Defend Truth


SA must take urgent steps to avoid being greylisted by the Financial Action Task Force


Paul Hoffman SC is a director of Accountability Now.

Xolisile Khanyile, the director of the Financial Intelligence Centre, says in spite of speculation to the contrary, SA is going to be greylisted because it hasn’t met the requirements set by the global money laundering and terrorist financing watchdog, the Financial Action Task Force.

The jury is no longer out. The lights come on and stay on more infrequently than ever before. Water of clean and potable quality is scarce. Sewage runs down ever more potholed streets. All too frequently, patients go to public hospitals to die, not to be healed.

South Africa’s social security system is taking so much strain that children are dying of starvation; malnutrition is on the rise and 70% of young people are in the Neet category (not in education, employment or training), while 34.5% of the overall workforce is unemployed. New investments that create jobs are scarcer than hen’s teeth. The education system, with its 30% pass rate, is turning out functionally illiterate citizens.

Instead of serving the public, politicians make and break coalitions with their own interests in focus. The Tripartite Alliance of the ANC, SACP and Cosatu teeters on the brink of dissolution; cities change mayors but, irrespective of the mayor, remain unsavable, to the detriment of their populations.

The ANC is so preoccupied with slates for elections, jockeying for position and factional strife that the grind of actually governing SA is neglected in the noise of battle for opportunities to dispense patronage, please cronies and dabble in nepotism.  More and more municipalities join the dysfunctional majority — unable to pay Eskom accounts, unwilling or incapable of governing, a haven for deployed cadres of the National Democratic Revolution (NDR), the lodestar of the alliance.

The Zondo Commission, quite rightly, fingered cadre deployment as an illegal and unconstitutional practice that contributed materially to the State Capture phenomenon. Instead of making plans to end cadre deployment, the President insists, contrary to what he said earlier, that he is not bound by the “end cadre deployment” recommendation of the commission.

He overlooks a binding high court judgment which has outlawed cadre deployment in the public administration. It is also clearly an illegal practice in state-owned enterprises, but it is so ingrained in the striving of the ANC for “hegemonic control of all levers of power in society” that cadre deployment remains the chief modus operandi of the ANC as it governs at national level, in all but one province, and in most municipalities.

It is passing strange that a movement, or alliance, that has been governing our multiparty constitutional democracy under the rule of law since 1994 still feels obliged to pursue a revolutionary agenda. Revolutionaries are meant to be those who are not in government.

Provided that your programme and policies, laws and objectives are consistent with the Constitution, a majority alliance ought to be able to put in place its wishes, not rail against the established order with revolutionary zeal.

Therein lies the rub. The NDR is not, generally speaking, in sync with the values and requirements of the Constitution. The separation of powers, the doctrines behind checks and balances on the exercise of power; a free press; an independent judiciary; Chapter 9 institutions that operate without fear, favour or prejudice; a commitment to open, accountable and responsive governance — all are missing from the tenets of the NDR, but they are all present in the highest law in the land, our Constitution.

In these circumstances, the forms of paralysis in governance we all experience daily grow and persist. Poverty is exacerbated, the striving for the constitutionally entrenched respect for human dignity is prejudicially affected and promoting the achievement of equality is crippled.

Unemployment rockets when there are no “JOBS JOBS JOBS” as promised in successive ANC-led election campaigns. The Gini coefficient, which measures inequality, is higher in SA today than it has ever been. Inflation has climbed to 6.5%. The GDP will grow by less than 2% in the year ahead.

These indicators all suggest that the further pursuit of the NDR is a fools’ mission and that it would be better by far to adopt the successful strategies of other modern states in which merit, pragmatism and honesty replace cadre deployment, outdated ideology (the NDR was Lenin’s idea, for heaven’s sake), and the various forms of corruption that go to make up State Capture and the standard modus vivendi of the politicians of the tripartite alliance.

The unpalatable truth is that the NDR is, generally speaking, inconsistent with constitutional values and should be abandoned, as was suggested by Professor Kader Asmal, a Cabinet minister under Nelson Mandela and Thabo Mbeki more than a dozen years ago.

Unexpected coup de grâce

The unexpected coup de grâce is now delivered by a functionary of the state who is, unusually so, prepared to speak truth to power. Interviewed in the Sunday Times, Xolisile Khanyile, the director of the Financial Intelligence Centre (FIC), says in spite of speculation to the contrary, SA is going to be greylisted because it hasn’t met the requirements for combating money laundering and terrorism financing set by the global money laundering and terrorist financing watchdog, the Financial Action Task Force (FATF). 

Greylisting is not to be laughed off as just “one of those things” that happens. Money laundering was a major feature of State Capture in SA.

When a country as big and complex as ours is greylisted, the impact is to reduce GDP by 1% or so. This reduction is one SA can ill-afford in these times of inflation and economic uncertainty.

The revenue of the state will suffer and the actual measures of poverty, inequality and unemployment will increase. The social security system will take additional strain. More children will starve to death, and malnutrition of those who survive will stunt their growth, intellectual capacity and ability to cope with the challenges of growing up in a greylisted and misgoverned country.

The SA Human Rights Commission will receive more complaints about these unfortunate phenomena, all of which involve the violation of human rights guaranteed to all in SA. Protests will become more frequent and a repeat of the July 2021 insurrection may become unavoidable.

Khanyile has been in her position at the FIC since January 2018; it can safely be assumed that she knows the ropes and is not idle in her prediction. As a career prosecutor with more than two decades of experience, she is well placed to warn of the looming greylisting for SA. It seems the warning will fall on deaf ears.

A Cabinet not preoccupied with factional strife and jockeying for positions on slates that are under preparation for the ANC conference in December would take the possibility of greylisting seriously. It would take immediate steps to address the concerns of the FATF and those at the Organisation for Economic Co-operation and Development who study the corruption situation in SA. Instead, there is persistent paralysis in governance.

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A new anti-corruption body

This problem has been highlighted by Accountability Now in its submissions supporting the establishment of a new anti-corruption body. The necessary reform of the criminal justice administration could go a long way toward assuaging the concerns which inform those whose pending decision on greylisting could bring down the whole edifice of constitutional governance in SA. The government has been totally unresponsive to the submissions made in August 2022. 

The Cabinet blows hot and cold on the issue of reform, sometimes favouring it, while at other times the can is simply kicked further down the road. Here is the evidence in the public domain already, with some words from within the Cabinet and others from those who know:

  • When Cyril Ramaphosa triumphed at the ANC elective conference in December 2017, he said: “Corruption must be fought with the same intensity and purpose that we fight poverty, unemployment and inequality.” The party would “act fearlessly” against the “abuse of office”, he vowed. Only, nearly five years later, the sun still hasn’t risen on this “new dawn”.
  • Mavuso Msimang, an ANC grandee, explains: “The fact is, the security forces meant to police corruption are themselves often corrupt, or occupied by incompetents. As it is, [in January 2022] the minister of police isn’t speaking to the commissioner of police — and one of them must go so that policing doesn’t collapse. It is the President who must make that decision.” He did, eventually.
  • Karam Singh of Corruption Watch: “The principles for fixing our public procurement system were laid out in the national anti-corruption strategy, which was developed in November 2020 but never executed,” he says. “But a start would be to create a real independent anti-corruption agency.”
  • By August 2020, it seemed as if the ANC had finally seen the light. Justice Minister Ronald Lamola said at the time that “it’s clear, as a country, we need a permanent structure” that is truly independent to fight corruption. Critically, though, Lamola didn’t commit to timelines, and said the discussion was “ongoing”.
  • On 4 August 2020, the National Executive Committee (NEC) of the ANC announced its views on reform of the criminal justice administration“The NEC called upon the ANC-led government to urgently establish a permanent multidisciplinary agency to deal with all cases of white-collar crime, organised crime and corruption. Furthermore, the NEC called upon all law enforcement agencies to carry out their duties without fear, favour or prejudice,” is how The Citizen newspaper reported it.
  • Chief Justice Raymond Zondo calls for “the establishment of a single, multifunctional, properly resourced and independent anti-corruption authority” in the State Capture Commission report.
  • In June 2022, the members of the Constitutional Review Committee of the National Assembly (an ANC-dominated body) unanimously resolved to invite Accountability Now to make a comprehensive presentation to it on the topic of establishing a new Chapter Nine body to prevent, combat, investigate and prosecute serious corruption in SA. A written submission has been presented already and a date for oral representations is awaited.
  • In August 2022, Justice Minister Lamola let it be known that the national Cabinet was not considering the establishment of a new anti-corruption body under Chapter 9 of the Constitution. This announcement is unfortunate. The discussion that was “ongoing” in 2020 is now not going on in 2022.
  • As of 1 September 2022, aNational Anti-Corruption Advisory Council (Nacac) will serve for three years to advise on reform. Its mandate does not appear to include what the President had in mind when he first announced the Nacac idea in his 2021 State of the Nation Address: dramatically diverting from the prepared text he emphasised that the intention was to create a new anti-corruption statutory body that reports to Parliament: “Not to the executive!” mark you.
  • Cabinet will not apply its collective mind to the sorry lot of the vital whistle-blowers of SA before March 2023.
  • According to the presidential spokesperson, the Nacac councillors were inducted in the last week of September 2022. It is not yet clear what their status and terms of reference may be, but it is clear that at least one of them is determined to use up the full three years, when in fact a three-month time horizon is more appropriate.

All in all, these facts are relevant to the survival of constitutional democracy in SA. Those who are not wedded to the NDR route need to make their position known and work toward restoring the rule of law. The possibility of the greylisting of SA could be used as a rallying call to accelerate the consideration of reform of the kind advocated by Accountability Now for so long. Doing nothing in the short term is simply an invitation to those considering greylisting to go straight ahead and do it. The fallout for the poor of SA is not a pleasant prospect.

The Defend Our Democracy campaign has already embraced the reforms suggested by Accountability Now. The suggestions may require refinement and adjustment. Let the debate commence. It is ill-advised to ignore the need for reform in light of the red flag raised by Khanyile. The greylisting of SA ought to be resisted via embracing long overdue reform. DM


Comments - Please in order to comment.

  • Cunningham Ngcukana says:

    The National Treasury must bear full responsibility for the grey listing of the country as financial institutions offered to help to avoid this situation but were turned down by the arrogance of National Treasury. This help, was offered with the full knowledge of staff issues at National Treasury and Ismail Momoniat who is the Acting Director – General, had his hands full and could not handle the issue alone. Almost all banks and Investment Management Companies were willing to assist and this was spurned by Treasury and the Minister. Hendrik du Toit, the CEO of the largest asset management company called it a tax on incompetence in the Financial Mail. Excuse and lies that are emblematic of the administration of Cyril Ramaphosa are going to be spun by ANC journalists in
    the media. This was known since the Mutual Evaluation Report was issued in October 2021 and nothing was done until the financial services sector pointed out that the time was running and wanted to know what was happening. Ninetyone offered help along with the largest bank in the country, First Rand and Enoch Godongwana spurned that help. The Mutual Evaluation Report is very clear on the shortcomings of the country, yet the arrogance of this government has brought the country where it is. Money laundering and terrorist financing risks in our financial system have long been flagged by the FATF. The Reserve Bank tried to lie and deflect attention from its pure incompetence by seeking to blame the banks .

  • Kanu Sukha says:

    If the likes of CR and Lamola (cadres – not Kaders ! of the first order), were serious about ‘reform’, they (and the rest of their cadres) would all be without a job ! Nor would their incompetence make them employable in the private sector ! Is it any wonder that jockeying for a place on the slate is a priority. At least one of them can go back to game farming sic !

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