The topic of corruption in South Africa is a hard one to avoid, with the media headlines dominated by high-profile scandals, from State Capture and the Guptas to the more recent PPE corruption and mismanagement of Covid-relief funds, at times, there seems little else to digest.

Here we look back at some of the most high-profile cases within the South African government, ranging from the Apartheid-era to the current rule. From the Truth and Reconciliation Commission to the Zondo Commission, South Africa has had its fair share of corruption scandals to deal with and it’s certainly nothing new…

The Apartheid Regime

Open Secrets reported that the South African government during the Apartheid regime channelled around R339-billion into secret government accounts between 1978 and 1994, and while these funds were used to fight against the ANC-led sanctions regime, a material number of corruption allegations and findings were made in relation to business deals conducted to circumvent imposed sanctions.

An early example of state corruption is from 1984, in what was considered the largest case of grand scale fraud in maritime history. The case, which later became known as the Salem case, saw the South African government, through the use of middlemen, attempt to circumvent sanctions and covertly purchase oil using a tanker it had acquired called the Salem. The plan had the Salem dock in SA to secretly offload the oil, fill the tanker up with water and scuttle the vessel in the ocean to claim on insurance. At least 47 countries were affected by this case, setting off 13 separate investigations and legal proceedings. The only country in which no investigations or prosecutions took place? South Africa…

The Special Defence Account is another high-profile example of corruption during the Apartheid regime. Running from 1974 to 1994, its sole purpose was to obtain weapons/weapons technology from around the world. Government spent just under R50 billion on the programme, which in today’s climate would translate to roughly R501 billion.

Ultimately, the apartheid government became adept at getting around the sanctions imposed on them, including the exchange controls that were introduced to stem the flow of currency out of the country to support the levels of the Rand. They implemented numerous elaborate and fraudulent schemes to circumvent these controls and take advantage of the lucrative and illicit rewards on offer. Under these schemes, non-residents were able to invest capital in South Africa at a discounted exchange rate, known as the financial Rand and realise these investments sometime later at the higher, commercial exchange rate.

Exploitation of round tripping

These illegal activities became known as ’round tripping’ where enterprising South African locals would fund the non-residents’ investments into the country in return for a share of the profits made on the gains between the financial and commercial Rand exchange rates. To implement the scheme and achieve the aims of the investors, methods including fraudulent invoicing were often employed with the resultant tax evasion being commonplace occurrences. You can conclude that corruption was no less rife during Apartheid than it is now…

Unfortunately, the current climate in South Africa is much the same, with a number of high-profile cases of corruption playing out on various platforms – from court to social media – but again, this nothing new to our young(ish) democracy.

Alan Boesak, Sarafina II and the Arms Deal

From the fraudulent behavior of activist Alan Boesak – and his subsequent arrest and three-year jail term – to 1999 Arms Deal and the drama of Sarafina II, there have been more than enough corruption cases to keep us engaged. Worryingly, the Boesak case shows that the current government seems to favour internal investigations or long-winded commissions that seldom end in real punishment for those implicated. Boesak was initially cleared by then SA Deputy President Thabo Mbeki, who conducted his own investigation, a result that was rubbished by international observers, and while Boesakdideventually serve jail time, he would receive a presidential pardon in 2005 clearing him of any criminal wrongdoing.

The Arms Deal, meanwhile, was a wide-ranging affair, which questioned the $4-8-billion purchase of weaponry by the ANC government led by Nelson Mandela in 1999. It has long been subject to repeated, seemingly substantive, allegations of corruption and the fallout has been messy. The scandal became headline news when senior ANC MP Andrew Feinstein resigned in protest to the ANC moving to curtail a probe into the deal. Feinstein would later claim that by trying to cover up the corruption at play the ANC had ‘lost it moral compass’, while Corruption Watch reported that the massively flawed arms deal is viewed as having set a regrettable tone for government dealings ever since. The Seriti Commission that was set up to look into the Arms Deal was always seen to be a whitewash with little accomplished in the three years that it ran for. After years of legal wrangling, sparked by NGOs such as Corruption Watch and Right2Know, legal proceedings finally began to take place over the Arms Deal and those implicated in it. Currently, former president Jacob Zuma has a date in court on charges of corruption, fraud and racketeering.  But the reality is, that after more than 20 years, there has yet to be a conviction.

Sarafina II was another high-profile debacle that continues to haunt the current SA government. The project was headed up by then Minister of health, Dr. Nkosazana Dlamini-Zuma, who was caught lying to parliament. Following an investigation into the production, it was revealed that production contract was awarded to a good friend of Dlamini-Zuma. In the process, proper bidding procedures were ignored, the tender process was revealed to be a sham, and in the end, the approximate R14-million production costs of the play would be borne by the government.

Dlamini-Zuma, meanwhile, is currently the Cooperative Governance minister and leading the country’s fight against the Covid-19 pandemic, which itself has been marred by a number of PPE tender scandals, fraudulent COVID grant claims and other fraudulent behaviour.

From Apartheid to democracy, there have been significant, positive changes, but corruption is seemingly a constant, and if anything, recent headlines have exposed a systemic disdain for taking any real action. Perhaps recent developments may change this, but only time will tell if government acts, lest we suffer a Sarafina III or worse.

Government is not alone in its fight against corruption, of course, with a number of private companies caught up in massively damaging cases. In future blogs, we will profile these cases, and how they unfolded, including the wide-ranging costs to those involved,

For more Information

For more information on corruption in South Africa, download a copy of our E-book, which along with local case studies, looks at global cases and the legacies they have left. It also presents you with all the information at hand to better detect and fight corruption within your business.

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