bribery – praag.org

Hitachi case exposes fronting by ANC

South Africa has been fingered in the alleged “improper payments” originating from contracts that the ANC’s investment arm, Chancellor House, for work at the Medupi and Kusile power stations.

As a signatory of the OECD Convention which is aimed at combatting fraud in international business transactions by foreign officials [OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions], South Africa’s failure to do so, has been exposed at the highest levels.

It appears however that the ANC has also transgressed their own Broad Based Black Economic Empowerment Act by making use of “fronting” to take money for awarding lucrative contracts to Hitachi.

These observations have been made by the American investment watchdog, the Securities and Exchange Commission (SEC) which described Chancellor House Holdings as a “front” through which the ANC could make money from the contracts with the Japanese group Hitachi in South Africa.

The OECD meanwhile released a damming report at the end of last year about South Africa’s unwillingness to act against international bribery and corruption and the finger is pointed directly at the ANC government.

The title of the report is: ‘Phase 3 Report on Implementing the OECD Anti-Bribery Convention in South-Africa’. The subheading reads: ‘Lack of enforcement jeopardises South Africa’s fight against foreign bribery; OECD concerned that political an economic considerations may be an influence’.

On page 9 of the report of 87 pages, it is stated, amongst others, (under the caption of Bribery of Foreign Public Officials):

‘Corruption remains a serious problem in South Africa. The country has experienced a number of high profile domestic corruption scandals, and corruption allegations have been linked to the highest levels in government.’

Also: ‘Corruption in public procurement tenders has been a particularly serious problem…’. It mentions that the Head of the Special Investigative Unit (SIU) had already reported to Parliament in 2011 about the fact that between R25 and R30 billion – approximately 20% of the country’s total annual procurement budget had been lost due to ‘corruption, incompetence and negligence’.

Turkcell seeking billions from MTN for Iran

Turkish cellphone company Turkcell has opened a lawsuit in South Africa against rival telecoms company MTN Group seeking damages for losses it says it incurred in Iran.

Turkcell filed a $4.2-billion lawsuit in Washington last year alleging the Johannesburg-based cellphone giant used bribery to win a mobile licence in Iran that was first awarded to Turkcell.

It dropped the suit in May after a US Supreme Court ruling in a separate case made clear that US courts would not have jurisdiction in a matter involving two foreign firms in a dispute outside the United States.

“In a continuation of this process, Turkcell today [Wednesday] opened a lawsuit against MTN in the South Gauteng high court in Johannesburg seeking damages for losses incurred as a result of MTN’s actions,” the Turkish company said.

In its US filing, Turkcell claimed MTN won the Iranian contract in 2005 by offering to use its influence in Pretoria to help Tehran obtain military hardware and sway South Africa’s votes at the International Atomic Energy Agency.

‘Brazen orchestra of corruption’
Backed by a collection of alleged MTN internal documents including emails, invoices, memos and presentations, Turkcell’s lawsuit accused the South African company of a “staggeringly brazen orchestra of corruption”.

MTN rejected the Turkcell allegations and appointed a retired British judge to lead an external investigation into them. That probe dismissed the accusations as “a fabric of lies, distortions and inventions”.

An MTN spokesperson declined immediate comment. – Reuters

‘My ANC donation in exchange for your government contract’

The KwaZulu-Natal government wanted a contract with a Cape Town-based Uruguayan businessman to be concluded quickly so he could make a donation to the ANC, the Mercury reported on Wednesday.

Former KwaZulu-Natal health MEC Peggy Nkonyeni allegedly told this to Kantha Padayachee, who is challenging her suspension from the provincial health department in the Labour Court.

Padayachee, who was the health department’s legal services general manager, told the court that Nkonyeni told her about the donation when she raised concerns about the contract for oxygen-generating plants.

“She told me she [Nkonyeni] had just become the treasurer of the ANC in the province and was under pressure to conclude the contract [with Intaka] so the ANC could receive the donation,” Padayachee was quoted as saying by the Mercury.

According to the paper, Padayachee was in court fighting her three-year suspension from the department.

She claims she was suspended after being interviewed by the Hawks in connection with a corruption case.

In the case, Uruguayan businessman Gaston Savoi and several senior KwaZulu-Natal government employees were charged with racketeering, fraud, and money laundering.

The Mercury reported that the State alleged Savoi made a R1 million donation to the ANC to secure the contract to supply water purification and oxygen-generating plants to the provincial departments of local government and health.

Nkonyeni, who was now the speaker in the KwaZulu-Natal legislature, was initially charged, but these charges were withdrawn in October. The health department said Padayachee was suspended after misconduct charges were brought against her. – Sapa

70% of sales staff in South Africa see corruption, bribery in their company

Irregular financial reporting is becoming a worry for corporate South Africa with recent research showing a greater awareness among directors and senior managers of the practice. Other investigations are highlighting a growing mistrust among staff members in big companies and a developing gulf between management and employees.

New research on integrity and employee satisfaction by iFacts, a leader in screening, information verification and integrity testing, show that only 50% of staff members in big companies trust one another whilst around half feel that they get on with management. “Our investigations illustrate that although there is a general understanding of company policy and compliance 47% of employees do not believe their firm’s anti-corruption policy is effective,” says iFacts MD Jenny Reid. “Alarmingly, close to 70% of sales staff consider bribery and other corrupt practices to be rife”.

iFacts findings are broadly in sync with Ernst and Young’s 2013 fraud survey which notes that 42% of board directors and senior managers are aware of some irregular financial reporting in their company whilst 57% feel that this practice is widespread in South Africa. Its results also indicate that the risk of misreporting financial information appears compounded by the fact that 79% of managers feel that they need to deliver better financial results for the company but there is increased pressure on remuneration with 23% having pay freezes and 17% having their bonuses removed.

“iFacts research has also shown that management, as opposed to employees, are the single greatest source of white collar fraud in organisations,” says Ms Reid. “Verification of the documentation presented by applicants at the interview stage, whether for management or other staff positions, can prevent much of the fraud from taking place. But companies need to have management tools in place to continuously measurement commitment to company policies.”

Post employment screening will also help to pro-actively detect fraud.

“In 21% of cases where fraud has been committed, the guilty parties evidenced an obvious change in lifestyle, driving better cars and having more material goods than before, things which could easily have been spotted if the company had only looked,” she says.

Corrupt South African prosecutor arrested

The South African Police Service reports that yesterday, 8 October 2012, Ladysmith detectives arrested a 37-year-old Public Prosecutor at the Ladysmith Magistrates’ Court for corruption.

It is alleged that the prosecutor was working at a Traffic Offences court when he approached traffic offenders waiting to address the court for a reduction of their traffic fines. The prosecutor allegedly asked three of the offenders for cash in exchange for removing their names from the court roll. The three reported the matter to the police and the prosecutor was arrested.

He was charged for three counts of corruption and three counts of defeating the ends of justice and is due to appear in Ladysmith Magistrates’ Court soon.