The Presidency has delivered some good news, and some not so good news, on the state capture front, to end off a long and difficult year of responding to corruption. What is clear in a progress report, released in the last week of November, on the implementation of the Zondo report recommendations is that more work still needs to be done to restore institutions that were harmed, and to recover monies lost.
Some R5.4-billion in assets has been recovered, including R2.9-billion in cash, out of the R57-billion estimated to have been stolen during the state capture period investigated by the Zondo commission.
“The work to address the recommendations with regard to the recovery of monies is continuing. Additional steps were taken in June with the establishment of a joint specialised team, with extensive involvement of the Financial Intelligence Centre, to focus solely on the enablers of state capture as identified in the recommendations and which enablers directly and/or indirectly assisted the Gupta Enterprise,” the report notes.
“This specialist enablers team operates under the direction of the head of the Investigating Directorate (ID) and comprises permanent members of the Integrated Task Force.”
Prasa investigation or not?
Among the less surprising updates is that the jury is still out on whether a special commission will be established to look deeper at state capture allegations relating to the Passenger Rail Agency of South Africa (Prasa). The matter will be decided by the outcome of investigations currently underway by the Directorate of Priority Crimes Investigations (DPCI, colloquially referred to as the Hawks) and the Special Investigating Unit (SIU). Chief Justice Raymond Zondo, as chairperson of the state capture commission, recommended that Prasa receive special attention, and an inquiry into its affairs be established, owing to the alleged procurement irregularities relating to the multi-billion-rand Swifambo and Siyangena contracts.
“A decision on the establishment of a commission of inquiry into Prasa will be held in abeyance until the completion of the investigations currently underway by the DPCI and SIU.”
Zondo heard extensive evidence relating to Prasa during the four-year inquiry, but noted in his final report that further digging into the parastatal’s affairs under former GCEO Lucky Montana should be considered. The bulk of Zondo’s report findings on Prasa related to Swifambo and Siyangena, the contracts of both of which are the subject of court proceedings, with applications from both Prasa and the respective companies.
Legislative review
Nine pieces of legislation underwent varying degrees of review during the period between October 2022 when President Cyril Ramaphosa first announced his implementation plan, and September 2023. Legislative reforms in the areas of public procurement; national intelligence; prevention, investigation and prosecution of corruption; money laundering and illicit financial flows; electoral reform; and measures aimed at professionalising the public service are recorded in the report.
Corruption Watch (CW) made submissions to several of the laws under review during 2023, including the review of the Protected Disclosures Act; the Public Procurement Bill; the Companies Act Amendment Bill; the General Laws Amendment Act; and the NPA Amendment Act. For more information on these and other submissions, visit the Legislation and Submissions page on our website.
State security clampdown
Another interesting area in which some tasks were recorded as “completed”, is in the tightening of screws within the State Security Agency’s (SSA) operations. Evidence heard before the commission relating to the intelligence sector detailed some concerning trends that pointed to derelict monitoring and accountability measures of covert operations within the SSA. The commission found that the capture of the SSA was integral to the broader state capture project.
It was the Principal Agent Network (PAN) in particular, linked to both former director-general Arthur Fraser and deputy director-general Thulani Dlomo, that Zondo found to have been at the centre of abuse of resources of the agency. The PAN was characterised in evidence as a rogue in-house function that established parallel structures to those legitimised by the establishment of the SSA in 2009. Operations carried out under the PAN allegedly saw millions of rands being used in secret operations, yet not being accounted for by agents. Former ministers David Mahlobo and Siyabonga Cwele, who oversaw state security at different periods, were said to have been involved in operational matters.
The measures that have since been taken to remedy internal systems appear to be receiving support from a multitude of stakeholders: “National Treasury is working with the Auditor-General and SSA on tightening financial controls, especially with respect to cash, and improving accountability through a multi-pronged audit process (involving the AGSA, IGI and SSA Internal audit).”
Zondo questioned why the AGSA could not perform audits across all the SSA’s functions, and why the Inspector-General of Intelligence was often refused support by Parliament, despite his function being to provide regulatory services to the SSA.
“The SSA has finalised and is implementing new gun control directives for the agency in line with applicable laws,” the report says, regarding the tighter monitoring of the SSA’s gun control function, another area of its work that came under scrutiny by Zondo. Other tasks relating to strategies around strategic appointments and sharing of critical information are still in the “in progress” phase.
Consequences for those implicated
Finally, there are several updates on sanctions delivered on individuals and companies that were implicated in the Zondo report. “Cases for delinquency proceedings against 73 former directors of state-owned enterprises implicated in evidence presented to the State Capture Commission have been compiled by the Department of Public Enterprises and are expected to be concluded by December 2023.”
One such individual is the former board member of South African Airways and board chairperson of South African Airways Technical, Yakhe Kwinana, who has been fined R6.1-million and barred from acting as a chartered accountant by the South African Institute of Chartered Accountants.
“The CIPC is currently processing complaints concerning 13 former directors of Eskom. Cases against the remaining directors are planned to be registered with CIPC by 31 December 2023.”
