Lessons from South Africa’s State Capture Commission: the importance of whistle-blowers and their protection
- Security Risk Management
Lessons from South Africa’s State Capture Commission: the importance of whistle-blowers and their protection
Paulo Mateus | Consultant
The State Capture Commission (officially the Judicial Commission of Inquiry into Allegations of State Capture) is a public inquiry launched in 2018 to "investigate allegations of state capture, corruption, fraud and other allegations in the public sector including organs of state" in South Africa. By December 2020, it had interviewed 278 witnesses, and collected 159,109 pages and one exabyte – or 1bn gigabytes – of data in evidence. The inquiry has grabbed the attention of both South African and international audiences, with viewers regularly tuning in live to watch testimony from prominent businesspeople, whistle-blowers and politicians. Revelations have surfaced of malfeasance at the highest levels of government, with little seeming to shock audiences anymore.
Most South Africans have likely only become aware of the commission’s work since it began public hearings. However, the commission’s true beginnings can be traced back to March 2016, when a handful of prominent figures blew the whistle on the true scope and nature of state capture. These revelations ushered in a period of sustained pressure and public activism that eventually forced former president Jacob Zuma (2009-18) to set up a judicial commission of inquiry. In particular, the revelations included the following key claims, which have shaped the nature of the commission’s work:
- Then-deputy finance minister Mcebisi Jonas confirmed that he was offered the role of finance minister by the Gupta family – a wealthy Indian-born family whose role in South African politics has become a key focus of the commission – before the post had become available.
- Former member of parliament for the ruling African National Congress (ANC) Vytjie Mentor confirmed that the Gupta family had also offered her a cabinet position.
- Former head of Government Communication Information Systems Themba Maseko and former public enterprises minister Barbara Hogan claimed that the Guptas had placed pressure on them to award contracts irregularly.
Several whistle-blowers have since come forward to tell their side of the story and assist the commission in its work. Some have remained anonymous, while others have entered into plea deals with the state. The value of their testimonies in assisting the commission in uncovering and exposing corruption cannot be underestimated.
This article explores the work of some of these whistle-blowers and how their lives have been affected since stepping forward. It also looks at the protections available to whistle-blowers in South Africa, and explains how and why companies should focus on creating environments conducive to whistleblowing.
The consequences faced by whistle-blowers
During his testimony at the commission, President Cyril Ramaphosa lauded whistle-blowers, stating that state capture would have continued for longer had whistle-blowers and the media not helped to unearth evidence of deepening rot and corruption within the government. The president claimed that whistle-blowers had played a critical role in uncovering state capture.
However, he also acknowledged that these whistle-blowers had faced difficulties having exposed wrongdoing, and that they have not always been provided with the protection they require. He stated that: “Once they blow the whistle, they have been subjected to enormous pressures that have affected them personally, professionally and career wise. They have been brave men and women who because of their abhorrence of corruption blew the whistle.”
This is the lived experience of a number of whistle-blowers, many of whom have faced either professional or physical consequences as a result of their decision. Prominent whistle-blower Angelo Agrizzi, who has estimated that he had paid bribes exceeding R432m (around USD 31m) to South African state officials to guarantee the award of massively inflated government contracts, confirmed in December 2020 that he had been the victim of at least two assassination attempts. Meanwhile, a Transnet official known only as Witness 1 was shot at eight times in a confirmed assassination attempt directly linked to his testimony. Witness 1 survived the attack and in August 2020 testified before the commission.
As well as the threat of physical violence, whistle-blowers often also face the threat of retaliation in their professional lives. Such retaliation can take many forms. The stigma attached to whistleblowing can often have long-lasting effects that follow whistle-blowers for the rest of their careers. The State Capture Commission has not been immune to this phenomenon as evidenced by the experiences of the following whistle-blowers who faced various forms of backlash following their testimony.
Athol Williams, former partner at Bain and Company and senior business ethics lecturer at the University of Cape Town, found himself unemployed in November 2019 after he blew the whistle on several irregular activities at the South African Revenue Service. Williams not only lost his job, but has since stated that due to his actions he had become unemployable.
It has been a similar story for former Trillian Management Consulting chief executive Bianca Goodson, who claims that whistleblowing came at a personal cost to her and her family. Since making a number of reports since April 2016, Goodson has found herself in an unemployable position, even writing a number of open public letters to the head of South Africa’s power utility Eskom, who recovered more than ZAR 1.6bn (around USD 114m) as a direct result of her testimony. Goodson sought reform for whistle-blowers as well as a position at the power utility to assist with anti-corruption efforts, but to no avail.
The importance of whistle-blowers to organisations
To create organisations that are resilient against fraud, it is key that companies learn from the State Capture Commission and understand the importance of whistle-blowers to their business. Organisations need to foster environments in which whistle-blowers feel free to report on irregularities and trust that their reports will be handled appropriately and without retaliation.
In its 2020 Report to the Nations, the Association of Certified Fraud Examiners (ACFE) found that 48% of occupational fraud in sub-Saharan Africa was detected by tips from whistle-blowers, the majority of which were internal employees. Additionally, organisations with effective hotlines and report-receiving mechanisms reduced median losses from occupational fraud by 33% when compared with those without.
Most importantly, the report noted that in sub-Saharan Africa the size of an organisation had a limited impact on the importance of whistle-blower and hotline programmes. The ACFE noted that whistle-blower and hotline programmes resulted in the detection of 48% of occupational fraud cases in entities with fewer than 100 employees and 44% of cases in those with more than 100 employees. This key metric indicates the importance of strong whistle-blower protocols no matter the size or scope of an organisation.
Legal protection and remedies for whistle-blowers
Ensuring robust protections for whistle-blowers is a key pillar in the fight against fraud and corruption. Following the testimonies of a number of whistle-blowers and on hearing the prejudices and challenges faced by whistle-blowers, Judge Raymond Zondo, presiding judge for State Capture Commission, remarked that;
“…it seems to me that providing a lot of protection to whistle-blowers is a critical pillar to meaningful fight against corruption. If people who want to engage in corruption know that there is good chance that somebody might blow the whistle, that does contribute to deterrence.
So, the country needs to have a good and a strong regime of protection of whistle-blowers. The next thing you want is that those who engage in corruption must know that when the whistle has been blown, the law enforcement agencies have a good chance of doing an investigation and catching them, and the third thing is that there will be prosecutions and people sent to jail.
If any of these pillars is weak, it compromises the fight against corruption.”
The South African legal system offers protection to whistle-blowers through various pieces of legislation. The Protected Disclosures Act (Act No 26 of 2000) was developed specifically to protect employees who blow the whistle on malfeasance at their workplaces. However, commentators have criticised the act’s use of restrictive definitions to regulate who and what is protected. The definition of whistle-blower applies only to employee and employer relationships, providing no protection to third parties, who as a result may be discouraged from making disclosures.
Once a whistle-blower protected by the act comes forward, any professional consequences or retaliation they experience are considered an offence. Consequently, the act imposes a number of obligations on employers to which protected disclosures are made, chief among which is requiring them to take all possible steps to protect whistle-blowers from retribution, victimisation or retaliation. These may include protecting the whistle-blower’s confidentiality or transferring them – with their consent – to other areas of the organisation.
Moreover, employers are also required to implement and authorise appropriate internal procedures for receiving and dealing with information from whistle-blowers, and to ensure that these procedures are brought to the attention of all employees.
Should an employee who has made a protected disclosure feel that their employer has not met these and other obligations, the act provides a number of remedies, including approaching either the Labour Court or the Commission for Conciliation, Mediation and Arbitration.
The act makes provision for whistle-blowers who face occupational detriment to apply for the payment of compensation, the payment of actual damages suffered, and the remedy of occupational detriment suffered due to a protected disclosure. Conversely, should a whistle-blower not seek the payment of damages, they are also entitled to request and obtain a transfer on terms and conditions no less favourable than the conditions that applied immediately before the transfer.
These provisions are reinforced by Section 159 of the Protection for Whistle-blowers Act, which provides whistle-blowers with both civil and criminal immunity for any disclosures they may make. Additionally, whistle-blowers can rely on the Witness Protection Act of 1998, which makes the disclosure of a whistle-blower’s identity an offence.
Nonetheless, a number of organisations have petitioned the South African government to reform whistle-blower protections, including legislation that would broaden the definition of a whistle-blower and provide specialised courts for whistleblowing cases.
Fostering a whistle-blower-friendly environment
As shown by the ACFE and the State Capture Commission, employees are a vital tool in the fight against corruption and losses due to occupational fraud. However, organisations will be unable to tap into this resource if their employees do not trust that they will be protected from the retribution that has plagued prominent whistle-blowers, as seen at the State Capture Commission.
It is also key to understand that retaliation goes beyond the overt threats and dismissals that have been widely publicised during the State Capture Commission. Repercussions may also include isolation, bullying or poor performance ratings.
To ensure that whistle-blowers feel able to communicate concerns, management needs to foster an environment where whistle-blowers feel comfortable reporting concerns and have the knowledge that they will be protected from any retaliatory measures.
- Encourage employees to raise any concerns regardless of scale or scope, and use training and staff communications to make all employees aware of the measures in place to enable them to do so.
- Provide a number of platforms for employees to raise concerns, such as anonymous hotlines.
- Reassure employees that they will be protected when concerns are raised in good faith.
- Implement a whistleblowing policy and programme that also raises awareness about the anti-retaliation measures the organisation subscribes to.
- Provide clear guidelines as to what constitutes retaliation against a whistle-blower and what the employee can do if they are affected.
- Where necessary, provide whistle-blowers with recognition and rewards.
- Provide training to staff who may receive tip offs or concerns to ensure that they obtain the maximum amount of information possible while dealing sensitively with the whistle-blower rather than seeming to interrogate them.
- Conduct thorough and objective/independent investigations into any tip-offs received. Where the risk of conflict of interest is high, organisations should consider using external independent service providers to conduct the investigations. This may also raise the level of trust and participation in the investigations on the part of the employees or whistle-blowers.
- Ensure that whistle-blowers are kept informed on the progress of any actions or investigations arising from their tip-offs.
- Ensure that whistle-blower confidentiality is maintained throughout the investigation process as well as after a case has been closed.
To achieve this Control Risks recommends the following:
History has shown that protecting whistle-blowers and providing them with safe spaces to come forward is critical in the fight against corruption, whether on a national scale – as seen at the State Capture Commission – or on a smaller scale within individual organisations.