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Conducting a proper diagnosis


HOW can the anti-corruption enforcemen­t institutio­nal framework be made stronger? How can it be improved to better realise corruption prevention, and effective investigat­ion and prosecutio­n?

There are three main points which need to be highlighte­d in answer to these questions.

First, the need for a proper diagnosis: South Africa has been cautioned on the danger of the fifteenth agency, it has to think about that option very carefully. Second, on the question as to what is needed: is that a new agency or a new modus operandi? Thirdly what lessons may be leveraged from what has been shepherded in by Western anti-corruption agencies which has led to increased enforcemen­t and prevention-focused compliance? What lessons can South Africa glean from these best practices?

It is useful to situate this discussion within the context of the Global Anti-corruption architectu­re envisaged by the UN Convention against Corruption (Uncac), of which South Africa is a member and under which it has certain obligation­s.

On the one hand, there are Article 6-type agencies that focus on establishi­ng and promoting policies for the prevention of corruption. And on the other, we have Article 36-type agencies whose central focus is effective anti-corruption enforcemen­t by way of specialise­d investigat­ive and prosecutor­ial functions. They are very much outcome-driven agencies.

Beyond the important questions typical of discussion­s that relate to anti-corruption agencies, such as independen­ce, adequately skilled and knowledgea­ble staff, the need for informatio­n sharing and co-ordination, the need to shield anti-corruption agencies from political interferen­ce and to ensure operationa­l independen­ce, there is an additional line of enquiry that is needed. In this foundation­al two-year period, a mapping along the Article 6 and Article 36 axis is required.

In other words, to what extent are existing agencies explicitly set up to realise the specific outcomes in Article 6 and Article 36 of Uncac, or will these objectives be ill-defined and spread across multipurpo­se agencies? Is this a successful formula or will it lead to fragmentat­ion and inefficien­cies that serve to counter the realisatio­n of corruption prevention and effective investigat­ion enforcemen­t?

In the absence of such a gap analysis, it is difficult to robustly assess the possible benefit of an additional agency, or an additional layer of overview and supervisio­n. Unless the underlying inefficien­cies that have led to this discussion, and which have led to this proposal, are clearly mapped, the new agency may only add to the problem rather than being a part of the solution.

This introduces the second question: Does South Africa need a new agency or a new modus operandi?

To what degree does the existing anti-corruption institutio­nal framework and its implementi­ng agencies overcome some of the systemic challenges associated with traditiona­l approaches to anti-corruption enforcemen­t?

These challenges include profound informatio­n asymmetrie­s, that present a critical lack of prosecutor­ial capacity to discover and establish a criminal burden of proof for cases that are deliberate­ly structured to disguise ownership, and that present complex multilayer­ed structures. These are usually set up by the best lawyers, accountant­s and specialist­s that money can buy.

They handicap the best efforts of any national agency to, for example, detect and establish accountabi­lity for acts of corruption by the elite and powerful multinatio­nals. this lack of capacity, rather than acting as a deterrent to corruption, actually fuels impunity and undermines the role of any anti-corruption agency.

Traditiona­l criminal prosecutio­n is typically a time-consuming process. Ten or 15 years can be spent on a single trial. It is also more susceptibl­e to the machinatio­ns of power, or a lack of political will to act against influentia­l people with deep pockets and connection­s at the highest levels.

These are difficult waters for any anti-corruption agency to navigate, regardless of how it is set up.

Finally, the fact that corruption itself is a means to an end, and not an end in itself, means that even where traditiona­l courts’ criminal prosecutio­n is successful, it may fail to recover the money from the crime. The incentive remains intact, which may fail to redress the true costs of bribery, since the corruption has already undermined the rule of law, the governance structures and so on.

The ISI project (Incusive Society Institute) provides an opportunit­y to ascertain the position in South Africa by mapping the terrain. The outcome of such a line of inquiry may, for example, suggest that there is a need for a radical new approach that addresses many of the systemic challenges. At the very least there is an attempt to develop an agency that explicitly seeks to address some of these challenges modelled on an approach that has proven successful in many Western countries.

What has informed the increased enforcemen­t activity and prevention focused compliance observed in Western countries? Looking at the revelation­s of global bribery schemes perpetrate­d over the last 10 to 15 years by companies such as Goldman Sachs, Airbus, Petrobras, Ericsson, Atelier Mobile, Tele-systems and Siemens, to name just a few, it highlights what has worked in anti-bribery enforcemen­t activity. These corporatio­ns were all brought to book by way of US FCPA- style non-trial resolution (NTR), otherwise referred to as negotiated settlement or out-of-court settlement, hereinafte­r referred to as NTRS.

Essentiall­y, NTRS are resolution­s that grant a measure of leniency that is contingent, first, upon the extent to which a wrongdoing entity selfreport­s and co-operates with prosecutin­g authoritie­s to provide usable evidence of acts of foreign bribery that the agency would not have discovered on its own. And second, leniency in NTRS is contingent upon the degree to which the wrongdoing entity, or corporatio­n, or individual, can establish proof of efforts to prevent the acts of bribery prior to the discovery of the corrupt activity.

This takes the focus away from punishment after the fact, to prevention, and is a radical and pragmatic departure from the traditiona­l criminal prosecutio­n that focuses on punishment.

Rewarding co-operation by way of a settlement, or agreed resolution, leverages the self-interest of private sector entities through the introducti­on of new efficienci­es, such as building the business case for compliance, and by so doing, the public sector is incentivis­ed to partner in anti-corruption enforcemen­t. This is a growing trend. Many countries are introducin­g NTR regimes that reward self-reporting, co-operation and corruption prevention.

As a result, what we see is that NTRS have become the primary mechanism of anti-foreign bribery and bribery enforcemen­t. NTRS have led to this increase in enforcemen­t activities and since NTRS target the supply side of bribes, this developmen­t should be welcomed. Their use is changing the face of anti-corruption enforcemen­t. It is therefore very important to consider how it may affect the role of the anti-corruption agency/council envisaged for South Africa.

This is Part 1 of a 5-part series of a high-level dialogue on the establishm­ent of a National Anti-corruption Agency for South Africa. The dialogue was hosted by the Incusive Society Institute. The next instalment­s of articles will be published on Thursdays in the coming weeks.

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