Creating jobs growth: SA needs a new anti-graft watchdog – Hoffman

JOHANNESBURG — South Africans have become increasingly frustrated with a lack of action on corruption. Despite affirmations that the #GuptaLeaks are definitely real, the NPA has still tried to find reasons not to investigate by blaming concerns over the leaks having been stolen. The fact is that the Gupta Leaks are in the public’s interest, especially as they’ve revealed widespread corruption. What South Africa needs are consequences for illegal activities, and as Paul Hoffman outlines below, perhaps it’s time for a potential new leadership (following the 2019 elections) to seriously consider the establishment of a new, independent anti-graft body. – Gareth van Zyl

By Paul Hoffman*

Speaking at the Cape Town Press Club last week, Mmusi Maimane, leader of the official opposition, predicted that the next general election, due within 600 days, would have “Jobs, jobs, jobs” as its main campaign issue. He is probably right about this. Far too many voters will be without a job and will be willing to support the political party that gives them the best hope of landing one. The 41% of the voting age population who chose not to vote in the last general election may be inspired by a well-focused pro-job creation campaign to get off the fence and actually cast a vote, which could be a game-changer.

Paul Hoffman, Accountability Now.

Job creation is a complex issue, especially so in the current economic circumstances.

Quite apart from the joblessness of particularly the youth, there is the recession into which the economy has slumped in recent quarters accompanied by the junk status bestowed upon the nation’s debt by two out of the three leading ratings agencies in the world.

The pleas of experts for fundamental changes to our labour laws fall on deaf ears, as do the more general themes of the book “Jobs Jobs Jobs” published by the Free Market Foundation in November 2011. In the preface to that book its editor, Temba Nolutshungu, relates the story of a 35 year old married body-builder who chose to commit suicide by drinking down a combination of rat poison and beer. His human dignity and self-respect had become so eroded that he could no longer face the embarrassment of seeing his wife work while he sat at home.

Business confidence in South Africa, measured according to a scientifically prepared index, averaged 44.76 from 1975 until 2017, reaching an all time high of 91 in the third quarter of 1980 and a record low of 10.20 in the third quarter of 1985 at a time when a low level civil war and successive states of emergency were the order of the day.

At present the business confidence index languishes at 29, down from its most recent high of 51 in January 2015, and the prognosis is for a further decline.

File Photo: Skilled but unemployed South Africans. Who speaks for them?

In the absence of confidence in the economy, there is no appetite for investment. Without investment, jobs are not created. It is reported that currently the private sector is sitting on a mountain of cash in South Africa. A figure of R1.4 trillion is quoted. The funds remain uninvested because those in business are not sufficiently confident to invest in the current circumstances in the economy. It is the private sector that is best placed to drive the necessary job creation, but it is not happening as a “wait-and-see” attitude in business seems to prevail. At least the cash on the balance sheets is still in the country, or at least some of it is.

It is the lack of confidence in governance in SA that is one of the main causes for the abysmal lack of opportunities to create jobs in the current climate.

Frequent reports, such as that by Carte Blanche on 20 August 2017, do nothing to instil confidence in the competence and probity of the public administration. These are the SARS figures highlighted by the Carte Blanche team:

This year (2015/16) the total of unauthorised, irregular and fruitless or wasteful expenditure was R48.6 billion, up from R26.4 billion in 2013 but down from a whopping R66.4 billion (of which R62.7 billion was irregular) in 2014, an election year.

In a recession the tax revenues will inevitably shrink; it is simply not sustainable to tolerate the massive extent of leakage in the system of public procurement that is portrayed in these cold figures. The procurement of goods and services by the state is meant to be done in accordance with a system that is fair, equitable, competitive, transparent and cost-effective. Clearly the public administration is in breach of these constitutional precepts which are prescribed in section 217 of the Constitution.

It is small wonder then that the government is not trusted sufficiently by the business community in particular and the public in general for the creation of the much needed jobs to occur. The business community fears that the risks are too great and prefers to sit on the mountain of cash on their balance sheets rather than open a new mine, a new factory or any new venture in the shark-infested economic environment of SA today.

The sheer scale of the malfeasance and misfeasance in the procurement system would suggest that the prosecution service is being kept busy by those who are involved in criminality (rather than incompetence) in the procurement of goods and services for the state. This felicitous situation does not obtain, and it feeds the lack of confidence and trust that keeps the jobless without work.

The most recent annual report (2015-2016) of the National Prosecuting Authority is rather bleak. According to the Legalbrief Today (12 September 2016) summary of a news report:

“The NPA plans to go after government officials accused of corruption in a bid to boost investor confidence and tackle graft, says a Business Day report. In its 2015-16 annual report tabled in Parliament last week, the NPA – which has been accused of playing a role in a political plot to unseat Finance Minister Pravin Gordhan – said special focus was placed on the prosecution of corruption. NPA head Shaun Abrahams said the Specialised Commercial Crime Unit maintained a conviction rate of 94.1% by obtaining guilty verdicts in 951 cases against a target of 93%. ‘In order to improve investor perceptions and in line with government’s priority focus of dealing with corrupt government officials, the unit increased the number of convictions of government officials on charges of corruption to 104,’ he said. This is up from 47 in the previous year. However, Corruption Watch’s David Lewis said that the conviction rate was still low, and the NPA was still poorly run and lacked independence. Corruption Watch continued to hold the view that the NPA was being led by ‘inappropriate people’, Lewis said.”

Shaun Abrahams
National Director of Public Prosecutions, Shaun Abrahams speaks during a media briefing in Pretoria, South Africa, May 23, 2016. REUTERS/Siphiwe Sibeko

When regard is had to the annual reports of the Auditor General, which routinely detail losses in the procurement system of the order set out above, then an aggregated conviction rate of 151 corrupt government officials over the two years preceding the National Director of Public Prosecutions’ report is a pathetically low success rate. According to Dennis Davis J, there is a backlog of some 3000 prosecutions arising from matters reported on by the Auditor General.  At the current rate of prosecution it will take 20 years to work off the existing backlog.

If, as is argued above, the lack of business confidence in the economy and the lack of trust in the government are at the root of the “investment boycott” currently being endured by the jobless members of the SA workforce, what is to be done to address the problems? A way to unlock the funding that is available and to attract new direct foreign investment has to be found if joblessness is to be reduced, as it must be if SA is to become more peaceful and prosperous as a nation.

Before the Nkandla “Secure in Comfort” report of the Public Protector detailed the excesses of the president; long before her “State of Capture” report fingered him as a kingpin in our silent coup; and even longer before the #Guptaleaks confirmed the worst, a survey indicated that 66% of South Africans do not trust President Jacob Zuma. This figure is surely higher by now, given the scandal prone status of the man known as “Number One”. He came within 21 votes of losing the confidence of the members of the National Assembly and his legal woes are still all unresolved, with the single exception of his rape case, in which, on his own version, which the court found to be reasonably possibly true, he had unprotected intercourse with an HIV positive young women less than half his age, the daughter of a struggle comrade who was in the habit of calling him “Uncle Jacob”. This is not the stuff of which confidence and trust are made.

All of the political parties intending to campaign on the popular platform of “Jobs, jobs, jobs” are going to have to address the issues that arise from the lack of trust in government and the lack of confidence in the economy. The two are inter-related. No businessman wants to invest, if the risks involved in turning a profit are too great to take. The rule of law and respect for property rights are critical to nurturing investor confidence. The more certain  potential investors are that they will get justice from the courts, protection from the police and  convictions of those who steal from them, the greater the prospects of luring them into investing.

The fairer the labour laws, the better for all concerned.

Of particular concern to re-establishing confidence and trust is the endemic level of corruption. The need to deal with the corrupt in a constitutionally compliant fashion ought to be high on the agenda of all political parties that campaign for jobs in the next general election. This step involves a commitment to the establishment of an Integrity Commission as a new Chapter Nine Institution that specialises, using properly trained and resourced personnel, in dealing with the corrupt among us.

The Constitutional Court of South Africa – custodian of the independent judiciary

The Scorpions did so admirably, but they were not clothed with security of tenure of office in that they were a mere unit in the NPA and a creature of an ordinary statute. A simple majority in parliament swept them away despite stern opposition both in parliament and elsewhere in society.

The Integrity Commission, as a Chapter Nine Institution, could not be subjected to so ignominious a fate. Locating the anti-corruption entity in Chapter Nine is the best practice way of complying with the requirement, laid down by the Constitutional Court, that our corruption busters should enjoy security of tenure of office. No Chapter Nine Institution is vulnerable to closure by a simple majority vote in parliament.

Campaigning to inspire business confidence and to restore trust in the public administration are necessary components of turning the economy around and creating “jobs, jobs, jobs”. Putting the national house in order insofar as combating corruption is concerned is central to this campaign.

  • Paul Hoffman SC is a director of Accountability Now and the author of Confronting the Corrupt.
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