SCORPIO 168

Defrauding Parliament: NPA’s deadliest low-hanging fruit

By Pauli Van Wyk 9 October 2020

Fikile Mbalula, Julius Malema, Floyd Shivambu, Malusi Gigaba, Cedric Frolick and Cyril Ramaphosa (with thanks to the Usual Suspects)

Former ANC MP Vincent Smith has pleaded not guilty to two charges — one of corruption and another of fraud. It is the fraud charge, arising from an alleged attempt to defraud Parliament, that will give his parliamentary peers heart palpitations. EFF leaders Julius Malema and Floyd Shivambu should have sleepless nights, while ANC heavyweights Fikile Mbalula, Malusi Gigaba, Cedric Frolick and even Cyril Ramaphosa have different shades of worry.

First published by Daily Maverick 168 SCORPIO

The National Prosecuting Authority’s (NPA’s) new-found willingness to charge a parliamentarian is a dramatic development,  particularly for Julius Malema and Floyd Shivambu.

As unexceptional as it may seem, the Vincent Smith indictment is the equivalent of Shamila Batohi, National Director of Public Prosecutions, demanding our attention, saying “the real NPA is standing up”. But what does it mean for long-standing ANC parliamentarians such as Fikile Mbalula,  Cedric Frolick and Malusi Gigaba, as well as Cyril Ramaphosa and his CR17 campaign funds?

The nine lost years of Jacob  Zuma’s tenure were characterised by kept politicians — financial freeloaders who routinely accepted “donations”, “loans” and favours to prop up their celebrity-style lifestyles.

These political sellouts managed to betray the South African dream of a “better life for all” without hindrance, thanks to a deliberately crippled justice and crime prevention system.

Batohi and her lieutenant Hermione Cronje, who heads the NPA’s investigative directorate that was set up last year to focus on bringing State Capture villains to book, now have the ability to change it all.

In an announcement that reverberated through governing and opposition parties alike, Cronje made this an October to remember with her indictments against Smith on charges that carry possible jail time.

In essence, the former MP stands accused of having received “gratification” — gifts, benefits and cash — that he did not declare to Parliament while knowing that he had a legal duty to so so.

The requirements are laid out in Parliament’s Code of Ethical Conduct and Disclosure of Members’ Interests, which outlines the minimum standards that South Africans expect of public representatives: upholding propriety, integrity and ethical values, among other things.

The purpose is to create public trust and confidence in parliamentarians and to protect the integrity of Parliament. Being dishonest with Parliament is therefore a serious offence, deserving prison time, as seen in the landmark 2003 case in which ANC MP Tony Yengeni was sentenced to four years in jail.

The case of the State v Smith and others will test one of the sharpest but perhaps most neglected arrows in the NPA’s quiver of tools for holding South Africa’s most influential politicians to account.

The legal framework

The crime of fraud is committed when someone intentionally uses deception, in word or action, to obtain some unlawful benefit.

In Smith’s case, the state alleges that he received security upgrades and cash deposits in bank accounts associated with him from Angelo Agrizzi, Bosasa conman-turned-whistle-blower, for his personal benefit. The charge sheet says Smith tried to hide this “gratification” from Parliament by not disclosing it in the register of members’ interests.

In constitutional expert Pierre de Vos’s reading, a case of “defrauding Parliament” will turn on the intent to “hide and deceive”. In Yengeni’s case, the court found beyond reasonable doubt he had intended to deceive his fellow MPs because of “the stubborn denials” of the truth.

In the judgment in Yengeni’s case, the court said misrepresentations to Parliament amounted to actions “with the intent to defraud Parliament”, which were punishable by jail time.

In the deep end: Floyd Shivambu and Julius Malema

The EFF leaders may face the same difficulties. Evidence collected over the past two years suggest that both are “kept” politicians who routinely accept “donations”, “interventions”, “gifts” and other favours propping up their lifestyles.

The largesse at VBS Mutual Bank, where just over R20-million in loans and cash was funnelled through front companies into their pockets, is but one illegal source of income for Shivambu and Malema.

Floyd Shivambu’s Limpopo wedding to Siphesihle Pezi, his Range Rover, some of his property rental leasing contracts and his lifestyle have been funded by VBS loot and private businesspeople wishing to do business with the state.

This is detailed in reams of bank statements, WhatsApp discussions, documents and Scorpio’s conversations with his benefactors. In return, Shivambu uses his political power to assist his benefactors, the evidence suggests.

Between late 2016 and early 2018 Scorpio’s calculations based on relevant documents show that he received just over R10-million in VBS cash and loans, while an additional R9-million or so has been confirmed as having flowed to him from other benefactors outside of VBS.

Yet Shivambu officially told Parliament he had nothing — no gifts, benefits, shares or businesses — to declare.

In the past, Shivambu has denied all wrongdoing and repeatedly evaded dealing with the merits of the evidence against him.

He has the added complication of having told Parliament in October 2018: “We are going to state here, categorically clear, without any fear of contradiction, that the EFF and ourselves as MPs never benefited anything from the VBS Mutual Bank looting and the so-called heist that happened there.”

Julius Malema, too, offered blanket denials when Scorpio asked for comment on his personal riches.

Yet between the middle of 2017 and 2018, documents suggest R4.8-million in VBS loot was diverted to Malema’s personal benefit, while Scorpio has confirmed he received just over R5-million more from other benefactors. The illicit money was spent on, among other things, upgrades to a house in Sandton, the Malema kids’ school fees, the Mekete Lodge events venue in Limpopo, clothes and groceries.

Malema declared no gifts, sponsorships or benefits to Parliament.

According to De Vos, a court would only be able to find MPs had the intention to defraud when it was very clear that they knew they had a duty to declare the financial benefit.

 Malema and Shivambu have been MPs since 2014. Every year since then — so at least seven times — the EFF leaders have declared their financial position and other interests to Parliament.

Whenever they are questioned by journalists, Malema and Shivambu repeat their denials that they received any benefits that should be declared.

The Catch-22 is that Shivambu and Malema could not declare the money they received because it was clearly the proceeds of crime. Essentially, they committed a crime to cover up another crime. 

Headache levels of different scale: Fikile Mbalula, Malusi Gigaba, Cedric Frolick and then deputy president Cyril Ramaphosa

De Vos said that in the sticky situation where an MP is accused of receiving a financial benefit in suspicious circumstances, it is possible to avoid criminal liability by admitting receipt of the benefit and arguing that its non-declaration was an oversight, or to argue that there had been no obligation to declare it.

If the obligation to declare is clear-cut and well known an MP may be in trouble, but if there is uncertainty with regard to declaring a particular financial benefit it would be difficult for a court to find the MP had an intention to defraud, he said.

The issue of Fikile Mbalula’s R684,000 family holiday in Dubai over the 2016/17 New Year period may be such a case.

Mbalula’s long-standing friend, Sedgars Sports director Yusuf Dockrat, paid at least R300,000 towards the holiday. Sedgars Sports was a technical sponsor of the South African Sports Confederation and Olympic Committee, which fell under the jurisdiction of Mbalula, who was Minister of Sports and Recreation at the time. Mbalula did not declare this benefit in the parliamentary register of members’ interests.

Public Protector Busisiwe Mkhwebane investigated and found he had violated the Executive Ethics Act — a different set of rules altogether. She found that Mbalula “exposed” himself and that his conduct was “improper” and “inappropriate”, but made no adverse recommendations against Mbalula.

“He further did not see it as inappropriate to undertake a trip abroad whilst he had no sufficient funds to finance it,” Mkhwebane said. Mbalula described the R300,000 as a “loan” and claimed to have paid it back, denying any conflict of interest.  

Quizzed by Scorpio, Mbalula was clearly aware of his duty to declare benefits to Parliament. But he argued that the “loan” was not a benefit he was duty-bound to declare.

The question is whether Mbalula would have paid back the loan, as he claimed he did, had he not been caught out by EWN, which first reported on the case.

Mbalula seems to argue that he had no intent to defraud Parliament because he had no duty to declare the Dockrat benefit. In a 26-minute telephone discussion about the matter, Mbalula repeatedly said, “I am not like Smith.”

A court may find it difficult under these circumstances to find beyond reasonable doubt that Mbalula had the intent to defraud Parliament.

Cedric Frolick’s case is similar. In the first week of October, the veteran ANC MP testified before the Zondo Commission about claims Agrizzi made to the effect that he had received cash and other financial benefits from the Watsons.

Under oath, Frolick denied receiving cash, but he did say: “I have to add that during the course of 2013/14, I received a desktop computer for my constituency office that was arranged by Mr Cheeky Watson for learners and students to assist them in their studies, and I also received two shirts, two pairs of shoes and a belt from Mr Cheeky Watson sometime on my birthday and I subsequently declared that in Parliament in the members’ register.”

Yet, the register reflects no declaration from Frolick relating to any gifts or sponsorships received from the Watsons or Bosasa.

When quizzed by Scorpio, Frolick, in a 20-minute telephone interview, declined to discuss why he appears not to have declared these gifts timeously.

Frolick did, however, maintain at the Zondo Commission that after Agrizzi made his allegations, he visited the office of the registrar of the register members’ interests to check what he had declared, and that he belatedly filed a disclosure annexure to cover the gifts.

If Frolick argues that his non-declaration was an oversight or that the registrar’s office “lost” earlier declarations he made, the NPA will again find it difficult to prove beyond reasonable doubt that Frolick had the intention to defraud.

In another case before the commission into State Capture, a former driver and protector of Malusi Gigaba has testified that the then Cabinet minister frequently received bags of cash, apparently from the Guptas. Gigaba denied the claims.

The difficulty with these untested allegations is that a prosecutor could find it hard to prove beyond reasonable doubt that Gigaba was on the scene and really did receive mountains of cash. So, a case against Gigaba accusing him of defrauding Parliament would fail.

De Vos said that bearing this in mind, there is little risk in the strategy followed by Cyril Ramaphosa in relation to his CR17 campaign funds in 2017, when he was lobbying to succeed Zuma as president of the ANC.

“The president has consistently argued that the Public Protector [Busisiwe Mkhwebane] got it wrong and that Parliament’s membership code does not oblige him to declare donations made to the CR17 campaign. In the context of these denials, the NPA will find it difficult to prove that the then deputy president had the intention to defraud Parliament,” De Vos said.

The need and rationale for combatting corruption

In the preamble to the Smith indictment,  Cronje borrows from the 2011 Glenister judgment written by Constitutional Court justices Dikgang Moseneke and  Edwin Cameron. Their remarks on the case, which related to the dismantling of the Scorpions, the establishment and independence of the Hawks, and the fight against corruption, serve as a stark reminder that public officials are supposed to serve the South African public.

“There can be no gainsaying that corruption threatens to fell at the knees virtually everything we hold dear and precious in our hard-won constitutional order,” the judges said.

“It blatantly undermines the democratic ethos, the institutions of democracy, the rule of law and the foundational values of our nascent constitutional project. It fuels maladministration and public fraudulence, and imperils the capacity of the state to fulfil its obligations to respect, protect, promote and fulfil all the rights enshrined in the Bill of Rights.

“When corruption and organised crime flourish, sustainable development and economic growth are stunted. And, in turn, the stability and security of society is put at risk.” DM168

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All Comments 13

  • If only the NPA would pick this low hanging fruit our country would be in better shape to face a future of economic upheaval. They are an embarrassment to our country and assist in turning Africa into the laughing stock. of the world. Great journalism.

  • More than anything, this article points out how the judicial system can be ‘manipulated’ by ‘smart’ legal minds, who ‘rise up’ (probably more like scum surfacing!) to the defence of patently corrupt individuals. This scum, instead of protecting the defrauded, line their own pockets from the proceeds of their well heeled clients stolen loot. And…so the rot continues in an unvirtuous cycle deceit !

  • If parliamentarians are found guilty of defrauding parliament, is it possible for the NPA to build cases against their deployers, namely the leadership structure of the relevant political party, for being complicit at worst or its lack of oversight at best? At the very least shedding light on the party’s constitution and process of compiling party lists will be informative. If no criminal case is possible, is there a case for civil action?

  • The ANC might throw the odd minion like Smith under the bus but will never allow the prosecution of the heavy weights. It should not be difficult to prove beyond reasonable doubt that these people all received funds and provided no services. Apart from anything else the SARS will have no declaration of these dodgy dealings. Don’t hold your breath, the comrades will be closing ranks and frantically covering tracks and Batohi and her bunch have not yet been convincing.

  • It’s a great article, I am supprised our constitutional court judges can’t uphold the constitution in some way. As much some people think we have this first world constitution my opinion is the opposite. It is the very worst one in the world. Nothing said in it is valued or honored. We have no constitution just a jungle of self enrichment and lawlessness people running the country. Very sad.

    • What I really want to say to you that it is not the SA constitution that must be seen as “the worst one” – rather I hold dear the words of Judge Zak Yacoob in his address to the SADC Lawyer’s Association regional solidarity webinar held on 7 October 2020 – he states that “It is laudable that many countries in the Southern African Development Community (SADC) region do indeed have truly democratic constitutions. But — and this is a very big but — without an independent and impartial judiciary, an apparently wonderfully empowering constitution is worth much less than the paper it’s written on.” So it really takes much more to just say that our constitution is worthless – very worthwhile article to read in Daily Maverick 12 October.

  • Being the political ingenue that I am, I am unaware whether the recent IFB loan was ever expressly made conditional upon an undertaking by CR to the bank to get a handle on our runaway thugtocracy and bring perpetrators to book, but I find it strange that the loan and the recent actions coincided so neatly. I suspect that they may have been. If that is the case (the conditionality of the loan) then it is both a pity that we had to achieve such a positive result with outside help but also an indication of where and how we have to go in future for more of the same positivity.

  • Great article. It will be interesting to watch the prosecutions unfold. I understand the intention, but its a complete waste of time having something as refined as “Parliament’s Code of Ethical Conduct” since the vast majority of MP’s have absolutely no idea what ETHICS is. They are of the opinion that ethical behaviour is anything – unless proven guilty of an offense in a court of law. I’m sure most of them would be shocked if they learned that ethics is a standard higher than that required by law. ie. Doing the morally “right thing” even if no one is looking. I’m pretty sure that if all MP’s who don’t measure up to that standard walked out of parliament, it would be almost empty.

  • Whilst I know and understand that the wheels of justice turn slowly (in most cases, too slowly), I wish I could fast forward 2 or 3 years, and read about all the politicians who have been imprisoned!! Past tense. It is almost always about prosecutions that WILL happen…yet does this ever happen?? What’s happened to those cases from 5?… 8?… years ago? Patience is a virtue… but crumbs, this is taking patience to a new level!

  • I agree with Kanu. There is something fundamentally wrong with our Constitution and the law when high-powered lawyers get involved, knowing full well that their clients are guilty as sin and yet they use all their expertise to keep these scumbags out of prison, most often at taxpayers expense. Justice delayed is justice denied! These are nothing but the most callous of mercenaries, sucking the life, blood and soul of the nation whilst raking in millions. Just witness the shenanigans and disgrace of Zuma and all his different lawyers after all these years. The modus operandi will be followed by all these other scumbags. I don’t understand how these lawyers at night and I hope it comes back to severely haunt them one day.

  • Great article thanks Pauli – let’s keep up the good work and publicise all politicians activities. They are accountable to the people. Is there any chance that you can get these articles translated into Zulu and other African languages and then get them distributed into the townships?

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