 1 of this article the necessary independence, in accordance with the fundamental principles of its legal system, to enable the body or bodies to carry out its or their functions effectively and free from any undue influence. The necessary material resources and specialized staff, as well as the training that such staff may require to carry out their functions, should be provided.”

SA will remain on the FATF grey list until such time as the FATF is satisfied that SA has the capacity to address the issues listed in the bullet points set out above. The NPA, with or without IDAC, is not equipped, neither operationally nor structurally, with the stirs criteria necessary to enable it to acquit itself of the functions desired by the FATF in those points.

The overriding question is whether or not the ANC led government will be able to see that this proposition is valid and then adjust its currently unconstitutional position accordingly.

Paul Hoffman SC is a director of Accountability Now. He was lead counsel in the Glenister litigation.