Keynote address by the Chairperson of the National Anti-Corruption Forum, Ms Geraldine Joslyn Fraser-Moleketi, on the role of National Anti-Corruption Forum (NACF) in protecting the public interest: IIA SA/ACFE Annual Fraud Conference

24 April 2006

Thank you for the great privilege afforded to me to participate in this important occasion. It is my pleasure to address you this morning as the chairperson of the National Anti-Corruption Forum (NACF).

In parts of my address I will engage with you as the Minister for the Public Service and Administration. There is an important distinction in the two roles. In the one role I speak on behalf of the collective of dedicated partners of the NACF and in the other as a partner to the NACF.

I trust that this conference will enable us to increase our efforts to cure our beautiful country of the effects of corruption. As the President remarked on 3 February this year, we must continue our work in the fight against corruption and we must carry forward the hope and expectations of the people of South Africa.

The people of South Africa expect government, business and all other sectors of society to conduct its business with integrity and not to indulge in any form of corruption or fraud. And even when we are making good progress in this fight against corruption we should not be seen to be complacent and lacking in the need to engage in a full fight against corruption.

Internal auditors and fraud examiners seem to stand at the wrong end of the friendship chain. I think this is a pity because you are supposed to be an organisation's biggest friend, the one that would enable management processes and controls to be effective thus allowing the organisation to progress and flourish in optimal circumstances without the hindrance of corruption and fraud.

If you feel a bit like you are under siege at least be assured that you will survive the siege if you conduct yourselves with integrity and courage and execute your duties with the requisite professionalism and objectivity. Secondly, those besieging you are not anyone's friends. They are the fraudsters and corrupt ones that devour our national assets and pride.

The public service anti-corruption strategy is based on the premise that good management constitutes the first line of defence against corruption. Whether in the public sector, a business enterprise or a traditional non-governmental organisation (NGO), the internal audit function often is the one that props up the leadership of organisations in the first defensive line.

I do think you are on the correct path at this conference in exploring the synergy between risk management and investigation, prosecution and resolution. International good practice clearly points to a holistic and integrated approach to fighting corruption. No amount of detection of corruption will change anything if it is not acted upon through effective investigation and resolution. Similarly no amount of investigation and prosecution on its own will fight corruption if we do not determine the risks, close the loopholes and create a culture of integrity.

As a country we have been plagued by our share of corporate scandals. These scandals have put the role of external auditors and internal governance arrangements in the spotlight. Ordinary citizens are now getting a peep into the wheeling and dealings of big business and what they see is not instilling confidence.

I do not think it is true that big business is just a self serving and shady business. Generally the governance arrangements of big business is solid, the systems are in place. But how do you account for a breakdown in ethics? If these scandals occur in spite of the governance arrangements then it means we have a breakdown in ethics. In the Public Service we have good management systems and controls but still we have cases of corruption. And where this occurs it must be acted upon within the law. Therefore your focus on tools and resources to conclude lapses in ethics through investigation and prosecution is welcomed. But the question still remains, what is being done to instil and support integrity in organisations? What ethics management systems exist, do organisations subscribe to and actively promote ethics?

The matter of the so called corporate scandals was discussed by the NACF during its meeting last week. The NACF recognised the constitutional right of due process and cautioned against trial through speculation in the media. It however expressed unanimous concern about the allegations. The NACF also welcomed the efforts of the National Prosecuting Authority (NPA) and other law enforcement agencies in investigating the allegations. During this meeting of the NACF the business sector again voiced its determination to support all efforts to expose, investigate and prosecute corruption.

I trust you have been following and participating in the self assessment process of our participation in the African Peer Review Mechanism (APRM). I trust also that you have studied the technical reports that are available on the APRM website (http://www.aprm.org.za for your information). The African Institute for Corporate Citizenship (AICC) compiled a technical report on Corporate Governance in South Africa, based on the inputs received from government departments, civil society organisations, unions and organisations like the South African Institute of Chartered Accountants (SAICA), Business Unity South Africa (BUSA) and the Institute for Economic Research and Innovation.

This report makes interesting reading. It generally gives corporate governance a good and a bad rating. It for example reveals that good progress is being made with corporate ethics management but that weaknesses exist in areas of conflict of interest declarations, flawed procurement practices, the compensation of chief executives and the so called revolving door phenomenon. It also recognises the progress with complying with the King II requirements through the Johannesburg Stock Exchange’s (JSE) compliance system but expresses concern about all the sectors that fall outside of the JSE's mandate. One of the submissions proposes increased shareholder activism, mandatory enforcement of King II, better regulation of unlisted companies, more enforcement and fast tracking the reform of corporate law.

Corruption is a thread that runs through the submissions that make up the APRM technical reports and the proposed actions include tightening corporate governance and implementing and applying all anti-corruption laws and strategies. It is very clear that there are high expectations of internal auditors and fraud examiners to make a distinct contribution to raise the level of integrity in all organisations.

You are champions of the anti-corruption and anti-fraud movement and I salute you.

Let me now speak directly to the role of the National Anti-corruption Forum, better known as NACF. To understand the role of the NACF you have to understand the concept of "public empowerment". Public empowerment is about providing all citizens the avenue to shape their own and collective futures in a meaningful way. In the area of fighting corruption, the NACF is such an avenue.

The NACF was established in 2001 as a forum for the public, business and civil society sectors to establish a national consensus on the fight against corruption through the co-ordination of sectoral anti-corruption strategies to advise government on strategies to combat corruption, to share information and good practice and to advise each other on the improvement of sectoral strategies.

The collaboration and collective responsibility recognises the societal nature of corruption and the need for an anti-corruption response inclusive of all of society. The approach of governments working closely with civil society is a fundamental requirement of African and global anti-corruption conventions.

For example, the United Nations Convention against Corruption deals extensively with the private sector and participation of society. In the case of the private sector, the convention requires measures that promote integrity and transparency that deals with conflicts of interest and it strongly discourages unethical accounting procedures. Regarding the participation of civil society the convention requires measures to promote the active participation of individuals and groups outside of the public sector in the "prevention of and the fight against corruption and to raise public awareness regarding the existence, causes and gravity of and the threat posed by corruption." Similar requirements appear in the African Union Convention on Preventing and Combating Corruption and the Southern Africa Developing Community (SADC) Protocol against Corruption.

The key phrase is "active participation". Without active participation civil society remains powerless to shape anything. And active participation does not mean active negative criticism; it means constructive contribution towards continuous improvement of our national anti-corruption framework.

Some commentators have criticised the forum in the past as just another talk shop there was a time when it nearly was just that. But that has changed in the last few years and the NACF has become a force that guarantees public empowerment. The forum hosted the country's second National Anti-Corruption Summit in March last year. This summit was preceded by a civil society mini-summit giving civil society the opportunity to prepare for active and informed participation in the summit. The summit was attended by public officials, business leaders, civil society representatives, community development workers and academics.

Over the two days these representatives had the opportunity to freely celebrate South Africa's anti-corruption successes but more importantly the opportunity to identify gaps and propose improvements. The contributions of the representatives of all sectors culminated into 27 resolutions, one of which was that the NACF had to establish a National Anti-corruption Programme (NAP). By late June 2005 the NACF adopted a NAP and immediately commenced with its implementation. Of course our first and biggest challenge was to obtain funding and I am pleased to say that government has provided two-thirds of total projected implementation costs.

The strategic objectives of the NAP are to:

* Promote the forum as the vehicle to further establish a national corruption consensus and to promote leadership in this regard,

* Promote in all sectors the obligations, rights, sanctions and protection emanating from the South African anti-corruption legislative framework in order to ensure full application of this legislative framework,

* Promote ethical practices in all sectors and activities, amongst other means through awareness and training programmes,

* Provide sufficient platforms for national, provincial and local engagement on issues of fighting corruption, involving all sectors,

* Implement sectoral anti-corruption programmes.

The NAP consists of a range of projects that support the strategic objectives. Teams from the various sectors are working together to implement these projects. Just last week the NACF had its first formal meeting of 2006 and discussed progress. The NACF amongst other matters:

* Adopted an ethics pledge for the leaders of the sectors. This pledge emphasises accountability and transparency and contains a commitment to ethical conduct, the furtherance of integrity and to report corruption and other forms of unethical conduct.

* Considered the draft of a layman's guide to the Prevention and Combating of Corrupt Activities Act. This guide is meant to increase the understanding of the Act and to empower managers and other employees about its application and obligation to report corruption. As you know persons in positions of authority must report corruption, fraud and other crimes where the value of the crime exceeds R100 000. In the Public Service, the code of conduct compels all employees to report corruption no matter how small the value.

* Convened a roundtable discussion for later in May 2006 to further discuss the application of the system of prohibition of corrupt businesses established through the Prevention and Combating of Corrupt Activities Act and to explore a wider application of prohibitions.

* Received progress reports on the African Peer Review process and preparation for Global Forum V on Fighting Corruption and Safeguarding Integrity that South Africa will host in April 2007.

* Discussed the civil society report on Apartheid Grand Corruption. You may know of this report, unfortunately it was leaked to the media and it has been much misquoted in spite of being embargoed. The NACF will discuss the report at a special session in May where after civil society will publish the report for a wider public engagement.

Ladies and gentlemen, the NACF is for the people of South Africa and it will continue to account to them through parliamentary processes and through feedback from the representatives of the sectors. If you feel you can make a contribution as an organisation, feel free to contact the NACF's Secretariat. In conclusion, I want to emphasise that government, business and civil society depend on each other to combat and prevent corruption for the benefit of the entire nation. I can proudly say that the NACF is offering a very strong and effective partnership in its quest to protect the people of South Africa from the evils of corruption. I would like to thank you once more for the opportunity granted to me to speak about our work.

Thank you.

Issued by: Department of Public Service and Administration
24 April 2006