South African mining body urges corruption crackdown
South Africa’s mining body has urged the speedy implementation of the state capture commission’s proposed measures to curb government corruption.
The commission of inquiry into allegations of state capture, corruption and fraud in the public sector handed the first part of its report to President Cyril Ramaphosa on 4 January.
Mining firms have endured the consequences of years of corruption and fraud within the state and its entities, most notably utility Eskom and national rail and port operator Transnet, the Minerals Council South Africa (MSCA) said.
The state spends 800bn rand a year ($51bn/yr) on procurement of goods and services, “making it a ripe source for fraud and corruption”, the MCSA said.
For example, the commission found clear irregularities in a multi-billion-rand Transnet locomotive procurement project, “the consequences of which the mining industry and other exporters and importers are now struggling with daily,” the MCSA pointed out.
Subsequent difficulties in procuring spares contributed to rail constraints and Transnet’s service failures that hampered deliveries of iron ore, coal, chrome and manganese to South Africa’s ports at a time when commodities markets were booming. As a result, bulk commodity exporters have experienced lost revenues and an opportunity cost of at least R30bn, according to the MCSA.
The commission further found a clear link between the corrupt granting of tenders and political party financing. “Tighter, smarter controls and mechanisms must be established to prevent this,” the MCSA said.
In addition, the mining industry has lost billions of rand worth of production revenue since 2008 owing to Eskom’s inability to provide consistent, competitively priced electricity. “The commission’s report details the level of malfeasance at the entity,” the industry body said.
Hence the MCSA fully supports most of the Zondo commission’s recommendations, including that a national charter against corruption should be established that incorporates a standardised code of conduct with legal standing. All parties tendering or contracted to supply the government with goods and services should sign an agreement to uphold these codes of conduct, the commission says.
An independent anti-corruption agency should be set up that is free of political interference and does not rely on ministerial budget allocations or government oversight. Funding for the agency would come from a parliamentary allocation, as well as a levy imposed on all public tenders, it proposes.
The commission wants to see whistleblowers protected and legislation introduced to allow deferred prosecution agreements with corrupt firms to avoid further burdening an already overstretched prosecutorial service. Under this proposal, firms that fully co-operate with authorities by self-reporting criminal activities could either pay a fine or be subject to remedial action to defer or avoid prosecution. However, people who engaged in those criminal activities would still be investigated and prosecuted, the commission said.
The MCSA expressed frustration over a lack of accountability and consequence management for those involved in years of wilful neglect, corruption and mismanagement for personal gain, because of deliberate inaction by state organs.
Hence the industry body urged Ramaphosa to implement the report’s recommendations with all possible haste. “Corruption is one of the key factors preventing vital local and foreign investment that is needed to grow the economy and to stimulate job creation,” it said.
“We trust the recommendations made in this report will result in speedy and appropriate legal and prosecutorial actions taken against those who caused such egregious damage to the country and its economy,” MCSA chief executive Roger Baxter said.
The commission’s work under the guidance of acting Chief Justice Raymond Zondo will culminate with the submission of the two remaining parts of its report by 28 February.
Ramaphosa undertook to submit the full commission report to parliament by 30 June 2022, along with an indication of the government’s intentions with regards to implementing the commission’s recommendations.
The commission was set up nearly four years ago after former public protector Thuli Madonsela released her State of Capture report, which investigated ousted president Jacob Zuma’s “improper relationship” with the Indian-born Gupta family.
That report’s findings resulted in the Gupta business empire – including Tegeta Exploration and Resources, which owns the Optimum coal mine – going into administration in February 2018. The family subsequently fled South Africa to avoid prosecution over the alleged fraudulent procurement of government contracts and are currently based in Dubai.