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Inside OUTA January 2018

Updates from OUTA, which is working for the people to improve South Africa’s prosperity through accountability for maladministration and abuse of taxpayers’ funds.

Dear OUTA supporters and followers

January 2018 has been filled with a number of events that signal the start of new hope, recovery and growth for the South African economy. This month’s newsletter provide more insight into some of the reasons to be excited, but everything now relies on the new leadership within the ruling party  – particularly with Cyril Ramaphosa now at the helm – taking this forward.

While speculation abounds over how the split in the ANC Top-6 may get in the way of CR’s vision for a new anti-corruption effort, we believe that his actions have sent a clear signal that he means business and that corruption will be dealt with. We believe that some of the ANC NEC members will not last their term, due to corruption charges that will unfold against them. These charges will be too serious for the ANC leadership to ignore and some tough decisions will need to be made if the ANC is to have a chance of winning the 2019 national elections.

But politics is not our game and our interest is only to observe, with close interest, the shifts and developments that affect our work. We need to remind ourselves constantly that one of our roles as a responsible civil society organisation is to work with Government when it comes to building a culture of responsible tax policy and use of tax revenues. Ramaphosa’s actions signal a new hope of improved positive engagement with civil society, as opposed to the past adversarial and conflicting approach taken by the state, when it comes  subject of tackling corruption and maladministration within the state.

Thus, in 2018, you will see more action from OUTA to keep Government true to its mandate and obligations to society. We intend to play a leading role in Government’s plans to engage with society, as new leadership seeks to improve the fight against corruption. But we won’t go soft on the issue. We will demand that those implicated in fraud and squandering of our taxes are held accountable, whilst seeking various mechanisms and avenues to restore a culture that denounces and trounces corruption in South Africa.

2018 will be a watershed year for our country and the next two years will see heightened activity within our courts. Many who once controlled senior leadership positions within the state will now have to answer to their unacceptable conduct and flouting of the law. As a result, our tax revenues will be spent a lot better going forward, investors will return and our nation’s prosperity will rise accordingly.


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Asset Forfeiture Unit: An effective corruption-fighting tool finally unleashed

We have now seen two significant preservation orders won by the Asset Forfeiture Unit (AFU): the 14 December order for R1.6 billion against McKinsey and Trillian for looting Eskom (this order is against six companies and eight directors of those businesses); and the 18 January order for R220 million plus the Vrede dairy farm against Estina and the Guptas (this order is against 12 businesses and five individuals who are either directors of the businesses or recipients of the funds). The preservation orders are the first step towards permanent forfeiture.

The Estina order is here, and the affidavits from Knorx Molelle and the AFU investigators (one and two). The preservation order for the McKinsey/Trillian matter is here. The Estina order is based on a criminal case in Bloemfontein which is an amalgamation of several cases, including the criminal case of treason charges which OUTA filed against Minister Mosebenzi Zwane in July last year and the McKinsey/Trillian matter is based on a complaint by the SA Federation of Trade Unions (Saftu).

OUTA assisted the AFU with behind-the-scenes work in these matters.

While there were delays in the process, the action eventually resulted in raids on the dairy farm, the Free State Department of Agriculture which ran the project and the Free State Premier’s Office.

This new energy within the AFU is a positive sign. It signals a strong message from a new leadership that the Government has the tools to tackle corruption and should use them. The biggest signal coming from this recent activity is that they are starting with Gupta-linked companies and assets, the very people who have been closely associated with President Zuma.

The AFU has the power to be one of the most effective entities within South Africa’s prosecution mechanisms and process. It’s based in the National Prosecuting Authority (NPA) and can tackle organised crime. In short, the unit’s work removes the ability to profit from crime and, when it is done properly, its impact on tackling corruption is immense.

Established in 1999, the AFU has the power to freeze and ultimately seize the assets of individuals or organisations implicated in benefiting from crime. Forfeiture is intended to remove the profit from crime and remove the property used to commit an offence, and restore the stolen goods to the victims if they can be identified or hand it to the state. Forfeited funds and the proceeds from the sale of forfeited goods go into the Criminal Assets Recovery Account and, by March 2017, there was about R600 million in the account plus 3227 vehicles and 1144 pieces of property.

For years this entity worked closely with whistleblowers, the Public Protector, SARS and the police to crack down on corruption and recover the proceeds of crime. It was a powerful force in keeping fraud and corruption at bay.

That was until corruption entered at the levels of the political elite. The highest levels of the state leadership had the ability energise the scourge of corruption with a new flow of oxygen. Through deliberate political interference and meddling with appointments in the NPA, the AFU and the Hawks (formerly the Scorpions – remember them?), the law enforcement structures were effectively muzzled and stripped of their moral courage and ability to do their work.

Once corruption enters the state through the highest office in the land, if left unchecked for too long, the state loses control. Thus civil society welcomed with elation the election of Cyril Ramaphosa to the ruling party’s leadership, as he had indicated his desire to tackle corruption.  And it was not long after his appointment that the signals of his intent began to come to life.

One such signal has been the emergence of a re-energised AFU, one that appears to have been empowered to get back to work again and recover that which criminals have stolen from the state.

We believe that South Africa will see a lot of action coming from the AFU. OUTA has laid a number of cases against current and former political leaders and executives within state-owned entities, the content of which is being and will continue to be used in both prosecutions and recovery of assets that were stolen from the people of South Africa. And this makes us very happy, more so because we knew at the time of bringing these charges many months ago, that we weren’t wasting our time.

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State capture: the house of cards is collapsing

January saw significant developments in combating state capture, as the once powerful start being called to account. While those called to account followed the trend of “deny, deny, deny”, the forums which they were called to shows that combating state capture has moved to a different, more significant level.

While the repositioning in the ANC which led to Cyril Ramaphosa taking over as the party president has strengthened the anti-corruption lobby, the January events are not merely a result of that but rather the culmination of events and work from last year. This is an indication of a much wider groundswell of opposition to state capture: it is in some cases the consistent work of exposing and opposing corruption and state capture by many, many people in different sectors which is now paying off.

On 22 January, former Gauteng Health MEC Qedani Mahlangu finally appeared before the arbitration hearings on the Esidimeni disaster run by retired Deputy Chief Justice Dikgang Moseneke. While Mahlangu may have apologised to the families of victims and the survivors, she tried to dodge responsibility; but getting her to that hearing was a huge step in that holding those who abuse power to account. The Esidimeni tragedy illustrates the very worst end of corruption, when money and costs were regarded as more valuable than humane treatment and care of powerless psychiatric patients.

On 22 January, Minister of Social Development Bathabile Dlamini appeared before Judge Bernard Ngoepe, in an inquiry ordered by the Constitutional Court over whether she should be held personally liable for legal costs in the Concourt social grants case due to her obstructive behaviour. Dlamini has been at the centre of attempts to retain and extend the illegal contract with Cash Paymaster Services, regardless of the risk to the reliable delivery of 17.3 million social grants. This is a minister who has shown contempt of parliamentary attempts to hold her to account, so obliging her to appear at this hearing was a significant achievement.

On 23 January, Anoj Singh appeared before Parliament’s very tough Portfolio Committee on Public Enterprises, in the inquiry into Eskom, where he utterly failed to explain Eskom’s disastrous finances and his role in key aspects of support for the Guptas. Singh’s denial of Gupta involvement in payment for his trips to Dubai in the face of damning paperwork to the contrary and his inability to explain those trips set the tone of for the rest of his evidence: it just wasn’t believable. The night before his appearance he resigned as Eskom’s CFO, which may have saved him from an Eskom disciplinary hearing but not from the rigorous questioning of the portfolio committee or from the likelihood of criminal prosecution.

On 24 January, Eskom’s head of generation Matshela Koko appeared before the same portfolio committee where, like Singh, he denied involvement in corruption and dismissed evidence put to him. He is one of the key remaining executives who are irretrievably tainted, who need removing if Eskom is to be rescued. Koko is currently fighting to retain his job.

On 25 January, the Pretoria High Court ruled that the pension paid to disgraced former Eskom CE Brian Molefe was illegal and ordered him to repay the lot; he’s believed to have received about R10.3 million of the R30 million that Eskom planned to give him. The court also ended the “resigned/retired/on leave” debate and ruled that Molefe had resigned.

On 25 January, the terms of reference for the new Commission of Inquiry into State Capture were gazetted. This is the start of the long-delayed six-month inquiry, headed by Deputy Chief Justice Ray Zondo, although he is still waiting for the basic regulations to be promulgated.

On 26 January, the Asset Forfeiture Unit and the Hawks raided the Vrede dairy farm and the Free State Premier’s Office, as part of the Estina investigation. This is the most public action taken by law enforcement agencies against state capture so far. The AFU won a preservation order in mid-January on the Estina investigation, targeting the Vrede farm and the accounts into which the Free State’s R220 million was deposited. This was used to fund the Guptas’ notoriously extravagant wedding at Sun City in May 2013, plus leach off all the rest into a network of Gupta-linked accounts.  The AFU is targeting R50 billion in ill-gotten assets, based on an array of criminal complaints filed by organisations including OUTA.

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Victory against drought levy but not against water scarcity

OUTA is well aware of the extremely serious water crisis that Cape Town – and much of the Western Cape – is facing. Day Zero, the day Cape Town runs out of water, is now expected to be 12 April and the city’s residents are urged to implement drastic actions to conserve water.

It no doubt came as a surprise that OUTA recently challenged the City of Cape Town over its proposed Drought Levy, with some people even accusing us of not being alive to the water crisis.  However, our thorough research prior to our action, pointed to concerns over the lack of of cooperative governance and the City’s failure to hold to account the national Department of Water and Sanitation (DWS). We could not sit back and watch due processes being cast aside whilst dealing with the crisis and our actions did not in any way stall the cities need to address the water shortage.

As a consequence of civil society’s pressure and objections from tens of thousands of residents, the City has agreed to scrap their proposed Drought Levy, which was an attempt to introduce a new ‘tax’ based on property values rather than a punitive water consumption based to address the problem.

In December 2017, we issued a legal letter to the City, demanding that the levy to be scrapped and the public participation process to be extended to ensure an adequate process.

On 15 January we made a written submission to the City outlining our objections as part of the public engagement process.

There appears to be a strong undercurrent of political point-scoring around the Cape Town water issue, which does not serve the public interests. Accordingly, we urge the different levels of government to work together to resolve this urgent matter. The failure of cooperation between the City and DWS resulted in the City attempting to resort to a fiscal “self-help” process, which we believe would set a dangerous precedent for future governance on this matter for other municipal revenue generating “opportunities”.

Ultimately, water supply is the constitutional obligation of the DWS and water distribution is the responsibility of the City. We believe that those who have failed to meet these obligations need to be held accountable.

While our actions and that of residents who participated in the public engagement process can be deemed a victory, we will keep our sights on the developments in Cape Town to ensure that decisions are made ethically and on a sound legal basis.

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We still waiting for the e-tolls cases to get to court

OUTA continues to work behind the scenes on the e-toll cases.

e-toll court case

OUTA has received requests to help on 431 cases of unpaid e-toll debts on which SANRAL has issued summons: 368 of these in the magistrate’s courts and 63 in the high courts. This is a big increase from August last year, when we had been asked to help on 163 cases.

OUTA has appointed Alet Uys Attorneys to act on behalf of its supporters in the e-tolls cases and work is continuing on these matters. There is a substantial amount of paperwork between the parties before the first of the matters will be heard, and these are not expected in court anytime soon.

SANRAL issued summonses over unpaid e-toll debts in 2016, then at the end of last year issued what’s believed to be thousands more summonses. These are issued through the court nearest to the defaulter’s address, so they are issued through courts around the country but mainly in Gauteng.

Worried about those e-toll bills? See here: What to do about e-toll debt collection.

If you want to join OUTA and get under the e-toll defence umbrella, click here.

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Budget Day is 21 February

February is the month in which Government sets the financial and delivery agenda.

First up is the State of the Nation Address (SoNA) and opening of Parliament on 8 February, with the SoNA traditionally setting the country’s priorities. Then the National Budget is delivered on 21 February.

Possibly the most important aspect of both the SoNA and the Budget is who will deliver them: there is increasing speculation that President Jacob Zuma and his Finance Minister Malusi Gigaba will be replaced by then.

While the country’s finances remain shaky as debt increases and badly governed state-owned entities remain the biggest threat, there is hope of greater stability with the change in governance at Eskom and the welcome comments by Deputy President Cyril Ramaphosa at Davos that the threatened nuclear build is neither affordable nor necessary.

OUTA will be watching the SoNA and the Budget.

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You’ve followed us, liked us, commented on us, argued with us, re-tweeted or re-posted us and – best of all – talked and talked and talked to us.

Over the last 18 months OUTA’s Facebook community more than doubled — from 61,735 to 137,404. Our Facebook posts now reach more than 326 000 Facebook users and a single post may be read, commented on and reposted by more than 7 000 people.

Over the last 23 days @OUTASA has been mentioned 1 856 times, reaching an audience of at least 1 904 230 Twitter users. In those three weeks, OUTA’s 25 700 followers re-tweeted us 1 268 times. We’re still growing there and now getting started on LinkedIn and Instagram.

You’ve shared our values and belief in an honest South Africa, taking active citizenry online and giving us support and direction.

Thank you.

See you online.

Be a part of the change by joining, liking or commenting on OUTA’s social media posts, #MyOUTA.


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