Signs of hope as new dawn takes hold
Publish date: 10 January 2019
Issue Number: 642
Diary: Legalbrief Forensic
In just 12 months, many of SA's ailing or crippled state institutions have received a lifeline, thanks to President Cyril Ramaphosa’s promise of a ‘new dawn’. However, Legalbrief reports that the situation was – and still is – so dire that much will depend on whether the momentum continues. Consider this: A year ago, Arthur Fraser’s State Security Agency and Tom Moyane’s SARS were effectively on their knees, the Hawks (and the Crime Intelligence Unit) were in freefall without permanent leaders, and Shaun Abrahams was still steering the NPA towards a cliff. The issue is picked up by Mandy Weiner in a News24 analysis. She notes that while the process of rebuilding has begun, it won't happen overnight. Weiner points to the lack of movement in the most prominent commercial crimes of recent times – the Steinhoff and VBS bank heist cases. ‘There are no more excuses and now is the time that those who have plundered and pillaged must face the law – 2019 must be the year of meting out justice and holding power to account,’ she writes.
Legalbrief unpacks some of the burning issues that are likely to remain in the spotlight throughout 2019: Former President Jacob Zuma is likely to see his reputation unravel further as leading police officials prepare to testify before the State Capture Commission of Inquiry on how he allegedly masterminded the capture of the country’s law enforcement agencies. A City Press report quotes sources as saying that when the Zondo Commission resumes in two weeks, ousted Hawks head Anwa Dramat and former Gauteng Hawks boss Shadrack Sibiya will testify about events leading up to their dismissals in 2015. Together with Independent Police Investigative Directorate (Ipid) head Robert McBride, they will tell the commission’s Judge Raymond Zondo about attempts to capture the SAPS, the Hawks, the NPA and Ipid. The three have had separate meetings with the commission’s investigators. Sources reportedly told City Press that Dramat would testify about how former Police Minister Nathi Nhleko allegedly pushed him out of his job. ‘He will testify about how the rendition case (of five Zimbabwean nationals), which was initiated by crime intelligence, was used as a smokescreen to get rid of himself, Sibiya and former top police officer Leslie Maluleke,’ a source is quoted as saying. ‘He will also tell the commission about the political pressure to drop several high-profile investigations, including one into the arms deal, and how Nhleko was willing to do whatever it took for him (Dramat) to vacate the Hawks’ top job.
The Nugent Commission of Inquiry into Tax Administration and Governance by SARS, besides making wide-ranging recommendations, has also linked Zuma to the destruction of the tax agency, notes Legalbrief. Its recommendations include criminal prosecutions, the setting aside of contracts, the recovery of expenditure and that disgraced former Commissioner Tom Moyane foot his own legal bills, according to a Daily Maverick report. The commission, chaired by retired Judge Robert Nugent, has recommended that the NDPP consider criminal prosecution for the awarding by Moyane of a contract to Bain & Co for the restructuring of SARS and which almost ultimately led to the revenue service’s collapse. Further recommendations are that National Treasury reviews procurement processes where multiple contracts were envisaged for a project by SARS to prevent abuse arising from ‘loss leaders’ at the outset. The commission also recommended that the Large Business Centre, which was disbanded by Moyane, be re-established as well as the Compliance Unit and a high-level Integrity Unit.
Bosasa, which is now known as African Global Operations (AGO), is being investigated by the Hawks for corruption related to prison contracts. The company has also been in the spotlight for its links to politicians, including Zuma. A report on the Fin24 site notes that two security contracts that state-owned airline SA Express had with the facilities management company Bosasa resulted in more than R1m of irregular expenditure. That’s according to Minister of Public Enterprises Pravin Gordhan who was asked whether public enterprises had contracted services from Bosasa over the past 10 years. Plagued by state capture and Ramaphosa’s backtracking on a R500 000 payment – which, it transpired, was a donation made in October 2017 by AGO to his presidential campaign – the ANC plans to be stricter when it comes to those who want to fund the party this election season. ANC head of elections Fikile Mbalula told City Press that Luthuli House had grown ‘sensitive’ to being funded by people with ‘dubious backgrounds and questionable characters’. ‘We are not a rich party, despite the fact that we govern the country and that people think we eat all the tenders. We fundraise like any other party,’ he said.
The noose is tightening around the Iqbal Survé stable following the late 2018 write-off of more than R1bn of an original R850m investment by the Government Employees Pension Fund (GEPF) to Independent Newspapers. The threat to the PIC, which runs the fund, is examined in detail in a lengthy analysis by Dirk de Vos on the Daily Maverick site. He suggests the write-off should be seen as a blessing in disguise as it should now focus the PIC’s attention on its remaining exposure to the stable, which, ‘if there is not urgent remedial action, will result in much bigger losses in the very near future’. De Vos says Ramaphosa’s commission of inquiry into the improprieties at the PIC cannot happen soon enough. Government employees and pensioners are owed an explanation as to how and why their savings have been repeatedly exposed to Survé-linked companies that make no sense whatsoever. The trustees of the GEPF must now address obvious oversights in governance and accountability.
The biggest losses suffered by the GEPF in recent times has been in Steinhoff. Advisory firm PwC, using its forensic accountants to unravel the Steinhoff mess, missed its December deadline to produce its comprehensive report. The report must now be submitted by February. In a Moneyweb analysis, Barbara Curson notes that the investigation is being carried out across different jurisdictions, which adds further layers of complexity resulting from different languages, accounting standards and laws. ‘Sadly, only an overview of the report will be published. The full report will be legally privileged, and is to be used in pending legal proceedings. Successfully investigating a case of white collar crime requires a large team of expert forensic investigators, and can take many years to unravel before it eventually gets to court. Looking back over the years, SA does not have a track record of speedy prosecutions in financial fraud. Steinhoff crashed at the end of 2017. The PwC forensic report can only produce findings, which may be used in any prosecution. We will have to rely on the Hawks to launch an investigation and see what the Financial Sector Conduct Authority discovers in terms of any insider trading. There is currently a vacuum of information. It is highly unlikely that any court dates have been set for the near future, hence, any court resolution is light years away. It is not surprising that Jooste can still smile for the camera.'