Tag Archives: South Africa

Shifting Goalposts: How FIFA Has Failed In Its Transparency Reforms

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FIFA, the body that oversees world football (soccer), has a long history of corruption well-documented on this blog, particularly during the tenure of former president Sepp Blatter (see, for example, here, here, here, here, here, here, here, here, and here). A series of groundbreaking indictments of numerous FIFA officials for wire fraud, racketeering, and money laundering by United States prosecutors, starting from 2015, led to multiple convictions, and revealed the widespread bribery involved in the awarding of 2010 World Cup hosting rights to South Africa. This scandal led to Blatter’s resignation in June 2015. (Blatter was later fined millions of dollars and banned from any involvement in FIFA activities for more than ten years by the organization’s Ethics Committee.) There have also been frequent allegations that Russian and Qatari officials allegedly bribed some FIFA executives and voters to win hosting rights to the 2018 and 2022 FIFA World Cups, though United States Attorneys probing FIFA have not elected to bring charges in relation to those allegations.

After Blatter’s resignation, FIFA pledged to clean up its act. In early 2016, Gianni Infantino was elected FIFA President. Infantino had campaigned on promises to crack down on corruption in the organization, and he pledged greater transparency in his first post-victory remarks. Shortly after assuming office, Infantino took steps to hire a chief compliance officer, publicly disclose the compensation of executive management, and bring FIFA’s accounting and auditing in line with industry best practices. But how has Infantino fared in increasing transparency when it comes to picking the host of the World Cup? 

Not very well. True, FIFA and Infantino widely touted the rigor of the process used to pick the United States, Canada, and Mexico as joint hosts for the 2026 Cup: an extensive consultation process introduced new standards for bidders, bids were subject to a years-long review window, new “technical requirements” for sustainable event management and environmental protection were created, and voting rights were expanded to FIFA’s entire 211-member body in place of being vested solely in FIFA’s executive committee. But the rather bizarre series of events this past October—culminating in FIFA picking the hosts of the 2030 and 2034 World Cups in a span of less than a month, with the winning bidder uncontested in both cases—demonstrates that the organization’s leadership has engineered rather ingenious methods of subverting nearly all of these reforms. Continue reading →

Reforming Corporate Criminal Liability in South Africa: Deferred Prosecution Agreements

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Although South African law allows corporations to be held criminally liable for the misconduct of their directors and officers, in practice holding companies liable for corruption and other crimes can be a protracted process due to backlogs, delays, and an under-resourced prosecutorial agency. In recognition of this problem, as well as the prominent role corporations have had in facilitating corruption and state capture, South Africa’s Judicial Commission of Inquiry into State Capture has recommended, among other things, reforming South Africa’s corporate criminal liability laws to allow prosecutors to negotiate deferred prosecution agreements (DPAs) to resolve corporate criminal cases. (Currently, South African prosecutors may negotiate and conclude plea and sentencing agreements with corporations, but this prosecutorial authority does not extend to DPAs.) The South African Law Reform Commission (SALRC) has been tasked to consider the introduction of DPAs as part of its review of South Africa’s criminal justice system; the SALRC’s report and recommendations are expected to be finalized by 2024.

This issue has garnered considerable discussion among South African commentators. While many welcome the introduction of DPAs as a much-needed reform, a number of commentators have raised concerns, most prominently the concern that introducing DPAs in South Africa will enable prosecutors and corporations to strike secret deals and fail to hold corporations accountable (see here, and here, and here). Fortunately, there are a number of ways to mitigate this potential problem, which the SALRC can and should include in its report and recommendations. Continue reading →

A South African “Abuse of Public Power” Offense? Some Suggestions for Drafting a Proposed Statutory Crime

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South Africa has laws which criminalize various forms of corruption (bribery, embezzlement, and the like), yet officeholders have regularly exploited their positions of power for illicit gains (see here and here). Part of the reason for this is that it often can be very difficult to prove the elements of a specific corruption offense, even when it seems clear that the officeholder abused his or her authority. To address this problem, a prominent judicial commission in South Africa (known as the Zondo Commission) recently recommended that South Africa adopt a statutory criminal offense for the “abuse of public power.” The proposed offense would cover “any person who exercises or purports to exercise any public power vested in such person…otherwise than in good faith and for the purpose for which such power was conferred,” and if the prosecution can prove such abuse of public power, then the defendant can be subject to up to 20 years imprisonment and/or a maximum fine of approximately US$12 million.

If the offense sounds very broad, that’s because it is. The Zondo Commission’s proposal contemplates a low threshold for what would constitute an abuse of public power, with no restriction to officials of senior rank. To illustrate, the Zondo Commission offered a wide range of potential examples of “abuse of public power,” including not only conduct such as the president granting an unauthorized person access to the “national wealth,” but also conduct like a junior official who suspends a colleague due to “envy or revenge.” Continue reading →

Full Disclosure of Donations to Intra-Party Political Campaigns: An Anticorruption Imperative in South Africa

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In South Africa, the Political Party Funding Act (the PPFA) regulates campaign donations and expenditures to political parties. By imposing various limits and transparency requirements, the PPFA—which is overseen by South Africa’s Electoral Commission—is supposed to prevent corruption and other forms of undue influence that campaign donors may seek to exert over officeholders. But South Africa’s political campaign financing laws contain a significant loophole, one that arises due to an unusual feature of how appointments to the executive branch of government work in South Africa. In contrast to many other jurisdictions, in South Africa members of the incoming governing coalition who seek appointment in the executive branch (including the president) engage in hotly contested intra-party political campaigns, and these campaigns are also funded through donations. Until recently, not only were donations to these intra-party campaigns not regulated by the PPFA, but they did not have to be disclosed under the Executive Ethics Code (Ethics Code). This potentially opened the door for corruption and influence peddling, with millions of dollars funneled to campaigns of South African politicians who sought positions in the executive branch.

For instance, President Cyril Ramaphosa’s 2017 intra-party political campaign (the “CR17 campaign”) to become president of the African National Congress (ANC) and, eventually, South Africa, received an estimated US$20 million in donations. It was subsequently uncovered that US$37,000 had been donated by a corrupt entity formerly known as Bosasa. Bosasa was notorious for making exorbitant donations to the ANC as a quid pro quo to secure significant contracts from the ANC-led government (see here and here). While it remains to be proven whether the allegations that Bosasa’s donation to the CR17 campaign was nefarious, or whether Ramaphosa personally benefited from donations made to his campaign, the non-disclosure of these and similar donations raises serious risks.

Recently, however, the Constitutional Court held that the Ethics Code in its current form is unconstitutional insofar as it fails to require disclosure of all donations made to intra-party political campaigns. The Court reasoned such non-disclosure deprived South African citizens of their constitutional right to information that is essential to making informed political choices when exercising their constitutional right to vote; the Court also concluded that this lack of transparency increased the risk of corruption. The Court mandated the president cure the defect arising by amending the Ethics Code by September 2023. The Court did not, however, prescribe the precise form the amendment should take because doing so would be inconsistent with the role of the judiciary under South Africa’s separation-of-powers doctrine.

When amending the Ethics Code to comply with the Court’s ruling, the guiding principle should be, to the extent feasible, to align disclosure obligations for donations to intra-party campaigns with the obligations currently imposed by the PPFA on inter-party political campaigns. Applying that principal suggests that the Ethics Code should be amended to impose the following two core requirements: Continue reading →

South African NGO to U.S. Department of Justice: Please Investigate Bain and Company for FCPA Violations

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In a Guest Post Monday, Nicole Fritz of South Africa’s Helen Suzman Foundation recounted Boston consulting guru Bain and Company’s role in the massive corruption that infected her country during the reign of its now deposed president Jacob Zuma. Today, she asks the Department of Justice to investigate the Company for “potential breaches of the U.S. Foreign Corrupt Practices Act of 1977.”

As she explains in a letter sent to the head of the FCPA unit, the evidence of violations is “not mere opinion.” Rather, it is drawn

from reports produced by two separate judicial commissions of inquiry, chaired by eminent South African judges: first, the Judicial Commission of Inquiry into State Capture Report (“State Capture Report”); second, the final report of the Commission of Inquiry into Tax Administration and Governance at the South African Revenue Services, colloquially referred to in South Africa as the ‘Nugent Commission Report.’  

The full text of her letter is here.

Guest Post: Will the Biden Administration Help South Africa Escape Capture?

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Today’s Guest Post is by Nicole Fritz, a South African public interest lawyer and executive director the Helen Suzman Foundation, a non-partisan think-tank dedicated to promoting liberal, democratic values and human rights in post-apartheid South Africa.

President Biden’s meeting Friday with South African President Cyril Ramaphosa offers a prime opportunity to show the Administration is serious about its new global anticorruption policy. Issued last December, the Administration promises a raft of new initiatives to not only crackdown on corruption at home but to help democratic, reform-minded regimes root out corruption that they cannot do on their own. President Ramaphosa’s government qualifies on all counts. Where it could best use assistance is in unraveling an American company’s role in the efforts of Ramaphosa’s predecessor, Jacob Zuma, to rob the country blind. 

During his nine-year rule, Zuma sought to “capture the state,” to remake South Africa’s fledgling young democratic government into a machine to enrich himself, his family, and his friends. No sooner did he take office in 2009 then he began stacking key government-owned enterprises with cronies and accomplices and purging the public service of professional, independently-minded civil servants.  He was finally forced from office after widespread public protest and coordinated efforts of civil society, those few remaining independent state agencies, and reformers within his own party.

In one of his last desperate bids to quell discontent and remain in office, Zuma established the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector. That Commission has defined the Ramaphosa presidency and the Commission’s several-thousand-page report, completed in June, reveals in astonishing detail just how far Zuma and accomplices extended their reach into the inner-workings of the government in pursuit of personal riches.

An especially damning chapter (here) recounts the role of the Boston management consulting firm Bain & Company in the state capture scheme.

Continue reading →

State Capture: A “How to” Guide

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The Democratic Alliance, South African’s principle opposition party, has brought suit seeking a declaration a policy of the African National Congress, the nation’s ruling party, is “inconsistent with the Constitution. . . and the Public Service Act” and hence invalid.

The policy at issue is the ANC’s Cadre Deployment and Development Policy. It sets out how the party selects who will serve in the national, regional, and local levels of South Africa’s government, either in an elected position or as a member of the career service.  The DA alleges that the effect of the policy is to give the ANC “control over the functioning of critical institutions of government. . . blurr[ing] the lines between the ANC and the State and facili[tating] state capture. . . . .” The case’s founding affidavit, equivalent to a complaint in common law jurisdictions, asserts the policy has “inhibited the ability of the State to function effectively in order to promote the rights in the Bill of Rights [and that it] has eroded South Africa’s democratic founding. . . . “

Evidence developed by the Judicial Commission of Inquiry into Allegations of State Capture, established after ANC leader Jacob Zuma was forced to resign as South African president, is cited throughout the affidavit to show how he and ANC cronies implemented the policy and what its effect has been.* The policy reads as a “how to” manual for capturing the state in a weak or developing democracy. One can only hope this will be how the South Africa’s judges read it as well.

A copy of the policy is here for readers’ information. And more importantly, for those working on prevent state capture elsewhere, to help them thwart similar efforts.

*Earlier today South African Chief Justice Raymond Mnyamezeli Mlungisi “Ray” Zondo, the commission chair, spoke to the failure of the ANC to come to grips with Zuma’s behavior and expressed the fear the state could be re-captured were another Zuma-like figure elected president. Click here to listen to his to warning to South Africans of all parties. Thanks to a South African reader for alerting me to his extraordinary and powerful remarks.

South African Court Slaps Down Attack on Corruption Prosecutor

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Early Wednesday a South African judge ruled that former President Jacob Zuma’s attacks on the prosecutor leading the case him were baseless and that Zuma’s trial on corruption charges proceed forthwith. Zuma had claimed prosecutor William Downer’s conduct in pursuing the case was so egregious — running the gamut from the commission of serious crimes, to breaches of ethics, to intimations of racial animus — that the charges against him must be dismissed. Or, at the least, Downer be removed from the case and trial therefore delayed indefinitely while a new prosecutor was found.  

In seeing through Zuma’s desperate attempt to derail the case, and standing up to the still powerful former president, Judge Piet Koen provided a model judges everywhere should follow.  When Zuma raised the unfounded, scurrilous attacks on the prosecutor, Koen ordered they be aired without delay.  Upon sifting through the evidence, he promptly issued a scholarly 109-page opinion finding that not one of the allegations withstood scrutiny and that there was therefore no basis to find Downer was not a fair-minded, independent prosecutor and hence no reason Zuma would not receive a fair trial if Downer remained on the case.

Today’s 61-page decision came in response to that earlier decision. Zuma had requested that the trial be halted while he appealed it.  In again a scholarly and carefully written decision, Koen knocked down the legal arguments offered in support of an appeal while reiterating the absence of any facts showing Downer guilty of misconduct or bias.

Zuma has done his best to pressure the judge into throwing out or delaying the case, with hundreds of supporters crowding into the courthouse and surrounding grounds at his every appearance to let their views be known and with some issuing not so veiled threats against the judge. Koen could have easily caved, finding merit to the claims or a way to put off the trial for months if not years.

That he did not and that he instead set the trial for this April stands in marked contrast to the way attacks on Nigerian, Zambian, and Italian prosecutors have been handled (here, here, and here). Rather than standing up for them, judges, justice ministry officials, and even fellow prosecutors stood aside after the attacks were launched with some collaborating with the attackers. If corrupt officials and their accomplices are to face justice, Judge Koen’s response must become the standard when those prosecuting them come under attack.  

Guest Post: Making the Most of “Windows of Opportunity” for Anticorruption Reform

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Today’s guest post is from Florencia Guerzovich, María Soledad Gattoni, and Dave Algoso, a team of independent consultants who jointly authored the Open Society Foundation report on Seeing New Opportunities: How Global Actors Can Better Support Anti-Corruption Reformers.

Ukraine after the Maidan Revolution. Malaysia after the 1MDB Scandal. Brazil after Lava Jato.

In each of these countries—and in many other examples—something triggered a shift in the possibilities for anticorruption reform. Pick your favorite metaphor: the stars align, the winds shift, there’s a fork in the road. We use the term “window of opportunity”: a period when heightened attention to an issue like corruption makes anticorruption reforms more likely. When those windows open, reformers both inside and outside of government try to seize the opportunity to make progress, while contending with forces that aim to maintain the status quo or advance an authoritarian or populist response.

Reformers’ approaches shift in these moments, as do their needs. Though success is not guaranteed, the possibility of reform can increase when global support organizations—including foundations, multilaterals, and NGOs—are better able to meet those needs (while also doing no harm). What do reformers most need during these windows of opportunity? And what can global support organizations do to help meet those needs? With the Open Society Foundations (OSF), we undertook research into those questions, with a primary focus on three case studies:

  • In Guatemala, the “Guatemalan spring” that opened following the announcement of corruption investigations into President Otto Pérez Molina and others in 2015, and the subsequent election of Jimmy Morales;
  • In Slovakia, the mobilizations under the “For a Decent Slovakia” banner and reform efforts that followed the murder of investigative journalist Ján Kuciak and his fiancée Martina Kušnírová in 2018;
  • In South Africa, the fight against state capture, which ended Jacob Zuma’s presidency and led to the administration of Cyril Ramaphosa in 2018.

Our findings, presented in a recent OSF report entitled Seeing New Opportunities: How Global Actors Can Better Support Anti-Corruption Reformers, were not always what we’d expected when we started the research. Collectively, our analysis of these case studies and other examples suggests some rethinking in terms of how to best support anticorruption reformers so that they can take maximum advantage of windows of opportunity when they arise. Continue reading →

Guest Post: How President Ramaphosa Can Begin Rebuilding Public Trust in South African Government

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Today’s guest post is from Larry Kirsch, an economist who is currently the Managing Partner of IMR Health Economics.

The South African government, like many governments around the world, faces daunting challenges due to the combination of the Covid-19 pandemic, economic collapse, and civil unrest. Addressing these problems requires not only decisive action by leaders, but also a sufficient reservoir of public trust. Without such trust, a leader’s call for civic sacrifice and solidarity may not receive the desired response. Unfortunately, South African citizens do not currently have much trust in their government. The leading international survey of trustworthiness, the Edelman Trust Barometer, reported this past January that trust in government among South Africans ranked lowest among the 28 countries surveyed—lower than Russia and Argentina and well below India and China.

Part of this lack of trust is due to chronically stressed economic conditions, as well as extreme structural inequalities. But citizens’ trust has been further undermined by South Africa’s endemic corruption. The corruption of former President Jacob Zuma and his closest cronies (especially the rapacious Gupta family) was well-documented in a a November 2016 report issued by the Office of the Public Protector, then headed by the highly-regarded Thuli Madonsela. That report, entitled The State of Capture, also emphasized the burden of corruption on everyday citizens, documenting, for example, how corruption had contributed to the dysfunctions in vital public services and state owned enterprises.

Will the relatively new government of President Cyril Ramaphosa be able to galvanize trust and obtain the degree of public support needed to deal with the grave threats facing South Africa? On the one hand, President Ramaphosa’s public statements, especially since the outbreak of the coronavirus in South Africa in early March, have been decisive, inclusive, and progressive, particularly in relation to the call for solidarity and the government’s commitment to the apportionment of healthcare, work, food, and other public support on the basis of need. But if President Ramaphosa truly wishes to begin a ”radical” restructuring process based on principles of fairness, social cohesion, and inclusive growth, he will have to deal squarely with the persistence of the culture of corruption, as well as with broader concerns about government openness and public accountability. And his stirring speeches have so far not included much information on how his administration intends to tackle these crucial issues.

One important element of a comprehensive strategy to rebuild the South African government’s integrity—and with it citizen trust in that government—would be for President Ramaphosa to personally back robust implementation of South Africa’s Promotion of Access to Information Act (PAIA). Continue reading →