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Ensuring the independence of South Africa’s new anti-corruption agency

Out-Law Analysis | 27 May 2022 | 8:56 am | 7 min. read

Professional bodies involved in law, accounting and audit could play a leading role in ensuring a new anti-corruption agency recommended in South Africa is genuinely independent of the state.

Findings from a review by the Zondo Commission illustrate why the case for such an agency to be set up is overwhelming. Ensuring the agency’s genuine independence from those that seek to influence how the state is run is vital to reduce the risk of ‘state capture’ reoccurring.

What has Zondo recommended?

Justice Raymond Zondo, who has led a review into alleged ‘state capture’ in South Africa, has recommended that an independent anti-corruption authority or agency be created through new legislation. To ensure that the Anti-Corruption Authority or Agency of South Africa (ACASA) is independent, he has recommended that it is led by a Council comprising of five members. He has further recommended that the chairperson of the Council be a senior legal practitioner with expertise in procurement.

According to Zondo, the four remaining members should be selected based on expertise in accounting, finance, economics and procurement, and that one of those individuals should be a member of the academic staff of a university who is a public procurement specialist.

In addition, Zondo has made recommendations on who should select the Council members. This is important because it is the Council members who would exercise a degree of control over the agency. In this regard, Zondo has recommended that the Council members should be selected by the chief justice, the auditor-general and minister of finance following some form of public process.

The composition of the Council

We agree with Zondo that the ACASA should be led by a Council comprising of a group of persons with a cross-section of skills, expertise and experience. Given the legal focus of the ACASA, it seems sensible that the Council should be chaired by a senior lawyer. We also agree that inclusion of an academic on the Council would be beneficial as they are often at the forefront of research, innovation and thought leadership. However, we believe that the functions of the ACASA merits the inclusion of specific skill sets that Zondo has not prescribed for the remaining three Council positions.

James Edward

Edward James

Partner

We believe that it would be an opportunity missed if the Council were to not include a suitably experienced compliance professional as a core member

A core function of the Council will be to implement measures to protect procurement systems and to also implement a whistleblowing programme to receive reports of concerns from whistle‑blowers. These functions are not novel to the private sector. In our experience, most large companies have compliance departments with similar functions that are staffed by experienced compliance professionals. These professionals have learned from years of experience in identifying, detecting, and preventing incidents of fraud, collusion, corruption and conflicts of interest, as well as implementing and managing whistleblowing programmes. As such, we believe that it would be an opportunity missed if the Council were to not include a suitably experienced compliance professional as a core member.

The effective functioning of the ACASA will be dependent on its ability to effectively investigate alleged incidents of corruption and related abuses. We are of the view that there would be merit in the inclusion of a Council member with experience and expertise in conducting forensic investigations. This would ensure that the Council is able to exercise effective oversight over the ACASA’s Inspectorate, who we assume would be subordinate to the Council. South Africa has an abundance of experienced forensic professionals, and it would be a lost opportunity to omit the inclusion of such a professional in the Council.

Who chooses the gatekeepers?

Each of the positions of chief justice, auditor-general and minister of finance are subject to their own selection and appointment process that impacts how independent they are from government.

South Africa is a constitutional democracy. Members of parliament (MPs), the National Assembly, are selected by the people during general elections held at prescribed intervals. The appointment of MPs is based on the proportion of votes received by each political party. Parliament in turn elects one member to be the president and the president has various executive powers as the head of the state and of the national executive. If a single party achieves a simple majority in the national elections, which has been the case since 1994, it determines who the president is. The president has extensive powers.

The minister of finance

Section 91(2) of South Africa’s Constitution gives the president the power to appoint and remove ministers – including the minister of finance. Whilst the president is accountable to the members of their party, the law gives the president autonomous discretion to pick and choose ministers. The minister of finance is not independent of government. They are appointed by the president, and they can be removed at whim – in 2015, David van Rooyen was appointed and then subsequently removed from the position of minister of finance by then president Jacob Zuma following an adverse market reaction.

The auditor-general

The process to appoint or remove the auditor-general is more complex than that of ministers. The auditor-general is one of the so‑called Chapter 9 institutions that are governed by the Constitution and intended to strengthen the constitutional democracy of South Africa.

The appointment process starts with the formation of a committee by parliament. The composition of the committee is determined by proportional representation that reflects the make-up of parliament as a whole. The committee considers eligible candidates and makes recommendations of who should be appointed as the auditor-general. The recommendation must be approved by parliament based on at least 60% of the votes. The president is then bound to appoint the auditor-general recommended and approved through this process.

Whilst the auditor-general is more independent than the minister of finance, they are still essentially selected by a parliament prone to being dominated by one party: from 1994 until 2019 the African National Congress (ANC) held more than 60% of the seats in parliament. This meant the ANC could overcome the 60% voting threshold during this period and select its preferred candidate. At present the ANC holds 57.5% of the seats in parliament.

The auditor-general is appointed for a fixed, non‑renewable, term of between five and 10 years. The current auditor-general has a seven-year term that will run until 2027.

The chief justice

The chief justice is the head of the Constitutional Court, which is the highest court of South Africa. Section 174(3) of the Constitution gives the president the power to appoint the chief justice provided that they consult the Judicial Services Commission (JSC) and the leaders of the opposition parties represented in parliament.

Earlier this year, Justice Raymond Zondo – the man who has led the Zondo Commission – was appointed chief justice. However, the process followed in that appointment gave rise to some confusion in respect of the role of the JSC and over who actually chooses the chief justice. This was because president Cyril Ramaphosa appointed Zondo to the role, against the advice of the JSC which had recommended that Justice Mandisa Maya be selected. Ramaphosa asked Maya to take up the position of deputy chief justice, an offer Maya has accepted.

We foresee the selection of the Council as the most vital step that will determine whether the ACASA is truly independent

While the decision of Ramaphosa to appoint Zondo as the chief justice has been viewed favourably by many, the appointment illustrated that it is the president of South Africa who ultimately selects the chief justice (based on the applicable laws in place).

Flaws with what is proposed

Under the current processes, two of the three individuals who would be responsible for selecting members of the Council would be themselves selected and appointed by the president. The third individual – the auditor-general – would be selected by parliament but under a voting threshold that recent history shows can be met by the governing party on its own. We believe that the influence that the president and ruling party could exert over these three appointments undermine the selection process for who might be appointed to the Council of the ACASA.

Are there viable alternatives that could enhance the independence?

Our concerns over the independence of the governance of ACASA should not be interpreted as a criticism of the offices of the chief justice, auditor-general or minister of finance. Each of these functionaries fulfil essential roles in South Africa. It would be advantageous to have members of government and the judiciary on the panel that selects the Council members. However, expanding the selection panel from three to six people could bolster the independence of the ACASA.

In our view, a more robust approach would entail a panel comprising of the three functionaries proposed by Zondo, as well as three functionaries appointed completely independently of government. Determining who selects the three independent persons is a challenge, but one which is not insurmountable.

A potential solution would be to empower relevant professional regulatory bodies to select the candidates. The bodies that could be considered for this role include, but are not limited to, the Legal Practice Council, which represents the legal profession, the Independent Regulatory Board for Auditors, the South African Institute of Chartered Accountants, the Compliance Institute Southern Africa, the Association of Certified Fraud Examiners and the professional association for procurement professionals that Zondo has recommended should be created.

Zondo has identified the essential need for the ACASA to be independent. We foresee the selection of the Council as the most vital step that will determine whether the ACASA is truly independent. Whilst we agree with Zondo’s recommendation that this selection should be done by a panel, we do not believe that the composition of the panel recommended by Zondo is sufficiently independent from government.

To place the independence of the ACASA beyond the reach of those that would seek to capture the state and erode the effectiveness of this vital enforcement agency, we believe that a larger panel should be considered and that the members of that panel should be selected by bodies completely beyond the sphere of government.