The night of 21 June was the longest of the year for many South Africans. Shortly after dawn broke on the 22nd, Chief Justice Raymond Zondo released the final chapters of the State Capture Report – the most damning account of the state of our nation since democracy.
It was also the day that the government withdrew all remaining Covid-19 restrictions, including face masks, indicating that the country has entered a post-pandemic era.
The fact that days will now become longer and no one has to wear a mask to hide behind may be cheesily symbolic of a country starting to recover from rock bottom.
I wrote the above paragraphs before reading the Zondo Report’s final chapter. And after reading it, I am afraid South Africa can only recover in a post-ANC world.
It is pretty much common cause that the report reveals that the ANC is rotten to the core and that the party’s leadership does not have even one strand of what would be regarded as strong moral fibre.
Any self-respecting political leader with integrity would resign or ‘step aside’, as the ANC would call it. However, this won’t happen because the responsibility now lies with the president and the ANC to implement the recommendations.
A lot has been written about the extent of the theft and corruption revealed in the report. Still, after having read substantial portions of the final chapters of the report, I think two recurring themes are perhaps understated. The first is the ANC’s policy of cadre deployment and its role in enabling state capture, and the second is the failure of the much-lauded South African financial system to pick up the smoking gun: the illicit money flows.
The individuals who enabled state capture were all ‘recommended’ for their positions by the ANC’s cadre deployment committee, which President Cyril Ramaphosa chaired during the relevant times. The Zondo Commission found that these ‘recommendations’ were, in fact, instructions.
The report found that this policy contradicts the Constitution, which is a massive indictment of the ruling party and is evidence of its integrity deficit. It is possibly worse.
The report highlights that the Constitution demands a “public administration that maintains a high standard of professional ethics; that is efficient, economic and effective in its use of resources; is development-oriented; provides services in a manner that is impartial, fair, equitable and without bias; encourages participation in policy-making; and is accountable and transparent.”
The deployment of cadres did not adhere to any of these prescriptions. Not one.
It is probably the clearest example of how the ANC put the party before the state, or even worse, put carefully-selected ANC members before the state.
But the practice did not only enable state capture. The committee also appointed most key government officials in all spheres of government, including national, provincial, and local governments. In many cases, perhaps most, the actions resulted in appointing incompetent and ‘ethically compromised’ officials. The result is most visible at the local government level, where most municipal authorities are bankrupt and dysfunctional.
Service delivery is in most authorities non-existent, with unmaintained infrastructure destroyed and social cohesion at an all-time low.
The financial and social damage will take decades to repair, and the opportunity cost may even outweigh the state-capture loot.
It is also a pity that Zondo did not recommend a skills (and lifestyle) audit of all senior government officials who may have been the beneficiaries of the deployment committee.
Failure of the financial system
The second theme is the failure of financial and monitoring organisations to identify and prevent the proceeds of state capture from flowing through our financial system.
The report recommended that banks’ conduct and the Financial Intelligence Centre’s (FIC’s) oversight be investigated to ascertain why it failed.
But it is not only the banks and the FIC that demands scrutiny. Money was also spent on buying houses, flashy cars and expensive handbags, to name a few. Why wasn’t the source of funds for these transactions not proactively investigated by the various links in the transaction chains? I am talking about estate agents, car dealerships, luxury goods retailers, financing institutions etc.
The revelations of the extent of the system’s failure will also amplify the likelihood that international money-laundering watchdog, the Financial Action Task Force (FATF), may greylist South Africa due to failures in its monitoring practices.
In a 2021 report the FAFT highlighted South Africa’s shortcomings, including its inability to recover the monies stolen through state capture. It also stated that “while authorities carry out some successful money laundering investigations, the proactive identification and investigation of laundering networks and professional enablers is not really occurring.”
South Africa needs to address the “shortcomings” by October, failing which the country will be placed on the grey list. This may potentially have much more dire consequences than when rating agencies cut our ratings to junk.
It is good that the Zondo Report revealed what happened during the state capture years, but it will be tough to rectify the impact. It will be impossible if the ANC has to do it.
Hopefully the 2024 general election will be a turning point.