Did U.S. Meddle with Zuma Corruption Investigation? There’s a new Sheriff in Town

Ex-Public Protector Criticised for Accepting American & German Funds in Effort to Stamp out Government Fraud

Ms. Thuli Madonsela, her immediate predecessor, has denied the claims: “It’s a lie that we used consultants. It’s a blatant lie that we used USAID money, ever.”  The American government, however, acknowledged quite freely its financial support of the Public Protector’s work.  In the USAID’s own words (PDF):

USAID support was designed in collaboration with GIZ, the Department of Justice, and the Public Protector of South Africa (PPSA), to provide technical assistance to specific areas of the PPSA’s five-year strategic plan, and, through it, assistance to the African Ombudsman and Mediator’s Association (AOMA). The assistance was designed to build the capacity of the PPSA to use its own resources more effectively as it faces the challenges associated with an increase in the number and complexity of complaints investigated by the office. It supports the PPSA with training needs for investigators, specifically in investigation skills, anticorruption and fraud, alternative dispute resolution and report writing, all of which will increase their effectiveness and help to standardize practices across the PPSA. The PPSA has also highlighted a need for training in human resources, and also, assistance with outreach activities to reach rural and marginalized people will be supported to enhance accessibility. Assistance to the AOMA would be beneficial to the stature and respect accorded to the office and will contribute to strengthening good governance and democratic principles around the continent.

Andreas Stargard, an attorney with Pr1merio Africa advisors, points out the glaring questions that arise from the facts known thus far:

The independence of the OPP is at the heart of the agency’s mission.  Foreign funding can be quite innocuous, or it can indeed present a thinly disguised opportunity for another nation to meddle in domestic affairs.

Here, the discrepancy between Ms. Madonsela’s denial and the official USAID release is a bit hard to swallow.  Apparently, PriceWaterhouseCoopers were retained by the Office to help compile the Report on President Zuma’s entanglement with the Gupta family within the narrow 30-day window of time that was available to the Public Protector.  It is not clear to us whether U.S. funding was actually used, but there are good arguments on both sides.

Even more interestingly, the $500,000 total in foreign funding claimed by the media needs to be unpacked in greater detail: the half-million dollar amount was “identified” by USAID in 2015 “in reprogrammed funding to commit to democracy and governance programming.”  Yet, it was (1) made jointly with the German government‘s equivalent of the USAID (GIZ); (2) committed at only the 50% level until now (the final $250,000 tranche was to follow, supposedly, in “mid-2017”); and (3) signed merely on August 19, 2016, purportedly after “several months of program design involving all project stakeholders.”

The new Sheriff in town

The new Sheriff in town

A U.S. embassy spokesperson was quoted by media to say that the money thus far donated via the GIZ collaboration had been widely discussed within government circles.  The former Public Protector’s detractors, however, claim that the U.S.-backed funding renders her office’s independence doubtful, according to one of her critics, the Umkhonto weSizwe Military Veterans Association: “America cannot fund you without putting their interests first.”

Ms. Madonsela’s final Report, has not been released publicly, as both President Jacob Zuma and Cooperative Governance Minister Des van Rooyen applied for and obtained judicial intervention, preliminarily enjoining publication of the so-called #stateCapture Report‚ which was to be released last Friday.  The Gupta family ties certainly may have played a role in the officials’ expressed desire for privacy.

Former public protector Thuli Madonsela says no government institution has received foreign funding directly. (Delwyn Verasamy, M&G)
Former public protector Thuli Madonsela (Delwyn Verasamy, M&G)

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Circles of Corruption: how does Africa stack up against the OECD?

Inside & Outside the Circles of Corruption

By Peter O’Brien, Pr1merio chief Economics & Trade advisor.

Many widely quoted assessments of corruption rank African countries poorly. These ratings are based mainly on indicators related to the ways in which business contracts, especially those involving government funds, are concluded. The suggestion is that resources are wasted due to mechanisms which award deals to groups that, in open and transparent systems, would not have qualified to obtain the contracts. While there is undoubtedly a very real problem, it’s important for Africa’s standing in the business world to understand the actual situation.

For comparison’s sake…

During the present decade, the avalanche of detailed information concerning corruption in OECD countries, and in particular Western Europe and the USA, has been enormous. A central feature of the stories uncovered has been the failure of administrative systems in those places – and a strongly associated feature has been the failure to resolve the problems. Some examples, drawn not from the financial sector (where the cases are so numerous that to describe them is now superfluous) but from industrial activities and projects, will illustrate the point.

Since mid-2015, and growing by the week, the question of environmental pollution caused by faking the results of admissions tests on diesel driven vehicles has rocked the automotive industry. What began as an investigation into Volkswagen has extended to several other global manufacturers. The investigations so far have underlined several things. First, companies themselves have broken their own ethical codes in order to secure some competitive advantage. Second, there clearly exists an unhealthy, cosy relationship between the auto firms and the entities that are supposed to test and certify vehicles as compliant with regulations. Third, the power of organized corporate lobbies has been sufficient to delay remedial action, and in the case of the EU promises to postpone it indefinitely. Fourth, industry elaborated codes of conduct rarely work. Fifth, financial penalties alone are unlikely to alter the structures of corruption.

In Germany, the finalization of the construction of the new airport for Berlin in now several years overdue. The delays, and the additional costs (reported to be above €5 million per day), have been variously attributed to weak negotiation and formulation of the initial contracts, inadequate monitoring mechanisms, collusion among constructors and suppliers, and straight kick-backs to several officials involved. In the UK, the award of government contracts to a company, G4S, to provide security services for the 2012 London Olympics, was found by parliamentary investigation to be grossly negligent. But subsequent to those findings, the same company has been given several other contracts, some of which are currently under new investigations.

Where does Africa stand?

Kofi AnnanSo where does Africa really figure in an imperfect world where corruption and fraud have since time immemorial been part of transactions wherever they take place? The response should probably be along the following lines.

To begin with, African firms, in the sense of companies created and driven by African indigenous capital, till now have very limited capacity to organize the large scale, multi-country manipulations found in the OECD. Put differently, African entities, private and public, are almost certainly far more reactors than primary actors in the game. This generalization applies equally to involvement in the scandals rocking so many of the self -created and self- perpetuating bodies purporting to govern many types of world sport. In soccer and in athletics, some African individuals and entities have hopped on to the gravy train – but the drivers are elsewhere. In other notoriously corrupt fields, such as cycling, Formula One racing or tennis, Africa has yet to play a notable role.

Given that, to date, African enterprises and institutions have not played a significant part in the monitoring and assessment operations supposed to prevent and correct abuses, there is likewise no evidence of weight to put Africa in the hot seat with respect to implementation of anti-fraud and anti-corruption in international cases.

The mention above of individual major projects in Germany and the UK, a reference that could readily be extended to more or less all OECD countries, further implies that Africa is by no means different from other places regarding the presence of  seriously deficient methods of project award and project management. The relative extent of problems is hard to judge, partly because the intensity of investigation required to discover some of the situations in the OECD is so great. In other words, it may be that the cases found in Africa are simply easier to identify.

Not so bad after all…?

What does all this mean? Certainly it does not mean either that we should weaken the effort to reduce fraud and corruption, or fail to pursue the necessary improvements in public administration, public finance management, and legal mechanisms. But it does suggest that, fortunately, the degree and sophistication of fraudulent and corrupt behavior can be contained. It has yet to reach the levels found in the OECD, and indeed most African countries and institutions do not have the wherewithal to undertake corruption on the scale observed elsewhere. Timely action now might well avoid future disasters.

A final point is the actual impact of fraud and corruption on economic performance. In the absence of many detailed enquiries, it is not easy to state with confidence if the impact is worse in African countries, or in some of them, than it is elsewhere. What does seem to be clear is that, up to the present, the bad cases in Africa have received relatively strong publicity. Since in today’s world image is everything, it might be time for some of Africa’s institutions, national, regional and continental, to devote resources to showing what Africa is doing to improve its own systems, and ensure it does not reach the position which some other regions of the world are in.