Publication: Institute of Security Studies Issued: Date: 2004-03-16 Reporter: Shauket Fakie

An Assessment of Measures to Prevent and Probe Alleged Corruption in the Arms Deal

 

Publication 

Anti-Corruption Conference
Institute of Security Studies

Date 2004-03-16

Author

Shauket Fakie

 

Corruption is a controversial and often misunderstood phenomenon. A beginning step in clearing up the misunderstanding is the need to distinguish between oversight and investigation. This will allow for fruitful and responsible collaboration between the two institutions. This requires an understanding of the following key principles protocol mechanisms, role of the investigation based on the mandate and function, respect for specialized skills of the investigators and trust and confidence in the role players. What went wrong with the arms deal investigation are underpinned by these principles.

Following this, the auditor-general (hereafter referred to as AG) presentation will cover four areas Firstly, the mandate and responsibility of the AG office; the role and responsibility of the oversight mechanisms, the specialized audits process in which the arms deal investigation falls under and lastly, the arms deal investigation itself.

The mandate and responsibility of the AG office are covered in section 1818 of the constitution. The principles underlying this mandate are impartiality, without fear, favour or prejudice and the principle of non-interference

The oversight mechanisms role and responsibility are derived from the parliamentary and legislature. The role of the parliament and the legislature are to keep the democratic principles, separation of powers and hold the executive accountable. Secondly, the establishment of the audit companies emanated from the government, with the exception of private audit companies. Generally, the oversight mechanisms are in place to ensure accountability.

The office of the AG is charged with two functions. The primary function is of regulatory audit or the attest function. The second function is a secondary function whereby it engages in specialized audits.

These processes go through certain phases. The first phase is the strategic planning and detail phases. The strategic phase is a high-level phase that entails an analysis of the risks of the organisation and the individuals that will be involved in terms of skill capacity. This is then followed by a detailed planning phase taking into account the risks either as high-level or low-level risks.

The strategic phase is followed by the execution phase. After an in-depth look of the detailed plan, the program is prepared according to the risks identified. This process through provision of working papers and clarification of issues aims at building an audit file that will end up in the report.

The final stage is the reporting phase, which is a culmination of the management report and the draft report. In principle the regulatory and specialized audits follow similar processes. However, the phases and the approach vary according to the cases.

Specialized audits are triggered by requests from the public, parliament, audits and auditees, after which an evaluation takes place in terms of the mandate of the Audit- Generalís office. Also, the AG takes in consideration the issue of risks such as the expected impact of the investigation on the organisation, how will the AG manage the impact and expectations of the investigations, relationships with other stakeholders. The AG office is careful to assess before it takes on any task that it is in its mandate. However, the AG decides the nature and scope of the investigation, according to Section 3 of the constitution.

Then the four-phase process begins. Firstly, the AG will conduct a preliminary investigation from the triggers. This is conducted to determine the evidence that can be obtained and weigh the merit of the investigations. This also makes sure that the expectations that arise are known. For example, what are the objectives of the audit and how far can the AG meet these expectations?

The second stage is the beginning of the proper probing of the investigation. The planning phase begins with an engagement with the institutions to be investigated, though this is done with arrangement with the institution. Secondly, there is the completion of the code of ethics. Lastly, complete the work plan on how the investigation will be approached e.g. the people to be interviewed etc.

The third phase entails the execution of the investigation. This includes the procedural process and the system document description. This understanding is crucial in terms of ensuring that audit procedures from obtaining audit evidence to acquiring sworn affidavits are adhered to.

Lastly, the report is compiled based on factual findings supported with enough evidence that has been gathered and sifted.

Ideally, this is the procedure of any case that the AG officeís deals with. The arms deal investigation was part of a specialized forensic audit. The investigation was started from the request from the parliamentary institutions, notability SCOPA. It is within the mandate of SCOPA to provide the terms of reference for the investigation. However, neither SCOPA nor the parliament gave provide direction for the investigation. Due to this, the AG had to determine the nature and scope based on the allegations they had. From the initial steps the process was flawed because of the failure to provide terms of reference.

The arms deal was riddled with allegations especially concerning the procedure that was followed and more substantively on the procurement process. However, the extent that the AG could investigate some of the issues was beyond its mandate. Firstly, the AG is not mandated to audit policies, as this is a parliamentary function. Therefore, the office could not involve itself on that aspect. Secondly, though the AG is mandated to investigate allegations on corrupt individuals, this mandate does not extend to cases dealing with crime. The AGís office did its best in the investigation in as far as it was mandated to do. However, its role and the extent to which it could play that role were largely misunderstood in the final report. 

Aspects that undermined the investigation

Media

Though the importance of media cannot be underscored, there lies an equal responsibility on the media on the way that they deal with issues and the arms deal was no exception.

There was poor collaboration between the media and the AG offices in sharing of the evidence. The media would report on certain aspects of the investigation, without divulging their source and the factual basis or evidence of their information. The media also created certain expectations to the public without clarification on what evidence they had based their expectations. A critical lesson that should be learnt is that the media should abstain from making allegations without evidence or concrete facts. This leads to the public expecting a different outcome from what the investigation will produce based on actual facts. This illustrates the need for further discussion and engagement between the two institutions.

Secondly, there was a high level of expectancy on what the report would divulge by individual members of parliament and unsuccessful bidders around what the final report will be like without factual findings.

Public

The publicís perceived outcomes and expectations were based on emotion without taking into account the policy issues and the heavily politicised settings that the investigation was being carried out under. It became increasingly difficult for the investigations to proceed logically without arriving at non-factual conclusions.

There was a great amount of distrust amongst not only the investigating authorities but also from the media and the public. This reduced the extent of belief in the final report as trust had been breached.

Lastly, the investigation was carried out under intense time pressures. The nine-month time frame set for such a high-level and sensitive investigation was insufficient. This may in turn result in oversight on certain documents or in the evaluation of the information. 

Lessons learnt

There are certain measures that can be taken to ameliorate these negative factors and ensure that the lessons are learnt and lost. Firstly, the kind of issues highlighted above that undermine investigations of this calibre require for the society to take cognisance and handle matters in a more responsible way.

The recommendation presented in the report will go a long way in preventing the wrongs that happened in other high-profile investigations. The recommendations should be taken into account.

There is need for improved quality in the skill of the people involved and the process it entails. There was a lack of integrity, openness and skill in the investigate process that undermined the investigative process.

There is need for increased quality in the processes in terms of governance. There was difficulty on gathering evidence on certain issues revolving around policy related matters, deliberate flouting of government practise such as internal controls or inexistent, imprecise policies and procedures especially at the time the Defence Force was procuring this arms.

In terms of the process, the preliminary review in which SCOPA provides the detailed information. Secondly, there is the collection of allegations including actions such as sifting of the allegations. There is the use of multifaceted approach involving the parliamentary agencies, AG office, SCOPA working together as a joint force. However, one has to bear in mind the complexity of bringing the skills of each of these agencies, with different mandates together with special concerns on how the process will be managed.

Conclusion

The final findings of the report was based on facts and supported by concrete evidence. This also entailed not including what seemed as fact in the reports but lacked substantive evidence required. This is because there is a need to prove beyond reasonable doubt.

The final report was done according to the terms of the mandate and the functions of the AG. The parliamentary response to the findings failed to take into account that whereas the procedural part of the investigation was complete, the investigate part was not.

Despite all of the shortcomings, the AG is convinced that it gave its best effort to ensure a fair report.

With acknowledgement to Institute of Security Studies and Shauket Fakie.

[1] Mr. Shaukit Fakie is the Auditor-General of the Republic of South Africa