South Africa crossed an important threshold this week.

Before the events of 14 June 2005, corrupt public officials could expect to be let off the hook.

Former ANC Chief Whip Tony Yengeni, for example, who was convicted of fraud in 2003, is still roaming free and even represents the ANC in overseas delegations.

Truman Prince, the municipal manager of Beaufort West, has kept his job despite an ANC internal investigation finding him guilty of various misdemeanours. In truth, his six-month suspension from the ANC was little more than a slap on the wrist.

And within Parliament itself, seated on the benches during President Thabo Mbeki's address were several ANC MPs who have either been convicted of fraud or still face charges in the Travelgate affair, but who retain their positions and salaries.

And, proving that misery loves company, convicted Travelgate MP Ruth Bengu had led the singing and dancing in Parliament just after Jacob Zuma refused to answer questions on his future on Thursday last week.

By dismissing Jacob Zuma as Deputy President, President Mbeki established a new precedent.

Henceforth, government officials who are tempted to behave corruptly will know that they could lose their jobs if they are caught, even before they are charged in court.

It is now up to the people of South Africa to hold the government to that principle.

As Business Day columnist David Gleason observed this week-before being unceremoniously axed from the newspaper-the sums of money that Zuma took from businessman Schabir Shaik were actually relatively small.

But of course Zuma's case was significant because he held the second-highest political office in the country - a fact which Gleason had curiously glossed over.
 
Likewise, the corruption of the late South African cricketer Hansie Cronje was alarming not because of the money involved but because Cronje had been a representative of South Africa and a role model for millions.

Yet there is far greater corruption afoot, involving sums of money that run into the tens and hundreds of millions of rands, and beyond.

The Travelgate scandal, for example, involved R17-million of public money. In the Oilgate scandal, the ANC stands accused of funnelling R15-million of public money from PetroSA through the BEE company Imvume Management into its own coffers. Imvume then apparently passed on payments to relatives of Cabinet ministers as well.

A truly startling allegation was made this week regarding huge profits made by businessman Mzi Khumalo. With the aid of former Industrial Development Corporation *1 CEO and current SAA CEO Khaya Ngqula, Khumalo reportedly took over BEE company Simane and sold off for R1,4 billion the shares Simane had acquired in Harmony Gold with Public Investment Commissioners' funds. The money was allegedly moved into offshore accounts via Deutsche Bank. Khumalo, of course, aside from his MK-ANC background, will be remembered for running the venerable mining company JCI into the ground in a period of less than a year.

This case, in which the amounts of money involved dwarf the wildest dreams of Shaik and Zuma, demands further investigation.

It also points to the dangers of the blurred boundaries between public office and private industry in South Africa today.

The fact that so many politicians and public officials are able to jump straight into the elite echelons of the business world has led to cases of extreme self-enrichment and conflicts of interest that are not yet illegal but are certainly corrupt.

Take, for example, the recent Telkom empowerment transaction. The 15 percent stake formerly owned by Thintana was sold to BEE investors including Andile Ngcaba, the former Director-General of the Department of Communications.

Ngcaba could not afford the roughly R1,5-billion that he needed to buy his 2,2 percent stake in the company, so he had to borrow the money.

Barely a month later, Telkom announced an annual profit of R7-billion and revealed that it would pay investors a staggering dividend of R9 per share.

This allowed Ngcaba and his fellow investors to collect hundreds of millions of rands, almost overnight. Together with Gloria Serobe's Wiphold consortium, Ngcaba's Lion consortium will collect a combined R326,5-million in cash.

Ngcaba's actions were not technically illegal.

Yet they are highly questionable-especially given that Telkom has cut its workforce by half (30 000 jobs) in the past several years, and that Telkom's exorbitant rates caused nearly a third of all the fixed lines it installed between 1997 and 2001 to be cut off.

The most significant case of corruption in post-apartheid South Africa remains the multi-billion-rand arms deal.

President Mbeki remains determined to avoid further investigations into the arms deal.

Mbeki has been rightly praised, not least by the opposition, for his courage in firing Zuma. This was a singular moment in our relatively short democratic history and for whatever other good or ill Thabo Mbeki has done during his tenure, he deserves to be well remembered for it.

However, in the hubbub of excitement - and sheer political drama of 14 June 2005 - many commentators overlooked the President's fairly desperate effort in the same speech to draw a line in the sand on the Arms Deal. The Arms Deal goes to the heart of the Zuma saga and continues to fester as a sore in the body politic of South Africa itself. I got the very strong impression from Alec Erwin's petulant and intemperate response - later that same day - in Parliament to my member's statement (which actually congratulated Mbeki) that government has much to hide.

Indeed, in his address to the special joint sitting of Parliament, Mbeki reiterated the view of the Joint Investigation Team (JIT) that "No evidence was found of any improper or unlawful conduct by the Government".

He again drew a distinction between the primary and secondary contracts in the arms deal, saying that while there may have been "some weaknesses in the procurement process" regarding the secondary contracts, the decisions made on primary contracts were justified by "technical and/or strategic reasons" and free from suspicion.

There are three fatal weaknesses in the President's argument.

1.        The JIT report was edited by the Cabinet. The Auditor-General has been compelled to release the draft JIT report, which makes clear that it was heavily edited by the executive before being presented to the nation. Questions have been raised, but never answered, as to whether the omissions and amendments were made on the President's orders.

2.        The distinction between primary and secondary contracts is false. The distinction fails most clearly in the case of African Defence Systems (ADS), the company at the centre of the corruption in the Shaik trial. The JIT report itself indicates clearly in at least five places that the government intervened to give ADS the effective status of a primary contractor.

3.        The Presidency blocked the Special Investigating Unit from probing the arms deal. The SIU headed by Willem Heath was the only investigative arm with the power to cancel contracts. But the Presidency denied the request of Parliament's Standing Committee on Public Accounts (Scopa) to involve the Heath unit. The letter sent by Deputy President Zuma to former Scopa chair Gavin Woods MP on 19 January 2001 advising him of the President's decision not to issue the proclamation enabling the Heath unit to take part was particularly harsh.

As Justice Hilary Squires observed in his judgment in the Durban High Court: "It is almost as if the writer is taking a special delight in rubbing the collective nose of Scopa, and Woods in particular, in the rejection of its recommendation".

Two years ago, when the prosecution began its case against Schabir Shaik, government spokesperson Joel Netshitenzhe said that there was "no serious evidence" of corruption in the Arms Deal, and added that government should not set a precedent "whereby an allegation against senior leaders leads to their resignation."

Now, the Deputy President has been dismissed on the basis of that same evidence. Clearly Netshitenzhe's arguments were merely a smoke screen designed to buy time for the Presidency.

South Africans would therefore be justified in taking a sceptical view of President Mbeki's continued protestations that the government is innocent of corruption in the arms deal.

Certainly, on the face of all the evidence available to us, the relationship between Schabir Shaik and Jacob Zuma is only one of numerous questionable facets of the arms deal - the tip of a much larger iceberg.
 
For example, one area that has yet to be fully explored is the role that Schabir Shaik's brother - Chippy - played in the procurement package.

The JIT report states that Chippy Shaik, who was the Chief of Acquisitions for state arms company Armscor *2, did not recuse himself properly in order to avoid conflicts of interest.  The most glaring conflict of interest was his brother Schabir's bid for the corvette combat suite contract *3, through a shareholding in African Defence Systems (ADS).

The DA has in its possession a copy of an encrypted fax from one of the bidders for the arms procurement that claims:

"The person responsible for the short list (Chippy Shaik) appears to be sure that the combat suite will automatically go to ADS".

In other words, according to the fax, it appears that Chippy Shaik was not only engaging with the bidders behind closed doors, but was also biased towards his brother's bid.  

If found to be true, these allegations show that corruption in the Arms Deal ran right to the top of government. Only a full investigation, headed by an independent judge, will uncover the truth once and for all.

Those of Jacob Zuma's supporters in the ANC who are angered by the President's decision, and who believe he is being made to take the fall for the arms deal in order to destroy his political ambitions, should join the DA's call for a judicial commission of inquiry.

We must live up to the standards that President Mbeki himself has set, both in dismissing Zuma this past week and in his strong words in Parliament against corruption earlier this year.

We must carry on the fight against corruption in the arms deal until no fact and no abuse of power remains hidden from the South African people.


Media Liaison: Robert Macdonald 072 638 7710

- The DA's Anti-corruption Message -

"(Corruption) can truly be likened to a cancer...If it is not checked, it becomes systemic. And the after-effects of systemic corruption can quite readily extend to the corrosion of any confidence in the integrity of anyone who has a duty to discharge, especially a duty to discharge to the public." - Justice Hilary Squires, State v Shaik and 11 Others.

The illegal enrichment of politically connected individuals at the public's expense undermines our young democracy and threatens to derail our economy. The DA calls on all South Africans to join us in rooting out and exposing corruption whenever and wherever it occurs. Tell us about any instances of corruption you are aware of or want investigated by e-mailing whistleblower@da.org.za or contacting your nearest DA office.

- Die DA se Teen-korrupsie Boodskap -

"Korrupsie kan inderdaad met 'n kanker vergelyk word. As dit nie beheer word nie, raak dit sistemies. En die nagevolge van sistemiese korrupsie kan geredelik uitbrei na die uitkalwing van enige vertroue in die integriteit van enigeen met 'n plig om uit te voer, in besonder 'n plig om teenoor die publiek uit te voer." - Regter Hilary Squires, Staat v Shaik en 11 Ander

Mense met goeie politieke kontakte, wat hulself onwettig ten koste van die publiek verryk, ondermyn ons jong demokrasie en is 'n bedreiging wat ons ekonomie kan laat ontspoor. Die DA doen 'n beroep op alle Suid-Afrikaners om korrupsie, waar of wanneer dit ookal voorkom, te ontbloot en uit te roei. Vertel ons van voorvalle van korrupsie waarvan u bewus is, of voorvalle wat u wil laat ondersoek. Stuur die inligting per e-pos na whistleblower@da.org.za of kontak jou naaste DA kantoor.

With acknowledgements to Tony Leon and South Africa Today.

*1  An Industrial Development Corporation (IDC) subsidiary, Findevco (Pty) Ltd, assisted in the financing of Schabir Shaikh's companies.

Findevo has had as its executives the who's who of BEE luminaries in this country, including Dr Diliza Mji (former ANC Treasurer-General in kwaZulu-Natal) and Moss Ngoasheng (President Mbeki's former Economics Advisor).

IDC funding was used to buy DGT Technologies, owned by Mji and Moeletsi Mbeki (President Mbeki's brother). DGDT not only got a slice of the Arms Deal, indeed the Corvette contract, after intervention by Chippy Shaikh to overturn the GFC's choice of gearbox supplier, but are doing very, very nicely on the present and upcoming contracts to upgrade the SA Army's fighting vehicles.
 

*2   No - The Chief of Acquisitions is a member of the Department of Defence and is Director of the Acquisitions and Projects Division (DAPD).

The Chief of Acquisitions is meant to report to the Secretary for Defence, but in the case of the Arms Deal bypassed this person (firstly Lt Gen Pierre Steyn and then Mr Netsiyanda) and reported directly (and probably unlawfully) to the Minister of Defence, Joe Modise (later Mosiuoa Lekota).


*3   And the submarine combat suite contract.