Treasury opens the purse for corruption prosecutions

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The treasury on Wednesday allocated more funding to the justice department to improve the prosecution service’s capacity to pursue complex cases, with an emphasis on financial crimes. It promised more of the same to come in the main budget in February 2023. 

In a medium-term budget policy statement (MTBPS) that nods gravely to the threat of greylisting by the Financial Action Task Force (FATF), the department gets an appropriations adjustment of R90-million.

The amount seems precious little to achieve priorities listed as follows in the MTBPS: “Funding will be allocated to the National Prosecuting Authority (NPA) to increase capacity in specialised tax units and the Investigating Directorate (ID), procure specialist prosecution services for complex matters (especially financial crimes), appoint forensic auditors and accountants to deal with high priority asset forfeiture matters, establish a digital forensic data centre and finance increased witness protection operational costs.”

But the treasury also commits to further funding for the fight against corruption in the coming financial year, suggesting that President Cyril Ramaphosa may be putting money where his mouth is after giving assurances on Sunday that the state will head the recommendations of the Zondo Commission on bringing to justice those who committed and enabled state capture.

“The 2023 budget will provide further allocations to support safety and security,” it says.

“To improve the fight against corruption and advance the recommendations of the state capture commission, the 2023 budget will also add to the budgets of the NPA, the Special Investigating Unit, the Financial Intelligence Centre (FIC) and the South African Revenue Service.”

The overall budget increase for safety and security for the next two years is put at R8.9-billion, but the treasury did not provide a breakdown of how this will be divided between the various components of the criminal justice system. 

Treasury officials however told a media briefing that some of it will go towards employing about 15 000 more police officers. Finance Minister Enoch Godongwana joked that it was his job to determine the quantity but he could not vouch for the quality.

In his first full budget in February, Godongwana gave additional funding of R426-million to the NPA and the FIC. The allocation was staggered over three years and R262-million was sourced through re-prioritisation of existing allocations to the peace and security cluster.

Some of it was intended to allow the ID to recruit 90 staff members and the FIC to add 68 people to its payroll.  

Ramaphosa confirmed on Sunday evening, in his formal response to Zondo’s findings, that the ID will become a permanent structure. This entity was established in 2019 to prosecute cases stemming from the state capture inquiry. To date, 26 grand corruption cases have been enrolled and the ID is under pressure to move faster.

The Asset Forfeiture Unit also faces pressure to increase the value of freezing orders and recover more money lost to the state through corruption. The adjusted estimates show that in the first five months of the current financial year, it secured orders related to corruption cases of R131-million — a fraction of its annual target of R1.8-billion.

The document ascribed the underachievement to the low value of the cases pursued.

“To improve performance, the Asset Forfeiture Unit is involved in several joint prioritisation initiatives to expedite the finalisation of cases with asset forfeiture possibilities earlier in the case.”

Concern at the threat of greylisting by the FATF, and the potential impact on the economy, was patent in Godongwana’s speech and remarks on Wednesday by members of the treasury. 

The minister said two bills designed to address weaknesses in South Africa’s legislative framework should be passed by year’s end, in a significant step towards meeting the demands of the Paris-based body on compliance with money-laundering rules.

But acting treasury director-general Ismail Momoniat conceded that it would be hard to avert greylisting. Should it happen, he said, he hoped “it won’t be for a long time”.

This month marks a year since the FATF published its evaluation of South Africa’s measures against money laundering and terrorist financing. South Africa failed in 20 of the 40 FATF standards and in all 11 of the measures to combat money laundering. 

Analysts have forecast that greylisting could see the loss of between 1% to 3% of GDP.