Sunday, January 29, 2012

Is the ANC in a decline it cannot reverse?

Songezo Zibi
Sunday Independent
29 January 2012

The centennial celebrations of the African National Congress provide an opportunity to reflect on what the future holds for the organisation. Of course the emotion accompanying the invocation of history, both proud and painful, raises the question of whether it is possible to offer a dispassionate appraisal of the future meaning of the ANC. Yet it is necessary that we do so in order that we may not fall into the folly of overplaying the hand of historical credibility, or succumbing to the cynicism that arises out of the ANC’s long incumbency in government.

While millions of South Africans probably have hundreds of reasons why they accepted wholeheartedly the ANC’s leadership during the struggle and after 1994, there are a few on which there appears to be general agreement. The most central is the extent to which the character and ethos of the ANC was representative of the best aspirations of the broad spectrum of South African society. Both in its policy enunciations and in the exemplary behaviour of its leaders and members, South Africans saw in the ANC a representation of their highest ideals. As part of our reflection, we have to ponder whether this still holds true.

Character relates to behaviour, effectively leading by example. Leadership by its nature triggers both careful and casual observation of the behaviour of leaders within and outside their official context. That is why it matters a lot to church congregants whether their Pastor is also a hard drinking, womaniser. Equally, it matters greatly to the general community whether the behaviour of the said church’s congregants is considered enough of a good example for the community to accept the collective leadership of the church on relevant matters. 

How has the ANC described the prevailing character of the organisation? The year 2000 discussion document titled ANC – People’s Movement and Agent for Change, notes the development of a trend in which the ANC’s members see leadership positions in the ANC as a pathway to accessing state power and resources. The document states: within the ANC, the tendency is developing in which positions in government (and the ANC itself) are seen as platforms for acquiring resources and power, and divisions based on this perspective of self-enrichment can be bitter”.

A decade later, the NGC discussion document Tasks of organisation-building and renewal describes the “current situation” in the ANC, which on the face of it, and considering what was outlined in the earlier Through the eye of the needle, appears to indicate progressive degeneration. “And yet, lack of discipline and blatant ill-discipline is becoming a distinct feature of the current situation. Inconsistency in application of rules and reluctance to act against ill-disciplined elements is rife. The leadership is often afraid to take action if this will threaten the prospects of re-election. The culture of our movement is being eroded at a frightening pace.”

In Leadership renewal, discipline and organisational culture, there is a longer list of behaviours considered rife and an antithesis of what the ANC historically stood for. In part the document says: “Since Polokwane (2007, when President Zuma took over), a number of these tendencies have become embedded (my emphasis) and in fact worsened especially as part of the lobbying process.” It goes on to list among others an inability to conduct ANC meetings in an orderly manner, abuse of methods and symbols of the struggle and indecisive leadership. It further states that these and many other stated practices have become a “shadow culture which coexists alongside what the ANC has always stood for”, and that old and new members and leaders are involved.

Given these self-assessments, and the seeming degenerative trend they project, is it still credible to insist that the ANC’s ideals are a reflection of its current character? Does an aspirational goal constitute present reality? Does this not suggest that the character of organisations is separate from the vices of the men who populate and lead them? These questions are critical towards assessing not only the true character of the ANC as it currently exists, but its possibility to lead society in the future.

The question that arises as a result of this is whether the ANC as characterised by the example set by its members and leaders represents the best aspirations of the South African people. We know that in successive elections, the people have voted the ANC overwhelmingly into power. But does this mean the character of the current ANC is reflective of the aspirations of the South African people?

Some have claimed that the ANC is in decline, including its own leaders. Gauteng provincial secretary, David Makhura recently stated that “the ANC is a patient, and it is very sick” in an assessment of the state of the party. COSATU leader Zwelinzima Vavi has used even more startling language, describing an organisation populated by proverbial hyenas and greedy elites. Others like political scientist, Dr Mzukisi Qobo have stated that it is already dead.

But what do scholars and experts tell us about organisational decline and eventual descent into oblivion? Jim Collins in his lesser celebrated but profound book, How the mighty fall, describes the typical steps into oblivion which are: arrogance born of success, undisciplined pursuit of more, denial of risk or peril, grasping for salvation and succumbing to irrelevance or death. Of these, the ANC, even with its receding intellectual depth, cannot be accused of absolute denial of risk. It has repeatedly announced bold initiatives to turn the decline around. A more pertinent question is whether the measures it purported to put in place have been successful. The increasingly desperate tone of these assessments appears to suggest decisive failure.

But why is it not succeeding? It could be because it has chosen a path of organisational involution. Xiaobo Lu in Cadres and Corruption describes involution thus: “Organisational involution takes place when a ruling party, in dealing with change of environment, opts to retain existing modes and ethos rather than adopt new ones.” He further goes on to explain why symptoms of organisational sickness become difficult to cure under involutionary conditions: “new rules and procedures are often turned into something familiar that bears the imprint of yesteryear.”

What Xiaobo Lu describes can be seen in the ANC. For instance it continues to believe, naively, in the inherent integrity of its members and leaders on the basis of what they swore to when they joined the organisation. This has led to its complete ill-preparedness for the dangers of unchecked ambition and lust for power. The other is the insistence on allowing anyone, no matter how ill-prepared, to run for high office on the basis of making the biggest hollow promises to branches. In a world of crises caused by high finance and complicated economics, any election without minimum qualification standards is outright foolish.

We must therefore ask whether the current state of the ANC as described by itself makes it ready to lead for the next 100 years. We must also question the assertion common among some in its ranks that because it has faced numerous challenges in the past and managed to overcome them, this necessarily suggests it shall again prevail.

Dispassionate examination should show us that the ANC’s ability to overcome serious debilitation was anchored in the intellectual and ethical strength of the leaders it had the consciousness to elect. In addition, in all those instances the ANC did not have to grapple with the challenges of holding state power and having access to vast fiscal and institutional resources. Renewal does not somehow occur. It is the outcome of hard work founded on ethical and moral ethical application and standards of leaders and members of an organisation.

Is the ANC in decline? In addition to the challenges it has already identified, there are others it appears paralysed to talk or do anything which relate to questionable personal behaviour some of its senior leaders because decisive action could cause further divisions. It is simply mind-boggling that the custodian of the finances of the Northern Cape, MEC John Block, retains his job while facing criminal charges of swindling the very State he swore to protect. In KwaZulu Natal, House Speaker Peggy Nkonyeni and MEC Mike Mabuyakhulu will go on trial in October for corruption against the State, yet they retain their positions as if nothing is wrong.

Suggestions seen so far have included the “screening” of new members, but this is fatally flawed. Many wonder how high up this screening would go and how thoroughly it would be applied. Would it for instance include senior leaders whose family members and friends appear to suddenly have found entrepreneurial flair they didn’t have before these leaders occupied high offices in government? Clearly Block, Nkonyeni and Mabuyakhulu among others would fall foul of this screening if found guilty by the courts.

Jim Collins in How the mighty fall says “the path out of darkness begins with those exasperatingly persistent individuals who are constitutionally incapable of capitulation…. Be willing to kill failed ideas (sic), even to shutter big operations you’ve been in for a long time. Be willing to evolve into an entirely different portfolio of activities, even to the point of zero overlap with what you do today, but never give up on the principles that define your culture.” It takes no rocket scientist to realise that any solutions would have to work around the ethical and moral “sensitivities” surrounding some leaders, literally making the whole effort an abortion from the start. Rank and file members would wonder why the new rules apply to some and not others.

Unless it notches up some notable successes with its efforts at renewal, it cannot hope to lead for another 100 years while in perpetual decline. If the erosion of the ANC’s essence continues at this “frightening pace”, a tipping point might be near, which would almost certainly lead to the death of an organisation clearly hobbled by problems it is incapable of solving. That decline means its character increasingly bears little connection with the highest aspirations of South Africans. If that connection reaches its weakest, the ANC will be effectively dead, for no society wants leaders it cannot identify with.

Songezo Zibi is a member of the Midrand Group. A version of this article appeared in the Sunday Independent earlier today.

Source:  Midrand Group

Friday, January 27, 2012

New Fraud Investigation Group Issues Subpoenas to Financial Companies

WASHINGTON — A new law enforcement group examining securities fraud from the housing bubble and financial crisis has already issued civil subpoenas to 11 financial companies for information related to their actions in the market for residential mortgage-backed securities, Attorney General Eric H. Holder Jr. said Friday.

President Obama announced the new group in his State of the Union address on Tuesday, saying it would “hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.”

At a news conference Friday, Mr. Holder said the group would be treading on different ground than that already covered by the Securities and Exchange Commission and other regulatory agencies that had previously filed fraud charges against sellers of mortgage-backed securities.

“We are wasting no time in aggressively pursuing any and all leads,” Mr. Holder said. “In sending out those subpoenas, we consulted with the S.E.C. in making a determination as to where they should go.” Officials would not say which companies received the subpoenas.

“We are not going to be looking at the same things they are examining,” he added. “We’re going to be working with them but looking at a separate group of institutions.”

The group, known as the Residential Mortgage-Backed Securities Working Group, is part of the Financial Fraud Enforcement Task Force, an interagency outfit created by Mr. Obama in 2009 to prosecute financial crimes.

Despite three years of work by that task force, however, public sentiment still holds that few if any of the real perpetrators of the housing bubble and financial crisis have been held accountable.

Eric Schneiderman, the New York attorney general, who is a co-chairman of the working group, said that having many different law enforcement groups working together “enables us to go places where each of us individually could not go.” For example, he said, “having the I.R.S. on the team opens up the possibility of looking into tax issues that hadn’t existed before.”

In addition, the New York State Martin Act, which gives the attorney general broad powers to elicit information during investigations, “is more flexible than federal securities laws,” Mr. Schneiderman said. The New York and Delaware attorneys general also have jurisdiction over the trusts that hold the mortgages that underlie the mortgage-backed securities, making them “the bricks and mortar of this entire structure.”

By coordinating their efforts, group members might be able to share documents and information that usually would be in individual agency silos, Mr. Holder said.

Although some prohibitions exist on sharing federal grand jury information, he added, “there are ways in which we can structure these investigations so that I don’t think grand jury prohibitions on the federal side will prevent us from sharing necessary information with our state partners.”

Shaun Donovan, the secretary of housing and urban development, whose agency is also part of the antifraud group, said its priorities also would include getting some financial relief to homeowners whose investments had been hurt by manipulations in the market for mortgage-backed securities.

A “fundamental principle” of the effort, Mr. Donovan said, is that “there is relief also for those homeowners” whose loans underlie the mortgage-backed securities. “It would be a tragedy,” he added, “if investors were made whole but homeowners who were wronged as well” continued to suffer.

Mr. Donovan said that a separate settlement being worked out between state attorneys general and mortgage servicing companies would not thwart the new group’s investigations, even if the settlement released companies from further law enforcement efforts related to mortgage servicing.

“We would not be standing here today if we were not absolutely confident,” Mr. Donovan said, adding that any releases being contemplated “are narrow enough to allow us to go forward aggressively.”

Source: New York Times

Wednesday, January 25, 2012

www.corruptionwatch.org.za launched in South Africa

Independent civil society institute Corruption Watch embarked on its outreach to the public today, launching a website and SMS hotline to receive reports of corruption and posting an online pledge for people to sign rejecting corruption.

The website will be a repository of stories from the South African public; a secure portal for evidence-based whistle blowing activity and a resource for information about corrupt activities in South Africa.

“By gathering, interpreting and acting on information from the public, the media and other sources,” Director David Lewis said, “Corruption Watch will expose the corrupt and the misuse in particular of public money. We have formed this institution to enable citizens to report and confront public and private sector individuals abusing their power and position.”

The data collected by the organisation will be used to reveal ‘hotspots’ of corrupt activity around the country at municipal, provincial and national level. Where corruption is rife, Corruption Watch will seek partnerships with powerful organs of civil society to effect change.

“We want to help move the national conversation about corruption from resignation to action,” said Lewis.

Funded principally by donations from charitable foundations, Corruption Watch was initiated by Cosatu’s office bearers, who were receiving an increasing number of complaints about corruption from its membership and the general public. It is a non-profit organisation and the board is comprised of the following individuals: Bobby Godsell, Adila Hassim, David Lewis, Mary Metcalfe, Mavuso Msimang, Archbishop Ndungane, Kate O’Regan, Zwelinzima Vavi, and is chaired by Vuyiseka Dubula.

The website will be the main interface between the public and Corruption Watch, though it can be reached via SMS, twitter and facebook. Through social media, people can share their stories about all manner of corruption, including but not exclusive to bribery, kickbacks and graft; influence peddling and patronage; corruption in the work place where they’ve seen or been victims of favouritism, nepotism, ghost workers and illegitimate absenteeism. People may be able to report instances of bid-rigging, price-fixing, arbitrage and profiteering, cartels and collusion and tender and procurement irregularities.

The personal details of anyone reporting an incident will be kept confidential, but the information collected will be aggregated, enabling Corruption Watch to analyse the data, spot patterns and draw a ‘heat map’ of when and where corruption is occurring.

“Information from crowd-sourcing offers a clear understanding of what is happening on the ground,” said Lewis. “While we won’t be in a position to investigate each and every report, the combined knowledge of people coming to our site will provide us with a powerful tool to build alliances with other institutions and NGOs. Strengthening the scale and voice of civil society will help South Africans defeat corruption.”

From some of the aggregated information – and occasionally a personal story that is representative of an endemic form of corruption – Corruption Watch will initiate research, commission reports and compile sufficient documentation to refer matters to the appropriate investigative or prosecutorial authority, or engage in policy-based advocacy work.

“Our first campaign,” said Lewis, “is asking people to sign a pledge online, or via SMS, refusing to participate in corruption and, if they are civil servants, committing to treating public resources with respect.”

The public can tell Corruption Watch about their experiences and sign the pledge on the website (www.corruptionwatch.org.za). To SMS, send the text “BRIBE” to report corruption or, to sign the pledge, type “PLEDGE” plus your first and last names to the number 45142 (the SMS costs R1). People can also talk about it on facebook (CorruptionWatch) and twitter (@corruption_sa), or follow #corruptionwatch.

“We are all degraded and affronted by corruption. It threatens our institutions, service delivery, public trust and indeed our democracy. Together we can reject the abuse of public money, which so disproportionately affects the poor,” concluded Corruption Watch Chairperson Vuyiseka Dubula.

Source: Corruption Watch

A Mortgage Investigation

In the State of the Union address, President Obama promised a fresh investigation into mortgage abuses that led to the financial meltdown. The goal, he said, is to “hold accountable those who broke the law, speed assistance to homeowners and help turn the page on an era of recklessness that hurt so many Americans.”

Could this be it, finally? An investigation that results in clarity, big fines and maybe even jail time? There is good reason to be skeptical. To date, federal civil suits over mortgage wrongdoing have been narrowly focused and, at best, ended with settlements and fines that are a fraction of the profits made during the bubble. There have been no criminal prosecutions against major players. Justice Department officials say that it reflects the difficulty of proving fraud — and not a lack of prosecutorial zeal. That is hard to swallow, given the scale of the crisis and the evidence of wrongdoing from private litigation, academic research and other sources.

This new investigation could be the real thing. Eric Schneiderman, the New York State attorney general, will be a co-chairman of the group, and he has refused to support a settlement being worked out between big banks most responsible for foreclosure abuses and federal agencies and some state attorneys general. He rightly objected to the fact that in exchange for providing some $20 billion worth of mortgage relief — mainly by reducing the principal on homeowners’ loans — the banks wanted release from legal claims that have never been fully investigated, including those related to potential tax, trust and securities violations in mortgage loans.

In the past year, the Obama administration has pushed back against Mr. Schneiderman, even as other attorneys general also left the settlement talks. By choosing him now to help run the investigation, the president appears to be embracing the call for a much broader inquiry that, properly executed, could result in a far bigger settlement. For now, the administration is saying that the new investigation and the settlement talks will both proceed. It would be better to settle with the banks only after officials have a full picture of any and all violations.

There are reasons to be wary. Some of the federal officials who will also be involved with the investigation — including Eric Holder Jr., the United States attorney general, and Lanny Breuer, the leader of the Justice Department’s criminal division, who will be a co-chairman — have not distinguished themselves in the pursuit of mortgage fraud. To win and retain public trust, both the administration and all the group’s co-chairmen — there are also four other officials from the Justice Department, the Securities and Exchange Commission and the Internal Revenue Service — must agree on several steps immediately.

The administration must ensure that the group has ample resources. The co-chairmen must hire a tough-as-nails prosecutor with a successful track record in financial fraud to drive the investigation forward. And the group must move quickly and vigorously, issuing subpoenas and filing cases. It is not starting from scratch; various agencies have all had separate investigations under way.

President Obama’s credibility is on the line. To restore public faith in the financial system, nothing less than a full investigation and full accountability will do.

Source: New York Times

Monday, January 23, 2012

Consumer probe unlawful – MTN

An investigation by the National Consumer Commission into MTN’s subscriber agreements and service quality was unlawful, the cellular operator argued before the National Consumer Tribunal on Friday. It also said a compliance notice issued to MTN by the consumer watchdog was sent to the wrong party. The hearing is the first under the Consumer Protection Act (CPA), which was implemented in April last year.

MTN is challenging a compliance order notice it received compelling it to amend its subscriber agreements and align its practices with the act. The commission has asked for a fine of 10 percent of MTN’s 2011 turnover if it is found guilty of contravening sections of the act.

Robby Coelho, a partner at law firm Webber Wentzel representing MTN, said the commission had acted beyond the powers granted by the act and therefore its investigation was unlawful. MTN said the commission had ruled against it based on an incorrect and outdated subscriber agreement even though it had implemented a new CPA-compliant contract.

Mamodupi Mohlala, the national consumer commissioner, said at the time the notice was issued in August that MTN’s amended customer contract was not yet in effect, which it should have been from April 1. Mohlala said the new contract still did not comply with section 63 of the act because it did not guarantee quality of service targets and make pricing transparent.

Advocate Alfred Cockerill, representing MTN, argued that the commission had incorrectly issued the compliance notice to MTN instead of MTN Service Provider. “If we are correct, and we believe we are, then that’s the end of the matter. The entire compliance notice (would be) invalid,” Coelho said.

Mohlala said, however, that MTN, the mother body, was licensed to provide telecoms services and not its subsidiary, MTN Service Provider, and if the latter was reprimanded then “the consumer doesn’t have recourse”. “We have also noted, in terms of their contract provision of network services, the subsidiary is not licensed to provide network services,” she said.

The tribunal did not specify a date for judgment. Hearings have also been set for other companies, including Vodacom, Cell C and TopTV.

Source: madeasy.co.za

Saturday, January 21, 2012

Congolese nationals claim intimidation during raids

Shouts of "Zombie Ndoki! Zombie Ndoki!" (Zombie is a witch) rang out on Friday morning outside the Hillbrow Police Station as a Congolese national, identified as Zombie Fabrice by a frenzied crowd of about 50 people, drove into the building's underground parking. An imposing man wearing a Mobutu Sese Seko-like chapeau and a large medallion with Democratic Republic of Congo (DRC) President Joseph Kabila's face, Zombie -- flanked by police and bodyguards -- walked slowly from his car into the bowels of the police station for a meeting.

The crowd of Congolese nationals made mostly of women whose husbands and brothers were arrested during a police raid in the Johannesburg suburb of Yeoville on Thursday afternoon, blamed Zombie for the arrests. Family of the 150 people arrested, many of whom chose to remain anonymous for fear of intimidation, alleged that Zombie had instigated the latest round of arrests by bribing police officers. Many said this was the sixth raid of its kind since the November presidential elections in the DRC. Chris Katango, a political refugee and chairperson of the Congolese Youth League, said: "Zombie is working for Kabila and he is here to make sure that our protest against the fraudulent election result in November is oppressed."

"Zombie was there on Thursday, pointing out people to be arrested by the police -- they are working for him," he added.

Living in fear

Large sections of Johannesburg's Congolese community have staged protests since the DRC's polls that many have claimed were flawed. Supporters of Union for Democracy and Social Progress (UDPS) leader Etienne Tshisekedi have argued that incumbent Kabila had defrauded the man known as Moses of the presidency. Tshisekedi supporters were adamant that the South African government and police were working for the Kabila regime in trying to quell ongoing protests. Theresa Farida, a Congolese national whose brother, Trindon, had been arrested in Thursday's raid said: "[President Jacob] Zuma is working with Kabila to make sure that our voices are silenced because the South Africans want to protect their mining interests in Congo. We can't fight in the Congo because if we say anything we are silenced, or people disappear. We have run away to South Africa but we can't protest here too. I want to go back to my country but I want to go back to a country where there [is] freedom and not fear."

"My brother was just drinking in the bar when the police came in and took him away -- tell me, how is drinking in a bar dangerous?" said Farida.

An employee of Kin Malebu, a popular Congolese eatery on Rockey Street in Yeoville -- who asked not to be named -- described Thursday's events: "At about 4pm the police just surrounded Times Square and the area around it and started beating people up and making arrests. They came into our restaurant too, looking for people."

Laurentine Borese, a 24-year-old, said she was walking to an internet café with her husband, Hugo Wanaldo, when they were accosted by police: "I was going to make a fax when the police came, they arrested my husband -- but not before beating me," she said, lifting her shirt to show the sjambok welts on her arms and back. Police spokesperson Captain Dennis Adriao confirmed that 150 people had been arrested and said more arrests could happen over the weekend. He said those detained had been charged with assault and intimidation and would appear in the Hillbrow Magistrate's Court on Monday.

He refused to comment on any possible relationship between Zombie and police and denied police were being used to quell anti-Kabila sentiment in Johannesburg. Adriao said: "A special task team had been set up to investigate the ongoing political violence because there have been many cases of assault and intimidation opened since November.

"The arrests made came after the team's investigations which included examining footage of several incidents of this nature ... We have not taken sides, we have allowed both groups to protest peacefully but when they get out of hand and destroy property or turn violent we step in," said Adriao.

Source: Mail & Guardian

Friday, January 20, 2012

Google puts small companies online

TECHNOLOGY group Google, cellphone company Vodacom and the Department of Trade and Industry have joined forces in a project aimed at placing 10000 small and medium businesses on the internet for free.

The initiative, launched in Pretoria yesterday, provides a boost to the government’s efforts to reduce unemployment by encouraging entrepreneurs to start new businesses, as outlined in the New Growth Path, which aims to create 5-million jobs between 2011 and 2020. The main partners are joined by advisory body the Human Resource Development Council in offering Woza Online, a website service that enables businesses to create websites for free. The websites are also hosted for free. Hosting and possible domain fees will be covered by Google and Vodacom.

Luke McKend, Google’s country manager for SA, said the company had decided it could contribute to the economy and help small and medium companies reach more customers through Woza Online, particularly those that had not previously had a presence on the internet.

World Wide Worx MD Arthur Goldstuck, who was present at the website’s launch, said even though 65% of small and medium businesses in SA had websites, the 35% that did not amounted to hundreds of thousands of companies. "As much as 79% of those businesses with websites are profitable, while only 59% of those without, are profitable," he said.

Deputy Trade and Industry Minister Elizabeth Thabethe said the initiative recognised the importance of small businesses for SA’s economy. "As many as 2,8-million small and medium-sized enterprises contributed about 55% to SA’s gross domestic product last year. They also provide employment for young people and women. Therefore, my department welcomes what Google and the other partners are trying to do," she said.

Up to 50% of youth aged 15-25 are unemployed in SA yet a report released by the South African Institute of Race Relations this week said the number of established owner-manager businesses in SA remained below the world average. Based on the 2010 Global Entrepreneurship Monitor, the reports said SA’s average new business ownership was 2,5% in 2009. The average for the 60 countries surveyed was 17,1%. The percentage referred to people in the 18-64 age group who were owner-managers of new businesses. This meant they owned and managed a business that had paid salaries, wages or any other payments for more than three months, but not more than 42 months.

Given data released by Statistics SA, about 343000 jobs were made in the first three quarters of last year. According to Adcorp Employment data, 397000 jobs were added last year.

Source: Business Day

Multinationals bow to tougher anti-graft laws

BHP Billiton is working to rope in corporate corruption, including any potential skulduggery by its local business associates. In early January it sent out a notification of its "anti-corruption expectations" to its local business partners. The document, which requires signed acknowledgement of receipt, summarises the company's anti-corruption policy, which bans everything from "gifts, travel, entertainment, meals or other things of value" that might improperly influence a government official to "facilitation payments", defined as "small payments made to government officials to expedite routine actions".

Although the action is commendable, experts say that moves such as these by large multinationals are because of tougher international legislation, such as the United Kingdom's Bribery Act, introduced last year, that targets corruption not only domestically but also internationally. Also, long-existing laws, such as the United States's Foreign Corrupt Practices Act (FCPA), introduced in the late 1970s, are being enforced more actively.

According to David Loxton, director and specialist in forensic law at Werksmans Attorneys, Britain's Bribery Act, in particular, had taken a tough line on corporate corruption and went as far as making companies liable of an offence if they did not put measures in place to stamp out corruption. This was quite unlike the FCPA and South Africa's Prevention and Combating of Corrupt Activities Act, both of which required intent on the part of company agents to commit bribery. "The UK Bribery Act goes much, much further," he said. "If a corporation can't show that it has measures [in place] to prevent bribery, such as a very tight contract with an agent, or a careful due diligence [investigation of that agent], then the strict liability offence will kick in." But it does exclude commercial organisations that can prove they had procedures in place to try to prevent corruption.

Loxton said that governments are heavily criticised for corruption, yet the activities of the private sector are largely ignored. "Why have governments enacted these pieces of legislation? Simply because the corporates aren't doing anything themselves to stamp it out," he said. "Sadly, in my experience, a lot of corporations will publicly state their aversion to bribery and corruption and, in practice, will do exactly the opposite." He said that the steps to address these concerns are a reaction to the tougher legislation and strong lobbying from the accounting and legal professions, in particular, who have advised their clients of the ramification of the laws.

High-profile cases of corporate corruption have plagued the business world in recent years. In 2010, mining giant Rio-Tinto saw four of its executives jailed for bribing Chinese officials and, in the same year, BHP Billiton began co-operating with American authorities investigating possible violations of anti-corruption laws regarding old minerals projects. Johnny Dladla, a spokesperson for BHP Billiton SA, said the company's code of conduct and internal policies prohibit corruption. "Specifically, our policies specify risk assessment and due diligence requirements for engaging business partners who interact with others on our behalf," Dladla said in a statement. "The document described in this article is one of the methods by which we collect due diligence information on prospective business partners."

The charter, in place for a number of years but revised in 2011, was applicable to all countries in which BHP Billiton operated, he said. Loxton said that legislation such as the Bribery Act has been criticised for creating an unfair playing field -- those companies domiciled or listed in countries that take a tough stance on corruption are at a disadvantage when competing with those from states that turn a blind eye to these crimes, particularly when they happen on alien soil. "This is the biggest problem that US and UK companies have and presents a perennial problem," said Loxton.

This was one reason why the FCPA, unlike the Bribery Act, allowed facilitation payments to expedite routine government actions. "Of course, the difficulty of this is that it does open the way for bribes," Loxton said, but it was seen as an attempt by the American authorities to ensure that its companies were not put at a disadvantage.

Source: Mail & Guardian

Sunday, January 15, 2012

Mabongi Shauwn Mpisane's R176m deal

Mabongi Shauwn Mpisane is demanding the eThekwini municipality honour a secret R176-million housing contract on which it is backtracking. The contract, which never went out to tender, was suspended after the city's legal advisers pointed out that Mabongi Shauwn Mpisane had a criminal record.

Mpisane and her husband, former city policeman Sibusiso Mpisane, are known for their flashy lifestyle and for hosting lavish parties attended by celebrities and high-ranking politicians. Mpisane's company, Zikhulise Cleaning, Maintenance and Transport, of which she is sole director, is also listed in a forensic report on alleged financial irregularities and tender fraud within the municipality. The company has received more than R300-million in housing contracts from the city over the past five years - excluding the one for R176-million - while Mpisane is facing 172 new tax-related charges. And, despite probes into Mpisane and her company by the municipality, the provincial housing department and the SA Revenue Service, in September last year the municipality gave her the contract to build and complete 2114 low-cost homes in Umlazi, south of Durban. Normal tender procedures were not followed and the city suspended the contract after being advised to do so by its legal department.

The Sunday Times has established that Mpisane instructed her lawyers to force the municipality to reverse its decision. In a letter dated December 6 2011 from lawyer Themba Mjoli, the municipality was given a 24-hour deadline to reverse its decision. "Unless you do so immediately ... our instructions are to seek appropriate relief from the high court on an urgent basis," he wrote. This week Mjoli declined to comment, saying he had just returned from holiday and was unaware if the city had responded. Municipal spokesman Thabo Mofokeng failed to answer questions forwarded to him. According to municipal documents, Mpisane's company was hand-picked for the tender by the city's bid adjudication committee in September last year - despite it being tarnished by claims of poor workmanship in several of its projects.

Documents seen by the Sunday Times show that the committee used Section 36 of the procurement policy to bypass the normal public tender route. However, a month later the municipality's legal department objected and, on two separate occasions, warned the committee to reverse its decision. In two scathing letters, legal advisers questioned the selection of Mpisane's company, saying she had been convicted of VAT fraud in 2005. At the time, the company was fined R15000 and Mpisane received a three-year jail term suspended for five years.

The advisers also said the Close Corporations Act prohibited Mpisane from owning a business because of her conviction and sentence. "The amount of public money involved is such that the [committee] is obliged to follow the public tender process, so that council can get value for money," it said.

Housing head Cogi Pather wrote to Mpisane on December 2 explaining their decision to suspend the contract. Mjoli responded: "You are undoubtedly aware that the impugned decision was taken and made arbitrarily and capriciously." The lawyer attacked the municipality for ignoring the cost to Zikhulise of paying "1000 employees" and "18 subcontractors". "On a more serious note, the community, which is currently awaiting being accommodated before the builder's shutdown, is likely to be seriously angered by your impugned decision."

Mjoli also questioned the applicability of the Close Corporations Act in view of the fact that Mpisane's sentence had been suspended. Council minutes show that the tender in question was simply reconfigured from an old deal in 2006 for the construction of 3100 homes in Umlazi. The Mpisanes were then appointed as the main contractors but, after the auditor-general denounced the deal as highly irregular two years ago, work came to a halt. But early last year the provincial human settlements department approved the new, re-jigged contract to finish the work.

In 2010 forensic auditors Ngubane & Co recommended an investigation into Zikhulise and 34 other contractors. Two years ago, the Special Investigating Unit also began a probe of payments linked to a R37-million housing project in Durban's Lamontville township involving Mpisane.

The DA's Tex Collins, who has cried foul over the municipality's procurement practices for years, said: "Clearly all is not well ... any such work [Mpisane's company is involved in] should be stopped immediately for investigation." Mpisane and her husband, meanwhile, spent an estimated R1-million on an Egyptian-themed seventh wedding anniversary in March last year. Guests included socialite Khanyi Mbau, Khulubuse Zuma and May Mkhize, wife of KwaZulu-Natal premier Zweli Mkhize.

Source: Times Live

Sunday, January 8, 2012

Criminal case against Malema, others for 'land grab'

Suspended ANC Youth League leader Julius Malema has been accused of stealing a prime piece of land in Polokwane, Limpopo in the suburb of Ster Park, police said on Sunday.

Brigadier Hangwani Mulaudzi said Polokwane police and the commercial crimes unit were investigating the case.

Businessman Matane Mphahlele has opened a criminal case against Malema, lawyer Maboku Mangena, Clifford Motsepe, the head of Limpopo's housing department, as well as senior municipal officers, City Press reported.

According to Mphahlele, Malema illegally transferred the plot into his own name in 2007 and resold it the following month for more than three times the price.

The newspaper further reported that Mangena and municipal officials allegedly helped Malema with the transfer. -- Sapa

Source: Mail & Guardian