Do three significant events in the subregion signify a trend? First, although the trial of South Africa’s former President, Jacob Zuma, may have been postponed to September 9, the so-called Arms Deal corruption trial, along with that of French arms company Thales, is likely to go ahead. This, despite all Zuma’s tactics to delay and disrupt, including arguably through his supporters’ incitement to loot, pillage and destroy the country’s infrastructure and economy.
Secondly, in the Netherlands, the Amsterdam Court of Appeal has dismissed a case brought by Angola’s Isabel dos Santos, the daughter of former President Jose Eduardo dos Santos. Isabel dos Santos had demanded the removal of a judicial administrator appointed to investigate Esperaza Holding, a company in which her late husband, Sindika Dokolo, held a 40% share in a joint venture (JV) with Angola’s State-owned oil company, Sonangol. The court declared Dos Santos’ JV vehicle, Exem, to be “null and void”. The judicial administrator concluded that Exem was “a front company with the sole goal to be part of a money laundering scheme to embezzle funds”. The Dutch public prosecutor’s office will now assess whether criminal charges are applicable, while Sonangol becomes the full beneficial owner of Esperaza.
Thirdly, in the Democratic Republic of Congo (DRC), the Hydrocarbons Ministry has notified Oil of DRCongo, a company controlled by controversial Israeli businessperson Dan Gertler, that exploration permits for two oil concessions controlled by his companies are no longer valid and that it was also terminating a production-sharing agreement reached in 2010. Analysts say that blocking Gertler’s oil deal will send a signal that the DRC’s President Felix Tshisekedi is committed to cleaning up corruption.
This comes as the new US administration under President Joe Biden beefs up its battle against corruption after the lost years of former President Donald Trump. One of the Biden administration’s first actions was for the US Treasury to reimpose sanctions on Gertler and several of his businesses that Trump had lifted.
But what’s also new is the Biden administration’s linking of anticorruption enforcement to national security. On June 3, Biden announced: “I am issuing a National Security Study Memorandum on the Fight Against Corruption to establish combating corruption as a core US national security interest. With this memorandum, I am directing departments and agencies to make recommendations that will significantly bolster the ability of the US government to combat corruption.”
The US traditionally extends its reach in the fight against corruption and this is likely to increase as departments and agencies make their recommendations.
Several of the world’s governments that are considered ‘kleptocratic’ should be nervous. Looking through the national and international security lens would place in focus a kleptocratic government that failed to use its revenue and resources for the betterment of the people and, in so doing, created fertile ground for organised crime or international terrorist groups to flourish. This could certainly apply and potentially influence US policy towards Mozambique as it faces a terrorism crisis in the northern Cabo Delgado region – and arguably towards South Africa.
The looting across South Africa’s two main economic provinces that broke out two days after Zuma started serving a 15-month sentence for contempt of court is a case in point. The State Capture, or grand corruption, of the Zuma years in all likelihood set the stage for this violence. Armed men attacked the KwaZulu-Natal toll plaza at Mooi River on the N3 highway, the strategic arterial route linking Durban, in KwaZulu-Natal, to Gauteng, unleashing days of pillage in which more than 300 lives were lost, 150 000 informal traders faced attack as 40 000 formal businesses were targeted and damaged, roughly 1 400 automated teller machines were damaged and around 100 malls were fire-damaged. Though the initial attack was in all likelihood orchestrated, the link between corruption and insecurity is clear. The 2020/21 report of South Africa’s auditor-general, Tsakani Maluleke, into local government showed a shocking R26-billion in irregular spending, which translates into services not delivered to South Africa’s neediest.
As part of this shift to link anticorruption to national security, the Biden administration has updated and sharpened its antimony- laundering (AML) legislation. In so doing, it has extended the legal jurisdiction of US legislation and enforcement. Expect antimony- laundering legislation to be used in conjunction with the US Foreign Corrupt Practices Act (FCPA). The AML reforms include changes to banking secrecy, beneficial ownership and disclosure rules. The powerful US Treasury and Department of Justice (DoJ) now have powers to subpoena foreign banks for all corresponding account records. AML laws now prohibit knowingly concealing the ownership by “a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure”.
The US looks set to embed Treasury attachés and financial intelligence officers in its embassies to beef up AML and counterterrorism financing capacity. Where the DoJ has traditionally deferred to local authorities and domestic policing, this is likely to change and see the US adopt more interventionist policies – and an increase in prosecutions, with preference for prosecution using US FCPA and AML.
The combination of these forces – domestic anticorruption pressure and the refocusing of powerful US influence in this arena – will turn these events into trends. So, companies that have knowingly partnered with political office holders, their sons or daughters, will face increasing pressure when they seek to exit their investments or take on new investors. And those sitting in Dubai benefiting from the proceeds of corruption might soon find their horizons have narrowed sharply.