World pow­ers warn SA on graft

Pres­i­dency re­ceives un­prece­dented memo on cor­rup­tion

Sunday Times - - Front Page - By RANJENI MUNUSAMY

● Pres­i­dent Cyril Ramaphosa has been warned by five world pow­ers that his am­bi­tious in­vest­ment drive could fail un­less SA starts to take tan­gi­ble ac­tion against the per­pe­tra­tors of state cap­ture, cor­rup­tion and other se­ri­ous crimes.

In an un­prece­dented move, the gov­ern­ments of Ger­many, the UK, the US, the Nether­lands and Switzer­land have writ­ten to the pres­i­dency through their mis­sions in Pre­to­ria stat­ing that there should be a “clear, un­qual­i­fied and man­i­fest po­lit­i­cal com­mit­ment to the rule of law, the in­de­pen­dence of the ju­di­ciary and to hon­est and eth­i­cal busi­ness prac­tices”.

The five coun­tries, which ac­count for 75% of for­eign direct in­vest­ment in SA, have also ex­pressed con­cern about what they called “ob­sta­cles” to for­eign in­vest­ment. Th­ese in­clude “con­stant changes of the goal­posts” in the reg­u­la­tory frame­work for min­ing, broad-based BEE tar­gets and score­cards, and in­tel­lec­tual prop­erty rights. They have also called for “a re­con­sid­er­a­tion of cur­rent visa prac­tices”.

“No in­vestor would ven­ture to come to SA with­out proper and com­pre­hen­sive guar­an­tees for his in­vest­ment,” the mem­o­ran­dum reads.

Some of SA’s big­gest com­pa­nies, in­clud­ing Bri­tish Amer­i­can To­bacco, Volk­swa­gen, Mer­cedes-Benz, Ford and Bar­clays, are head­quar­tered in th­ese coun­tries, and em­ploy thou­sands of South Africans lo­cally.

The doc­u­ment was signed by Ger­man am­bas­sador Martin Schäfer, Bri­tish high com­mis­sioner Nigel Casey, US chargé d’af­faires Jessye Lapenn, Dutch am­bas­sador Han Peters and Swiss am­bas­sador He­lene Budliger Ar­tieda.

The move to send a joint con­fi­den­tial mem­o­ran­dum to Ramaphosa’s of­fice was prompted by jit­ters from po­ten­tial in­vestors in the five coun­tries about com­mit­ting new fund­ing to his in­vest­ment drive.

Pres­i­dency spokesper­son Khusela Diko con­firmed re­ceipt of “cor­re­spon­dence from rep­re­sen­ta­tives of a num­ber of coun­tries with sig­nif­i­cant in­vest­ment in SA”.

“Whilst it’s un­for­tu­nate that those who are diplo­mats amongst them ig­nored and un­der­mined es­tab­lished diplo­matic chan­nels and pro­to­cols for com­mu­ni­ca­tion, the pres­i­dency has noted their in­put and re­gards it as part of the very im­por­tant and on­go­ing di­a­logue tak­ing place amongst South Africans and the in­vest­ment com­mu­nity — both do­mes­tic and for­eign,” she said.

The in­ter­ven­tion is the first for­mal in­di­ca­tor that Ramaphosa’s New Dawn cam­paign to stim­u­late eco­nomic growth by at­tract­ing $100bn (R1.3-tril­lion) over five years might be in trou­ble.

At his pres­i­den­tial in­vest­ment sum­mit in Oc­to­ber, there was much hype about pledges to­talling R290bn. But this mainly con­sti­tuted in­tended spend­ing, pub­lic de­vel­op­ment money from in­ter­na­tional de­vel­op­ment agen­cies and lend­ing from the Brics New De­vel­op­ment Bank.

Ramaphosa and the four spe­cial in­vest­ment en­voys that he ap­pointed last April have been scour­ing the globe for new spend­ing and ad­dress­ing neg­a­tive per­cep­tions of SA, in­clud­ing at the re­cent World Eco­nomic Fo­rum in Davos, Switzer­land.

The de­ci­sion by the five coun­tries to ad­dress their con­cerns for­mally with the pres­i­dency came af­ter en­gage­ments with of­fi­cials in Ramaphosa’s of­fice, in­clud­ing his eco­nomic ad­viser Trudi Makhaya and the en­voys, Trevor Manuel, Mce­bisi Jonas, Phumzile Lan­geni and Jacko Ma­ree.

Other coun­tries be­ing tar­geted for in­vest­ment have ap­par­ently ex­pressed sim­i­lar con­cerns.

Of par­tic­u­lar con­cern to those who signed the mem­o­ran­dum was that Ramaphosa’s com­mit­ment to act against

No in­vestor would ven­ture to come to SA with­out proper and com­pre­hen­sive guar­an­tees for his in­vest­ment

cor­rup­tion was not be­ing fol­lowed through with cases be­ing brought to court.

“There needs to be ac­tion to back up the words about tack­ling cor­rup­tion,” said one of the sig­na­to­ries, who asked not to be named. “For there to be fresh in­vest­ments, the CEOs need ar­gu­ments to take to their boards about why it is time to make com­mit­ments to SA. It is dif­fi­cult to make that when we haven’t seen a sin­gle per­son jailed.”

An­other diplo­mat, who also spoke on con­di­tion of anonymity, said the pro­ceed­ings at the Zondo com­mis­sion were be­ing closely mon­i­tored in for­eign cap­i­tals.

“The past nine years have been marked by un­cer­tainty and stag­na­tion on many fronts in SA. Pres­i­dent Ramaphosa has set out to change that. Im­por­tant steps have been taken — par­tic­u­larly in the fight against cor­rup­tion. We have been watch­ing the rev­e­la­tions of the Zondo and other com­mis­sions very at­ten­tively and I can as­sure you that the com­mis­sion is also be­ing fol­lowed very closely from abroad, in our home coun­tries,” he said.

“From the per­spec­tive of for­eign in­vestors, it is im­per­a­tive to not stop here, but to con­tinue on the path to­wards trans­parency and ac­count­abil­ity and for the ju­di­ciary to see this through.

“It is cru­cial to rapidly and cred­i­bly re­con­sol­i­date the rule of law,” the diplo­mat said.

In­ter­na­tional in­vestors had been en­cour­aged by the mes­sages from the pres­i­dent and out­reach by his en­voys, as well as the gov­ern­ment’s com­mit­ment to im­prov­ing in­vest­ment and busi­ness cli­mate, he said. “What they need now to per­suade their boards to com­mit to fresh in­vest­ment in SA are clear de­ci­sions on reg­u­la­tory frame­works in key sec­tors like telecom­mu­ni­ca­tions, ac­tion to put [state-owned en­ter­prises] on a sus­tain­able foot­ing, and ac­tion to make clear that cor­rup­tion will be tack­led ef­fec­tively.

“I am con­vinced that if trust is be­ing re­stored, in­vestors will flock back to the coun­try,” said the diplo­mat.

Diko said the is­sues had been raised in nu­mer­ous other fo­rums, es­pe­cially by South Africans them­selves. “All of th­ese is­sues are re­ceiv­ing the nec­es­sary at­ten­tion from gov­ern­ment and other af­fected stake­hold­ers,” said Diko.

Ma­ree said all th­ese is­sues had been raised with them dur­ing in­ter­ac­tions with po­ten­tial in­vestors. He con­firmed that he had been en­gaged di­rectly by all the sig­na­to­ries to the mem­o­ran­dum.

“There are pro­cesses in place but many peo­ple are im­pa­tient. It is of course bet­ter if we can demon­strate ac­tion and there are tan­gi­ble re­sults to show progress,” said Ma­ree.

An of­fi­cial in the pres­i­dency said the move by the five coun­tries was un­prece­dented as for­eign na­tions only “in­ter­fere” in do­mes­tic af­fairs when gov­ern­ments vi­o­late their laws or com­mit hu­man rights vi­o­la­tions.

“We must all be care­ful not to un­der­mine the [Zondo] com­mis­sion. Th­ese coun­tries must also un­der­stand that with the NPA [Na­tional Prose­cut­ing Author­ity] in the state it was, who was sup­posed to take the cases to court? It is well known that some of our in­sti­tu­tions were hol­lowed out and cor­rupted,” he said.

A for­eign pol­icy ex­pert at the South African In­sti­tute of In­ter­na­tional Af­fairs, El­iz­a­beth Sidiropou­los, said it ap­peared that the five na­tions wanted to alert Ramaphosa to gen­uine con­cerns in their cap­i­tals. “Th­ese coun­tries … are flag­ging for him that if SA is to be per­ceived ac­cord­ing to what he set out in his first state of the na­tion ad­dress, they need to bring peo­ple to book.”

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