MICHAEL MARCHANT & HENNIE VAN VUUREN: How crisis-ridden NPA has failed South Africans

If you believe President Cyril Ramaphosa and prosecutions boss Shamila Batohi, the National Prosecuting Authority (NPA) and law enforcement have made great strides towards prosecuting economic crimes and state capture. 

Yet the past week has revealed a story of systemic failures at these agencies that only entrench impunity for those engaged in economic crime. 

Despite the spin, the NPA remains in crisis. Glossing over these facts suits the political principals, but it costs South Africans dearly.

Last Friday, South Africa was placed on the Financial Action Task Force (FATF) “greylist” due to its significant weaknesses in identifying and preventing money-laundering and illicit financial flows linked to organised criminal and terrorist groups. 

The FATF’s blind spots are conspicuous: money-laundering paradises such as London, Luxembourg and Hong Kong, for example, aren’t on the greylist. Still, we won’t be able to take up such important global fights when we are unable to prosecute the corrupt in our own backyard.

In 2022, the government belatedly enacted an urgent set of reforms to address the deficiencies identified by the FATF. To its credit, it was able to address all but eight of the 67 identified. 

Crucially, the FATF now acknowledges that South Africa has the laws it needs to tackle financial crime and illicit finance — but it doesn’t have the capacity to enforce them. The police, intelligence services and NPA lack a combination of the capability, will and independence to investigate, convict and sanction those implicated.

While it is true that this is a consequence of the attacks on these agencies during the state capture era, the present leadership must also take responsibility for the failure to urgently rebuild and reform their institutions.

Consider how the United Arab Emirates (UAE) responded to FATF greylisting in early 2022. Instead of rattling off a list of “nine seminal cases” like the NPA did, it moved quickly to assist South Africa in extraditing two of the Gupta brothers. The UAE probably knew it wouldn’t have to deliver its end of the bargain, as South Africa would likely bungle the process.

A full year later and the Guptas are no nearer to extradition. The UAE, on the other hand, has been praised by the FATF for “significant progress”, no doubt also because of its “support” of the Gupta extradition. It shows how the UAE has deftly played the FATF, while preserving a reputation as a safe haven for money-launderers. 

While the full cost of the greylisting remains to be seen, the consensus is that it will lead to reduced investment, greater uncertainty and a drop in employment. In short, the poor will suffer the most. 

The leadership in the NPA and other agencies such as the Hawks must take responsibility for this. They have had years to rebuild and reform, but instead are convinced by the spin of their own PowerPoint presentations.

Failing on the basics

On the eve of the FATF’s decision, the NPA steered a seminal state capture case to disaster in the high court in Bloemfontein. 

The Nulane Investments trial is the first state capture prosecution to go to trial. Free State officials were in the dock for procurement violations — sitting alongside Gupta lieutenants Iqbal Sharma and Ronica Ragavan, who face money-laundering charges. 

This was the case the NPA was relying on to secure the Guptas’ extradition. And it was the case designed to show that accountability for state capture is possible. 

This is why it was so disturbing when the NPA’s case fell apart. All but one of the accused have applied to be discharged without needing to present a case, arguing that the state has made no case against them. It looks likely they will succeed.

Prosecutors were not caught out by a clever legal strategy. They and the Hawks committed a series of rudimentary errors in ensuring the integrity of the chain of evidence, and in establishing the authenticity of documents. 

The judge was left with little choice but to rule these documents could not be relied on. Prosecutors seemed woefully unprepared for these basic procedural arguments. 

The prosecution also wasn’t ready to argue why the Gupta leaks, upon which numerous state capture prosecutions will depend, should be admitted as evidence — so it abandoned this effort entirely. Those charged in other state capture cases will have watched with glee.

This failure is a loud warning that the deficiencies in the NPA cannot be ignored. While a loss in this case shouldn’t have a legal impact on other state capture cases, it raises serious doubts about the state’s ability to succeed in the larger and more complex prosecutions to come. It also makes it clear how far we need to go to move off the FATF greylist. 

The NPA’s failure in the Nulane matter, and its broader failure to successfully prosecute corruption and economic crimes, is a big problem. But the failure of Batohi’s leadership to acknowledge the problem compounds the costs. 

If you read only the NPA’s submissions to parliament and press statements, you’d be forgiven for thinking it has made great strides towards revitalisation of the authority, and that accountability for state capture is imminent. Criticism from civil society has been swatted aside as alarmist and unfair, not least by many in the media who have drunk the Kool-Aid.

Yet there has been dead silence from the leadership on the Nulane debacle. Batohi and her leadership must account for what went wrong. More importantly, they must urgently provide a credible plan for how they will ensure success in prosecutions of other state capture and economic crimes. 

* Marchant is head of investigations at Open Secrets; Van Vuuren is director of the organisation