“There is no question that as we move into the global information age, foreign corrupt practices threaten to undermine both the growth and the stability of our global trade and financial system”, said Al Gore.
The power and success of any emerging democracy lies in its economy. A sound financial basis will result in a strong sociopolitical and socioeconomic environment which in turn can support a system that enshrines strong democratic principles.
SA is no different. Since the transition to democracy, SA has emerged as the powerhouse of southern Africa. Nowhere has this been more evident than in our interactions with neighbouring countries. Our international ties are also indicative of the respect and admiration we enjoy with first-world countries and their recognition of SA as a leader in sub-Saharan Africa.
On a local level, the realignment of the cabinet after the elections has shown a commitment to service delivery by government. President Thabo Mbeki has appointed his cabinet to enhance delivery and promote democracy and good governance.
US Vice-President Al Gore, in the electronic journal of the US Information Agency, Economic Perspectives, said the following:
“There is no question that as we move into the global information age, foreign corrupt practices threaten to undermine both the growth and the stability of our global trade and financial system. Nowhere are the consequences more evident than in emerging and developing economies. The financial crises in Russia and Asia have clearly been deepened as a result of cronyism and corruption. As emerging economies open their doors to foreign investment and trade, corruption tends to thrive. At worst, it can impede the ability to attract overseas capital, it can damage economic development and reform and it can hinder the growth of democratic institutions.”
There is no doubt that corruption has a profound effect on the financial position and the economy of a growing country. The strength of a country’s economy is directly proportionate to factors such as imports and exports… and to the quality of government administration and to the level of corruption.
Corruption hurts everyone. It deepens poverty. It distorts social and economic development. It erodes the provision of essential public services and it undermines democracy. Instead of fair competition based on price, quality and innovation, corruption leads to competitive bribery. This harms trade and deters new investment.
In the 1998 Transparency International Corruption Perception Index, four African countries – Uganda, Kenya, Nigeria and Tanzania – appear within the last 13 of 85 countries surveyed.
Africa, as a developing continent, faces a major problem not only with corruption, but even more so with the perception of corruption. In the same index, the first African country to appear is Botswana, ranked 23, followed by Namibia at 30 and SA at 32 out of 85 countries.
There is a growing consensus among developed and developing countries alike that the fight against corruption advances national and economic interests. Combating corruption is now one of the highest priorities on the agenda of both international development agencies and leading organisations.
I believe that combating corruption effectively and sustainably is possible only with the involvement of all stakeholders. These include the state, civil society and the national and international private sector. Government cannot tackle corruption effectively on its own other than in highly authoritarian and potentially abusive ways.
We must build systems that combat corruption. The three most important aspects in the fight against corruption are:
* Raising awareness about the costs of corruption;
* Promoting good governance, delivery-driven and clean administration; and
* Strengthening the justice sector.
Corruption is present in every country in the world. The only difference is that some countries have managed to control it more effectively than others. One of the principle ways of doing this is to raise the awareness of the private and the public sector with regards to the cost of corruption. Both the public and the private sector are on the receiving end of fraudulent schemes and the effects are clearly evident in the economy.
By raising awareness we can educate people to the fact that corruption leads to lack of delivery, inaccessibility to basic services, unavailability of education, training and medical services, and lack of funds for pensions, welfare grants, and housing. All these elements affect the poorest of the poor and lead to an increase in crime.
Examples currently being investigated by the special investigating unit include the following:
* In housing subsidy cases, the cash recovery to date has been R3286000. This amounts to 219 subsidies. The monthly amount receivable through acknowledgements of debt is R22685. At present 122 cases are involved. The unit has received 21 default judgments involving R315000 and six more cases are due to be heard next week in the special tribunal. In addition to this, a summons is to be served on a contractor next week to the value of R608040 – equivalent to 40 subsidies.
* In pension cases, 1048 state employees have allegedly drawn a pension as well as a salary. The value of potential recoveries is R53m. On an average pension of R500 a month, this would mean that 9397 persons could have received a pension every month for 12 months.
The legislation establishing the unit was one of the first acts of Parliament towards a clean administration. In so many cases, we find people are deprived of their rights because a corrupt official in collusion with the private sector is trying to make a “quick buck” or become involved in major syndicate activities.
The promotion of good governance and a delivery-driven and clean administration is essential to the survival of democracy. It is encouraging to see that the government has made giant strides in this direction through the establishment of bodies such as the public protector, the Independent Directorate: Serious Economic Offences, the National Directorate: Public Prosecutions, and the special investigating unit.
Also, the improvement in transparency and the oversight in government through activities such as integrated financial management systems and training and technical assistance for audit institutions and anti-corruption agencies have become essential in this fight.
Another essential ingredient is that the bodies created to fight corruption have the necessary independence and backing. Independence is vital to their credibility and integrity. It builds better watchdogs in society and creates a greater confidence in the country.
Corruption flourishes where institutions in the justice sector – including the judiciary, prosecutors, police investigators and the private bar – are weak and incapable of investigating and prosecuting criminal activity.
To address these problems it has become essential to look at drafting new criminal and anticorruption laws to support those already in existence, comprehensive training at all levels including the judiciary, and improving the court administration to prevent tampering with records and reduce the delays experienced in hearing of cases.
By strengthening the justice sector and giving it the tools it needs, we will not only create the deterrent effect, but also cultivate a new belief in our legal systems.
We have already experienced the deterrent effect that the unit has on corrupt practices. Often – even before an investigation commences or is concluded – the unit receives calls or approaches to sign acknowledgements of debt or to admit corrupt practices. This amounts to good and clean administration.
The recent upheaval in developing country economies underscores the importance of transparency in public institutions and public decisions. Evidence also shows that countries with notoriously high levels of corruption risk marginalisation in a world of rapid economic integration. We cannot allow this to happen to our fragile democracy.
A massive investment in anticorruption campaigns will most certainly result in a substantive decline in corruption and a very visible economic growth and stability.
SA does have the potential to manage corruption effectively and prove, not only to its neighbours, but to the entire world that it is setting the benchmark in combating corruption in the new millennium.
Heath is head of the special investigating unit. These remarks have been edited.
Judge Willem Heath, Business Day, August 26, 1999
Categories: Corruption, Odious Debts
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