Annexure A

Reasons for the Protest

Introduction:
Although there is debate about the scale of corruption in South Africa, there is little
doubt about the pervasiveness of the phenomenon in our country. In January 2015, the
Institute of Internal Auditors reported that South Africa has lost R700 billion to corruption
over the last 20 years. In the most recent audit of the Auditor-General (AG) for 2013/14
some R62.7-billion is recorded as irregular expenditure by national and provincial
governments; departments and public entities in these spheres of government. For the
same period, unauthorised expenditure of approximately R2.6-billion was incurred by 30
departments, while 245 entities spent R1.1-billion on fruitless and wasteful expenditure.
The situation is not better within the local government sphere and within parastatals.
According to the Auditor-General report, irregular expenditure of R11 473-million was
incurred by 264 local government entities in 2013/2014. For the same period, entities
that fall under the Municipal Finance Management Act (MFMA) spent R687-million in
fruitless and wasteful expenditure; unauthorised expenditure of R11 402-million was
incurred by 190 municipalities (71%).
Corruption Watch (CW) reported to have received 49 reports from the public about
corruption in state-owned enterprises (SoEs) between January 2012 and April 2013,
accounting for over 3% of all corruption complaints received during this period. Many of
these involved vast amounts of money and flagged weaknesses in procurement and
employment processes. Complaints implicated 12 out of the 132 SOEs in the country.
Most notably corruption reports were in the energy (28.6%), transport (24.5%) and
health (10.2%) sectors.
The Public Services Commission (PSC) which monitors the rot amongst public servants
reported in November 2012, gross financial misconduct by public officials. Over a ten
year period the number of reported cases of financial misconduct by public officials has
almost doubled from 434 in 2001-02 to 1,035 in 2010-2011. The amount of money
involved hit a high point of almost R1 billion in 2010-11. The previous highest figure was
approximately one third of that amount, R331.2 million, and recorded nearly 10-years
ago.
But it is not in the public sector where corruption is rife. In most instances, the corruption
in the public sector is as a result of links between private sector entities that have
connection with public officials. The links are the basis of collusive tendering related to
public procurement and cartel-like behaviour among well-established industries.
Perhaps the biggest private sector corruption scandals to be exposed in a democratic
South Africa, is the revelation of a R30-billion price-fixing and collusion by the countrys
biggest construction companies. The Competition Commission also found cartel-like
behaviour in cases of bread and cement price-fixing. Most concerning is the manner in
which large corporations were involved in bread price-fixing.
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Presently, the Competition Commission is involved in an investigation following a

complaint against certain foreign exchange traders, who are alleged to have been
directly or indirectly involved in fixing prices in relation to bids, offers and bid/offer
spreads in respect of certain foreign exchange transactions involving the South African
Rand.
Although many may want us to believe that corruption is a post-1994 phenomenon. The
view that corruption is a new development ignores how corrupt the apartheid state was
and is premised on a racist stereotype that black-led governments are inherently
corrupt. South Africa has long struggled with a culture of corruption. This corruption
reached its crescendo under late apartheid when the state was waging a war against
its people and was also engaged in systemic economic crime to break international oil
and arms embargoes. Large parts of the public and private sector used the cloak of
secrecy to steal vast amounts of money and move this abroad. The apartheid-era
Auditor-General had severely limited powers of oversight over the militarys special
defence account, which was used to transfer over US$20 billion abroad between the
late 1970s and early 1990s in order to purchase weapons and wage international
propaganda campaigns.
Despite repeated calls from civil society, little has been done to address the issue of
late apartheid corruption. Most recently the Public Protector Thuli Madonsela has
initiated investigations into apartheid-era embezzlement by the countrys largest banks.
A leaked report (commissioned by the South African government in 1999) identified
almost US$2.9-billion that could be uncovered from three large corporations (two of
which are South Africa) and a further US$3.1-billion in questionable payments made in
Luxembourg to purchase weapons.109 Several notable South African corporations
have been implicated by the report, which also suggests criminal collusion involving
individuals within the South African Reserve Bank in the late 1980s.
Troubling us is the fact despite the enactment of legislation aimed at curbing corruption
and the establishment a plethora of institutions meant to curb corruption, the cancer
continues to spread. South Africa is a party to a number of international and regional
conventions that set out obligations to fight corruption; the United Nations Convention
against Corruption, the African Union Convention on Preventing and Combating
Corruption, the OECD Anti-Bribery Convention and the Southern African Development
(SADC) Protocol Against Corruption. Through ratification, South Africas obligations in
terms of these convention find expression in domestic legislation such as the Prevention
and Combatting of Corrupt Activities Act ; the Prevention of Organised Crime Act ; the
Protected Disclosures Act (also known as the Whistle-blowing Act); and the Criminal
Procedure Act, among others.
But South Africa does not just have anti-corruption legislation on. There are a number of
institutions and commissions whose specific task is to root out, tackle and eliminate all
forms of corruption such the National Prosecuting Authority (NPA) which has a number
of specialised units, including the Specialised Commercial Crime Unit; the Asset
Forfeiture Unit and the Witness Protection Unit. The Public Protector is mandated to
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investigate any conduct in state affairs, or in the public administration of any sphere of
government where there is suspected impropriety. The Directorate for Priority Crime
Investigation (DCPI) also known as the Hawks is an independent directorate within
the South African Police Service (SAPS) that manages, prevents, investigates and
combats serious organised crime, serious corruption and serious commercial crime.
The Special Investigating Unit (SIU) is a state body that fights corruption through quality
investigations and litigation. The Financial Intelligence Centre established in terms of
the Financial Intelligence Centre Act (FICA) receives reports of suspicious financial
transactions and it aims to combat money laundering in South Africa.
The Auditor-General has a mandate in terms of the Constitution to audit and report on
accounts, financial statements and the financial management of all national and
provincial departments, municipalities and any other institution required by legislation to
be audited. The Public Service Commission (PSC) which is established in terms of
Section 196 of the Constitution is an independent, impartial body that seeks to enhance
governance in the public service. Formerly known as the Independent Complaints
Directorate, the Independent Police Investigative Directorate (IPID) aims to ensure
independent oversight of the SAPS. It conducts independent investigations of criminal
offences allegedly committed by SAPS members. This includes investigations of
individual acts of corruption as well as systemic corruption involving the police.
One of the reasons for ongoing corruption is that the existing laws have not been
adhered to or implemented to their fullest extent, although the anti-corruption
architecture is strong, with several pieces of domestic legislation already in place.

Corruption cancer spreads:

Transparency Internationals 2013 Global Corruption Barometer indicated that South
Africa is one of the countries where people feel corruption has increased not just
among government officials but among its citizenry. Almost half, that is, 47% of South
African respondents said that they had paid a bribe in the past year to at least one of
eight public services mentioned.
The increase in corrupt practices can be inferred from the latest Auditor-General report
for national and provincial departments. As indicated in the introduction above, the
latest Auditor-General report noted an increase in unauthorised and irregular
expenditure. The AG Kimi Makwetu stated that in 2013/14, R2,6 billion (R2,3 billion in
2012/13) was incurred by 30 departments. Makwetu commented that little progress has
been made in decreasing the extent thereof in the past three years.
This increase over the last three years continues a pattern that can be discerned from
2007 onwards as Table 1 below shows. Data from AG reports (2007-2011) show that
the amount of spending identified as irregular deserves attention. These irregularities
are serious transgressions of the law, particularly the Public Finance Management Act
(PMFA).

Table 1:
A Summary of Unauthorised, Irregular and Wasteful Expenditure (2007-2011)
- Measured in Millions
Year
2007/8
2008/9
2009/10
2010/11

UNAUTHORISED
National Provincial
Public
Entities
Not
Not
1.0
specified available
1 400.0
8 086.7
2.4
362.4
8 415.6
Not
specified
802.3
2 948.6
9.1

IRREGULAR
Provincial Public
Entities
228.0
Not
343.0
available
530.0
4 038.0
750.0
2 305.0
7 344.6
1 589.0

National

2 286.7

16 790.1

2 226.3

National
2.8
35.2
27.6
428.8

WASTEFUL
Provincial Public
Entities
Not
48.5
available
120.8
52.7
160.3
116.0
849.6

164.0

In accordance with legislation, failure to comply with legislated obligations and

responsibilities, and incurring unauthorised, irregular and fruitless and wasteful
expenditure should be investigated and could constitute financial misconduct by
accounting officers or officials. In his 2013.14 report the Auditor-General stated that;
Our key findings in this regard include failure by management to take effective and
appropriate disciplinary steps against officials who made or permitted unauthorised,
irregular or fruitless and wasteful expenditure. Further, allegations of financial
misconduct on the part of accounting officers and other officials were not always
investigated.
This lack of accountability is widespread and relates to numerous forensic audits that
have been conducted at provincial and local governments. In Port Elizabeth, the Pikoli
Report uncovered the misuse of some R10-million meant for a new bus system but was
squandered on a music festival which never happened and on payments made to
individuals. The recommendations of this report were not implemented and the busses
remain unused.
In the same municipality, the Kabuso Report on corruption and maladministration
discovered that holiday resorts had been sold off and leases entered into in irregular
ways. Councillors were named and action was suggested against them in the report.
Nothing has happened.
The 2009 Sicelo Shiceka task team report that investigated and undertook an audit of
potential irregularities in municipalities in the North West has never been released to the
public. In the last months there have been numerous service delivery protests in
Madibeng in relation to water supply and accusations of corruption in the tanker supply
and non- maintenance of the water supply.
In October 2014, the Governor of the South African Reserve Bank (SARB) and the
Chief Executive Officer of the Financial Services Board (FSB) appointed Mr James
Cross, former Senior Deputy Governor of the SARB, to lead a task team that will
engage in a process with authorised dealers, and produce a report to advise the SARB
and the FSB on its findings and recommendations. At the time of its establishment the
task team was to report its initial findings during the second quarter of 2015. The public
has not seen the report despite reported widespread misconduct and malpractice in the
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South African foreign exchange market that lead manipulation of benchmarks,

devaluation of the Rand and sharing confidential client information.
These two reports Sicelo Shiceka and James Cross ones - are the tip of the iceberg.
There have been many such reports over the years and many have failed to see the
light of day.
The lack of accountability is rife in state-owned enterprises (SoEs). A good example of
this is what happens at Eskom. The whole new build programme has been
characterised by cost and time overruns. While the Medupi tender came in, it was R32billion. It was ratified by the Eskom Board at R91-billion. Presently cost escalations are
reported to be about R300-billion and the power station that was meant to come on
stream in 2011 is four years late. Kusile is expected to balloon from R81 billion up to
R172-billion.

Corruption takes away resources from provision of basic services to

the working class and undermines existing jobs:
Resources that go down the corruption tube could be used to deliver basic socioeconomic services, the provision of adequate housing, basic education, healthcare
services, water, social welfare and basic nutrition for children. Corruption also takes
away resources from urgent land reform (including recapitalisation programmes), rural
development, programmes to help small-scale farmers and support for extension
services. Corruption is a licence for hunger as it ensures that food conglomerates
dominate a broken food system (as seen in the bread price fixing scandal) and
undermines the quality and scale of the school feeding schemes.
How corruption is an attack on the working class can be found in the Auditor-Generals
reports. In the latest AG report it was found that four of the most essential in terms of
provision of services to the poor, health, public works, education and human
settlements were recorded as having, largely failed the audit test. In three of these,
health, education and public works, R16.9-billion irregular expenditure was recorded. In
relation to compliance with key legislation the Auditor-General says; results in the
education, health and public works sectors remain poor with only one department out of
the 30 in these sectors having no material findings on compliance.
There is no doubt that corruption is an assault on the socio-economic rights in Sections
26 and 27 of South Africas Constitution. A fight against corruption is a struggle for
socio-economic rights for the working class, ordinary and poor people. There are
numerous examples of money meant for projects to uplift the poor where money
allocated has been used for other purposes.

But corruption is not only an attack on our socio-economic rights. It also robs us of jobs.
The AG found that 72% of those audited for 2013/14 did not comply with supply chain
management legislation. The non-compliance does not apply to departments and local
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government. As unions who organise in state owned enterprises who have found largescale non-compliance with the local content requirements of the Preferential
Procurement Policy Framework Act and its Regulations leading to massive job losses in
companies owned by local suppliers.
We therefore demand:
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We demand that the President establish a Commission of Inquiry, in terms of

Section 84 (2) (f) of the Constitution of the Republic of South Africa 1996 to
probe the effect of corruption on the delivery of socio economic services, the
provision of adequate housing, basic education, healthcare services, water,
social welfare and basic nutrition for children.

That it investigates compliance by organs of the state of the Preferential

Procurement Policy Framework Act and the impact of non-compliance with
job-losses.

To assess how effective the anti-corruption architecture is in both the private

and public sectors.

In relation to Eskom whether or not the present situation in Eskom is the

result of corrupt practices in the past and present and to determine that and
how government must pay compensation to workers through their employers
for lost wages.

To make recommendations on measures necessary to ensure that public

money is used for the purposes it is assigned and not for the benefit of the
few.

We further demand:
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The release of all of reports into corruption and in particular the Sicelo
Shiceka and James Cross Reports and the implementation of both the
Kabuso and Pikoli reports.

An investigation into corruption and economic crime during the apartheid

years in particular in relation to sanctions busting.