THE ZONDO COMMISSION – A helpful summary of the evidence, conclusions and recommendations

THE ZONDO COMMISSION – A helpful summary of the evidence, conclusions and recommendations

WILL THE EVIDENCE, CONCLUSIONS AND RECOMMENDATIONS OF THE ZONDO COMMISSION HELP US BE LESS VULNERABLE IN FUTURE?

“Through my eyes and within the constraints of my understanding, I am convinced that the Zondo Commission has been an incredible gift to our nation going forward.  Listening to the hearings and reading Part one of the report of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption, and Fraud in the Public Sector has been a privilege and this article is an attempt at the impossible, a brief summary!  It is especially for those whose lives don’t leave as much room for ‘reading time’ as they would like.

In gaining some understanding of the weakness within the public sector that made and makes us vulnerable to state capture, corruption and fraud we will hopefully be better equipped to do our part in building a culture within society that renders us less vulnerable to our human failings. I hope this glimpse into what happened, why and how it happened and the recommended government response will stir in us, a hope that inspires us to, pick ourselves up, dust ourselves off and move forward together into a ‘better’, even if ‘less than perfect’ future! 

Oh, and just in case we are tempted to think this is a problem exclusive to South Africa, the words of Landa Cope (God and Political Justice) come to mind “where corruption can take place there are always those who will be corrupt.”  Our job is not to despair or write ourselves off, but to guard our hearts, renew our minds and to do what we can to make it more difficult for corruption to take place and more difficult for those who try, to get away with it.

The report itself is attached for those who want to go to the source and get the original version!!”

Cheryllyn Dudley, (former MP 1999 to 2019, author and Dia LOGOS political analyst).

INTRODUCTION

In 2016 when the Public Protector, Adv Madonsela, conducted what has been referred to as ‘Phase 1’ of the investigation into allegations of state capture she felt that ‘Phase 2’ required a judicial Commission of Inquiry to focus on whether President Zuma improperly and in violation of the Executive Ethics Code allowed members of the Gupta family and his son, to:

  • be involved in the process of removal and appointment of the Minister of Finance in December 2015;
  • be involved in the process of removal and appointing of various members of the Cabinet;
  • be involved in the process of appointing members of Boards of Directors of SOEs.
  • Or whether any state functionary in any organ of state or other person acted unlawfully, improperly or corruptly in connection with these issues.

In 2018 when President Zuma established the Commission, the terms of reference had been widened and the Commission was required to investigate allegations of corruption and fraud in every municipality, every provincial government department, every national government department and in every state owned entity. Such an investigation – Chairperson of the Commission, Acting Chief Justice Zondo noted – would take more than ten years to complete. Many suspected that President Zuma was well aware that 10 years was not only an underestimation of the time it would take but was relying on the broad mandate to successfully take the focus off the original purpose of the commission.  That of holding the President accountable.

The first hearing of the Commission took place on 20 August 2018 and evidence was completed on 12 August 2021, after President Ramaphosa had testified for the second time.

The evidence led before the Commission within this timeframe mainly included allegations of state capture, corruption, fraud, and irregularities relating to tenders in:

South African Airports Company, South African Airways Technical and South African Express; Bosasa; Denel; Eskom; Estina; PRASA; SABC; SARS; State Security Agency; and Transnet.

During the more than 400 hearing days of the Commission, more than 300 witnesses gave evidence.

Part 1 of the Commission’s Report which was handed to President Ramaphosa on 4 January 2022 (Part 2, is expected by the end of January 2022 and Part 3, by the end of February 2022) points out that “a fundamental question that the Commission is required to answer is whether the evidence led before the Commission has established state capture”.  While a summary of the Report as a whole will be included in Part 3, Part 1 leaves little doubt that the Commission has concluded, that state capture has been established.

Motivated by a desire to understand the weakness within the public sector that makes it vulnerable to state capture, corruption and fraud, the investigation endeavoured to uncover not only what had happened but also why and how it happened.

PART 1, VOLUME 1: SOUTH AFRICAN AIRWAYS AND ASSOCIATED COMPANIES 

The report states that, “The appointment of individuals to boards of SOEs must be justifiable based on their skills expertise, experience and knowledge. Functionaries within SOEs must be held to the highest standards of accountability because they use public funds to manage the businesses they oversee. Those responsible for governance at SAA, SAAT and SA Express displayed a wanton disregard for these standards. Rather than acting in the entities’ best interests, they were motivated by their own personal interest. This should never be allowed to occur again.”  Evidence showed Ms Myeni remained as head of the SAA Board at the discretion of President Zuma despite the damage being done to SAA.

The Commission has recommended that:

  • further investigation and possible charges of corruption, be laid against all the individuals involved in the scheme to secure millions of Rands for the personal benefit of Ms Myeni and the Jacob Zuma Foundation. (a criminal complaint has already been laid against Ms Myeni);
  • the National Prosecuting Authority(NPA) considers, prosecuting Ms Myeni for fraud;
  • Parliament consider making changes to legislation in order to permit Board members to be declared delinquent directors under the Companies Act where breaches of duty are uncovered after more than two years. (Despite Ms Myeni and Ms Kwinana’s wanton disregard for the best interests of SAA they cannot presently be declared delinquent as they both ceased being directors of SAA more than 24 months ago).

Having declared the SAA ‘5 year components tender’ to AAR and JM Aviation unlawful, irregular and unfair, the Commission has recommended that:

  • law enforcement agencies further investigate the role of Swissport and named individuals in the conclusion of the contract’;
  • SARS consider the non payment of VAT on the R28.5 million JM Aviation received from Swissport prior to the contract being concluded with SAA and take relevant action.
  • the NPA consider prosecuting the JM Aviation directors, the members of the Board of SAAT at the time, including Ms Y Kwinana, and Adv Nontsasa Memela for corruption or related crimes;
  • the NPA consider engaging with the United States Department of Justice regarding the role played by AAR in this scheme;
  • the NPA considers further investigation and prosecution of Mr Ndzeku, Ms Memela, and Ms Mbanjwa, who conspired to hide the true nature of the payments made by JM Aviation to Adv Nontsasa Memela;
  • the Legal Practice Council investigate the conduct of Ms Memela (an advocate) and Ms Mbanjwa, (an attorney) with a view to removing them from the roll of attorneys and the roll of advocates respectively.

With regard to the involvement of the State Security Agency in security vetting it is recommended that:

  • the President notes the involvement and
  • takes steps to ensure that services of the State Security Agency are not abused to serve the interests or agenda of certain individuals.

In connection with the ACSA interest swap contracts with Nedbank and Standard Bank, procured through the corrupt involvement of Regiments Capital, Mr Ramosebudi, Mr Wood and Mr Niven Pillay. It is recommended that:

  • ACSA take steps to recover the amounts paid to Regiments Capital under the interest swap contracts and any additional losses suffered by ACSA on those contracts;
  • law enforcement agencies investigate these contracts with a view to the NPA prosecuting Mr Ramosebudi, Mr Wood, Mr Niven Pillay and Regiments Capital on charges under the Prevention and Combatting of Corrupt Activities Act;
  • the NPA Asset Forfeiture Unit recover the amounts paid to Mr Ramosebudi by Regiments Capital under the Prevention of Organised Crime Act;
  • the Asset Forfeiture Unit recovers the amounts paid to Regiments Capital by Nedbank and Standard Bank;
  • law enforcement agencies investigate the role of Mr Brickman, Mr Visnenza and Nedbank in relation to these contracts with a view to the National Prosecuting Authority prosecuting Mr Brickman, Mr Visnenza and / or Nedbank on charges under the Prevention and Combatting of Corrupt Activities Act;
  • the NPA Asset Forfeiture Unit recovers Nedbank’s profits under the interest swap contracts under the Prevention of Organised Crime Act, unless Nedbank has a valid defence to such recovery claims.

Evidence points to the SAA Working Capital tender awarded to the McKinsey and Regiments Capital Consortium being procured through the corrupt involvement of Regiments Capital, Mr Ramosebudi, Mr Wood and possibly also Mr Indheran Pillay and Mr Tewedros Gebreselasie.  There is however no evidence that McKinsey was aware of any of the corrupt conduct linked to the award of Bid No RFP 085/13 and McKinsey has already repaid in full, the amount that it received from SAA in connection with its appointment under this tender. It is recommended that law enforcement agencies investigate the award of Bid No RFP 085/13 with a view to:

  • the NPA prosecuting Mr Ramosebudi, Mr Wood and Regiments Capital on charges under the Prevention and Combatting of Corrupt Activities Act;
  • the NPA prosecuting Mr Indheran Pillay and Mr Tewedros Gebreselasie on charges under the Prevention and Combatting of Corrupt Activities Act;
  • the NPA Asset Forfeiture recovering from Mr Ramosebudi under the Prevention of Organised Crime Act, the amount of R375 606 paid to Riskmaths Solutions (Pty) Ltd by Regiments Capital in November 2013; and
  • the NPA Asset Forfeiture Unit recovering under the Prevention of Organised Crime Act, the amount of R6 241 500 paid to Regiments Capital by McKinsey in relation to the SAA Working Capital contract.

PRECCA REPORTING OBLIGATIONS

In order for the Prevention and Combating of Corrupt Activities Act 12 of 2004 (PRECCA) to have any prospect of assisting in the fight against corruption, those who were duty-bound to report corruption but failed to do so, must also be held accountable.  PRECCA makes it an offence for anyone who holds a position of authority within an entity and who knows or ought reasonably to have known that an act of corruption has been perpetrated, to fail to report the conduct. The Commission therefore recommends that:

  • law enforcement agencies including the NPA should give further consideration to Ms Nhantsi In her position as interim CFO, (who ought to have reported the BNP transaction and her suspicions concerning the motives of Ms Myeni and Mr Masotsha Mngadi), with a view to her possible prosecution.

AUDITORS

The Commission believes that the answers Ms Kwinana gave to certain questions during her evidence revealed she either has no clue about some of the basic obligations that she should know as a Charted Accountant or she knew those obligations but dishonestly pretended that she did not know them – either explanation may mean she is not fit and proper to practise the profession of a Chartered Accountant. The Commission recommends:

  • the Auditor General’s office be further capacitated so that it can audit all public entities;
  • private firms must ONLY be appointed to audit SOEs if they can demonstrate that they have the requisite skills and understanding of their obligations to the public at large, have sufficient appreciation that, not only are the financial statements of cardinal importance, but also the entity’s PFMA obligations are of great significance;
  • the South African Institute of Charted Accountants investigate whether Ms Kwinana has the requisite knowledge and appreciation of her obligations as a Chartered Accountant and whether she is suitable to continue to practise the profession of a Chartered Accountant;
  • Ms Kwinana’s auditing firm’s tax returns should also be investigated by SARS because there may have been a significant understatement of revenue (to the value of approximately R40 million) in the 2016 financial year.

SA EXPRESS

The Commission’s investigations into SA Express’s dealings with the North West Department of Transport has revealed an elaborate scheme of corruption. The Commission recommends that:

  • all government and state officials, as well as private individuals who were involved in this looting scheme, should be brought to justice (investigations are currently underway, the case has been open since 2016);
  • the investigation be concluded speedily.

MONEY LAUNDERING

The Commission recommends that:

  • further investigation and serious consideration be given by the NPA to charging Mr Natasen with money laundering and the use of the proceeds of crime;
  • if further investigation reveals possible contravention of the law, his conduct be reported to the SAICA;
  • SARS should investigate the numerous respects in which Neo Solutions appears not to have accurately and fairly reported its income to the authorities;
  • the Reserve Bank investigate whether Ms Viljoen’s AMFS operation was, a cash in transit business that failed to comply with its FICA obligations, or was operating as a bank without any lawful licence to do so;
  • the current SAPS investigation should be extended to interrogate the role of AMFS in more detail (the question that needs to be answered is whether AMFS was providing general money laundering facilities to those who wished to have their proceeds converted to cash without the necessary checks required from the formal banking system).

ASSET FORFETURE

Where prosecutions have been recommended in this section, it is also recommended that the NPA Asset Forfeiture Unit takes steps to recover under POCA any amounts that constitute the proceeds of unlawful activities or the instrumentality of an offence.

PART 1: VOLUME 2

THE NEW AGE (TNA) AND ITS DEALINGS WITH GOVERNMENT DEPARTMENTS AND STATE OWNED ENTITIES

INTRODUCTION

TNA is, in the view of the Commission, a prime example of the way in which state capture took hold in South Africa and shows the extent of the Guptas’ influence in the public sector.  The Commission’s investigations have revealed how key role players enabled state capture to take place, despite the existence of institutions designed to protect our democracy, including Parliament.

Those within the affected entities who made it possible fall into two categories.  Officials who were compliant and followed Gupta orders without question or hesitation have been dubbed “facilitators”. They used threats and intimidation but were also able to rely on a culture of silence and compliance.  A culture which in my mind was entrenched in the Mbeki era.  The subordinates to the “facilitators” who did not stand up to their superiors or speak out when there was evidence of corruption in their organisations have been dubbed the “followers”.  There is no doubt that without both the facilitators and the ‘followers actions’ or lack of actions, state capture would not have been able to flourish as it did. Sadly, while some “followers” did attempt to raise red flags, in most cases, they eventually compromised and helped to cover up or legitimise public spending on TNA.

What is clear from the work of the Commission, is that in order to divert public funds for private benefit, it was necessary to ensure people who would comply with orders, were holding office at all levels of the relevant institutions. Benefits like promotion, status and money were likely motivating factors but what sticks in my mind is the stigma of ‘being a traitor to the struggle if you questioned those in authority’ (prevalent in the Mbeki era), which held a lot of sway.

There were, of course some public office bearers who were unwilling to comply. These have been dubbed as “resistors”. And “resistors” were noticeably removed from their positions and replaced, with “facilitators”. The fear of being a ‘marked’ man or woman in the work place when you have a family and extended family relying on your earnings encourages people to want to hear, see and say nothing.

A CALCULATED STRATEGY

The TNA investigation shows that state capture thrived despite the fact that the necessary laws to prevent it were in place. The PFMA clearly and definitively made every one of the TNA contracts unlawful yet the people given power and authority in the SOEs openly ignored their legal obligations. The Board members and executives who supported and facilitated the conclusion of these contracts are very likely guilty of financial misconduct which carries a sentence, on conviction, of either a fine or a period of imprisonment not exceeding five years.

The Commission recommends that:

  • law enforcement agencies investigate a possible crime of corruption against Mr Tony Gupta and prosecution if warranted;
  • 2015 Board members be investigated further and charges brought where necessary;
  • law enforcement agencies further investigate the role of Mr Brian Molefe and Mr Collin Matjila in the conclusion of specific contracts and their misrepresentation, with a view to possible prosecution by the NPA for fraud and/or contravention of the PFMA.

PART 1: VOLUME 3

SOUTH AFRICAN REVENUE SERVICE

INTRODUCTION

The South African Revenue Service (SARS), is mandated to collect revenue and ensure compliance with tax and customs legislation.

Although the Public Protector’s State of Capture report did not mention SARS, the SARS evidence is central to the mandate of the Commission.

SARS has featured prominently in allegations of state capture and evidence has revealed collusion between SARS, the Executive (including President Zuma) and the management consultancy Bain and Company, South Africa; a planned and co-ordinated agenda to seize and restructure SARS; the purging of competent top officials; the strategic positioning of compliant individuals; the restructuring and deliberate weakening of institutional functions; a climate of fear and bullying, and a pattern of procurement corruption. 

A MASSIVE FAILURE OF INTEGRITY & GOVERNANCE

The report refers to “a massive failure of integrity and governance at SARS, demonstrated by what SARS once was and what it has become…”. SARS’ investigatory and enforcement capacity presented a challenge to those involved in organised crime, and was, therefore, targeted.  Sadly the media fell into the trap of perpetuating false narratives which discredited ‘targeted’ people, providing grounds for their removal. This included very senior people who had served the institution well for years.

Under the pretext of the existence of an allegedly unlawful (rogue) unit. Some of SARS’s most important units, set up to ensure tax compliance, were disbanded or restructured so that important projects were put on hold or abandoned, weakening the revenue collection function.  The vast amount of evidence before the Commission, points to the organization having been deliberately captured with President Zuma and Mr Moyane playing critical roles in dismantling it.

The Commission has recommended that:

  • all Bain’s contracts with state departments and organs of state be re-examined for compliance with the relevant statutory and constitutional provisions;
  • law enforcement agencies conduct investigations with a view to enabling the NPA to decide whether or not to initiate prosecutions in connection with the award of the Bain & Co contracts;
  • the SARS Act be amended to provide for an open, transparent and competitive process for the appointment of the Commissioner of SARS;
  • Mr T Moyane be charged with perjury in relation to his false evidence to Parliament.

PART 1: VOLUME 4

 PUBLIC PROCUREMENT IN SOUTH AFRICA

INTRODUCTION

The government is the single biggest procurer of goods and services in the country and the public procurement system must operate in a way which advances the national interest, is fair, equitable, transparent, competitive and cost effective.  It must also address the exclusions and the discrimination of the past.

One of the reasons the Commission was established was to enquire into the working of public procurement in South Africa following widespread concerns that the system was rife with corruption.  A public procurement system will be open to abuse unless there is good governance and good management enforced through effective monitoring and oversight measures which ensure accountability.

In view of evidence of the system being abused the Commission recommends the following:

  • that Government, in consultation with the business sector prepare and publish a National Charter against corruption in public procurement;
  • that the Charter include a Code of conduct setting out the ethical standards which apply in the procurement of goods and services for the public;
  • the Charter be signed by or on behalf of: the President and the Cabinet, the Provincial Premiers and members of the Provincial Cabinets, local authorities, all State-Owned enterprises, political parties represented in Parliament, constitutional entities, representatives of the business sector, listed public companies, Trade Unions and Anti-corruption bodies in civil society;
  • every procurement officer in the public service, on assuming duty, be required to sign a commitment to observe and uphold the terms of the National Charter;
  • every natural or juristic person tendering or contracting to supply goods or services by way of public procurement must sign a commitment to uphold and to adhere to the terms of the Charter and its Code of Conduct;
  • the content of the National Charter and the Code of Conduct should be widely publicised;
  • the National Charter and Code of Conduct be given legal status and effect by an Act of Parliament;
  • the establishment of an independent Agency against corruption in public procurement;
  • that Government introduce legislation for the establishment of an independent Public Procurement Anti-Corruption Agency (PPACA);
  • that such legislation constitutes the Agency as an independent and impartial body that must perform its functions without fear, favour or prejudice.
  • that Government introduce legislation or amend existing legislation to ensure that any person disclosing information to reveal corruption, fraud or undue influence in public procurement activity be accorded the protections stipulated in the United Nations Convention Against Corruption;
  • that government introduce legislation for the introduction of ‘deferred prosecution agreements’ to allow for a company to self-report and fully co-operate, pay a stipulated fine or be subject to other remedial action, under terms and conditions sanctioned by the Tribunal of the Agency;
  • that consideration is given to enacting legislation that will establish a professional body to which all officials who work in the area of public procurement should belong;
  • that such professional body fix the qualifications and the necessary training and experience necessary for membership of the profession;
  • that the Tribunal of the Agency act as the disciplinary committee of the profession with power to strike a member from the Roll or to impose such other disciplinary sanction as the case may require;
  • that the Prevention and Combatting of Corrupt Activities Act (“PRECCA”) be amended to combat bribery and create an offence where any person in the private sector or any incorporated state-owned entity gives, agrees or offers to give any gratification prohibited, to another person intending to obtain or retain business for that person or to obtain or retain an advantage in the conduct of business for the other. Except where adequate procedures exist;
  • that the Political Party Funding Act be amended to criminalise the making of donations to political parties in the expectation of or with a view to the grant of procurement tenders or contracts as a reward for or in the recognition of such grants having been made;
  • that consideration be given to the enactment of legislation for: the greater centralisation of public procurement in certain aspects; the better harmonisation of the legislation applying to public procurement; the better guidance of public procurement officials in applying the legislation governing public procurement; the better training of public procurement officials; the discontinuance of any deviation based on the concept of a sole source service provider.

FROM A CHRISTIAN PERSPECTIVE

It’s important to note that corruption is not a “South African” condition but a “human” condition.  It relates to sinful hearts and is revealed through sinful actions.  It is a universal disease with which every society has struggled throughout human history.  And even though South African has some deep-rooted challenges related to corruption, the solution is as much spiritual as it is social and political.

When living in a society where corruption has ingrained itself in the culture, like South Africa, the Christian should not only condemn the practice but also individually reflect God’s holiness through his or her honest lifestyle.  We must also highlight the value of work as the only valid means to gain income, and as one of the best remedies against corruption and poverty. Corruption is more than a personal moral issue; it is a national ill that cries out to be cured.

As Christians, we long for a society free from corruption. We must unite to fight all forms of corruption, whether it be the small bribe paid for a traffic fine or the more serious and damaging state capture.  We must unite proactively by proclaiming the gospel of Christ and displaying a pursuit for holiness and honesty..

 

%d bloggers like this: