Lesotho says No to corporate corruption!

As we publish this edition of ANC TODAY, the 2006 annual Southern African Development Community (SADC) Summit will be taking place in the Kingdom of Lesotho. Hopefully, as planned, the delegates will have an opportunity to visit the Lesotho Highland Water Project and gain the necessary insight about this enormous and awe-inspiring engineering construct, with all its positives and negatives.

If time allows, hopefully the delegates would also be exposed to the instructive story of the corruption that is now part of the history of this major project, and the extraordinary story of what the Government of Lesotho has done to confront this curse. This is a story that should be of interest to the rest of Africa as well.

The 2003 2nd African Union Assembly of Heads of State and Government, held in Maputo, Mozambique, adopted the African Convention on Preventing and Combating Corruption (ACPCC). The Convention provides that it would come into force once it is ratified by 15 African States Parties, and the instruments of ratification deposited with the AU at its Headquarters in Addis Ababa.

Algeria deposited these instruments at the AU Headquarters in Addis Ababa a little more than a month ago, on 6 July this year. Because it was the 15th African Member State to do so, this means that the ACPCC has now come into force, binding all Member States of the AU to take the necessary steps to accede to it, and ensure its implementation.

For its part, Lesotho ratified the Convention on 26 October 2004 and deposited the ratification instruments in Addis Ababa on 5 November 2004. This was a full year ahead of our own processes as the Republic of South Africa. We ratified the Convention on 11 November 2005, and deposited the ratification instruments on 7 December 2005.

The day after the ACPCC came into force, on 7 July this year, the website "Onlinenigeria: Daily News" said: "The Convention requires African government officials to declare their assets, adhere to ethical codes of conduct, provide citizens' access to government information about budget spending and to protect those who blow the whistle on state fraud...The convention establishes procurement standards, accounting standards, transparency in the funding of political parties and recognises the need for civil society participation. It also requires African countries to establish as criminal offences, bribery, diversion of property, trading in influence, illicit enrichment, money laundering and concealment of property."

The Government of Lesotho had to deal with the challenges posed by these requirements of the ACPCC long before this Convention was adopted by the AU. This was occasioned by corrupt activities initiated by some of the construction companies involved in the Highland Water Project. Put simply, some of these companies took the decision that they would offer bribes at least to the CEO of the Project, a citizen of Lesotho, to ensure their participation in this multi-billion-dollar Project.

In a speech at the South African Institute of International Affairs on 19 July 2004, the Attorney General of Lesotho, Mr Fine Maema, said: "An audit by the accountants Ernst & Young in the early 1990s uncovered irregularities in the LHDA, (Lesotho Highlands Development Authority), the parastatal charged with administering the LHWP (Lesotho Highlands Water) Project, and more particularly the Chief Executive, Mr M E Sole. This in turn led to disciplinary hearings against Mr Sole and, after his dismissal, civil proceedings against him. During these latter proceedings bank records were discovered in Lesotho and South Africa which in turn pointed to Mr Sole having bank records in Switzerland.

"The (Lesotho) law office then...appl(ied) for the release of Mr Sole's bank records in Switzerland. This application was later expanded to cover other bank accounts, i.e. those of various contractors and consultants engaged on the water project and also three middlemen through whom the funds were channelled. These applications were all granted by the local examining magistrate in Zurich. All those holding bank accounts then appealed her decision firstly to the High Court in Zurich and thereafter to the Swiss Federal Court. Our lawyers were successful in these appeals and in June 1999 the bank records were delivered in Maseru.

"The picture that then emerged was of corruption quite unprecedented in the history not only of Lesotho but, at that time, also of Southern Africa. Over a number of years and in fact since shortly after the inception of this project overseas contractors and consultants had been paying enormous amounts of money to Mr Sole through intermediaries in Switzerland. These payments coincided with these contractors/consultants seeking contracts on the water project. The contractors/consultants include those engaged on all the major phases of the water project, including the building of the Katse Dam, the transfer tunnels taking the water to South Africa, the hydro-power station, and so on.

"Prosecutions then followed, firstly against Mr Sole in July 1999 and thereafter against the others involved, that is the contractors/consultants paying either Sole directly or through intermediaries as well as the intermediaries themselves. In December 1999 the accused were all served with a High Court indictment, the joint trial being set down before Mr Acting Justice Cullinan, a former Chief Justice of Lesotho...Every legal stratagem was employed on behalf of the contractors/consultants, as well as Mr Sole, to derail these prosecutions."

Despite these legal stratagems, and in spite of the severely limited resources of the Kingdom of Lesotho, the Lesotho law-enforcement authorities managed to secure convictions against the wrong-doers. The Attorney General quoted the Chief Justice of Lesotho as having said: "Thus having cast caution to the winds and shown reckless disregard for the peace of mind enjoyed from turning an honest penny, world renowned companies were put to shame when they were caught with their hand in the cookie jar. The lead companies in the who's who of the corporate brotherhood of the world found themselves in the seething quagmire of shame and scandal - naked without a fig leaf to hide their glaring nudity."

Attorney General Maema also said: "The first prosecution was against the recipient of the bribes, Mr M E Sole. This trial was concluded in 2003 with Mr Sole being convicted on a number of counts of bribery and sentenced to an effective 18 years imprisonment, (which was reduced on appeal to 15 years)...The second case involved the international engineering consultancy from Canada, Acres International where Acres was convicted of bribing Mr Sole and sentenced to a fine of some...R15 million...The third case is that against the largest engineering consultancy in Germany, Lahmeyer International. The trial Court convicted Lahmeyer on 7 counts of bribery and sentenced it to a fine of R10.6 million...which on appeal was increased to R12 million...The Court of Appeal in its judgment addressed specific comments to the International Community and particularly the funding agencies."

Of course what these bribes were about is securing contracts with the aim of making as much profit as possible. What went on suggests that for some business people, this becomes such an overriding preoccupation that all sense of morality, of ethical conduct, is abandoned, deliberately and consciously.

In an article entitled "Enron Ethics", Robert W. Tracinski wrote: "A writer in the New York Times quotes a colleague's summary of the true 'Vision and Values' statement of any big corporation: 'Why not just come right out and say it? 'We will strive to make as much money as we can without going to prison.''

"As philosopher Harry Binswanger points out, the premise behind this statement is that lying, cheating, and stealing is the best way to make money and be selfish ­- and the fear of prison is the only disincentive for wholesale fraud and looting. Professor Binswanger goes on to point out that this statement reflects a whole approach to morality. To be principled and moral, in this view, means to sacrifice one's interests by, say, going into social work or taking a vow of poverty. The logical flip-side is that to be self-interested, to pursue wealth and happiness - well, that requires no principles or morality at all, just a random, range-of-the-moment grab for whatever one can get one's hands on.

"This is the predominant moral outlook today, especially on the left. Ironically, Enron seems to have implemented this view of morality to a T. To enrich themselves, Enron's executives lied to shareholders and cooked the books to produce fake profits, ignoring the company's long-term financial problems."

The British "Guardian" commented on 30 November 2001 that, "Losers apart, there will be many dancing on Enron's grave. In the US, it had attracted a degree of notoriety for its part in the bungled privatisation of California's electricity, which led to black-outs earlier this year. But it was in the developing world that Enron had a near unparalleled reputation for corporate irresponsibility. It has been the only company to warrant an entire Amnesty International report, a chilling catalogue of human rights abuses from India to Latin America. The anti-corporate movement accused Enron of subverting the political process of virtually every country in which it operated to advance its interests. Enron was in the thick of one of India's biggest corruption scandals in which huge sums were paid to politicians in the privatisation of electricity firms."

In a Commentary in "BusinessWeek" on 11 April 2002, Heesun Wee said: "After the dust from the Enron collapse settles, one positive outcome may arise. CEOs, take note: The energy trader's demise provides an important lesson in the value - the necessity, really - of having a corporate conscience and a culture built around knowing the difference between right and wrong.

"It's tempting to brush aside business ethics as a nebulous, well-intentioned subject suitable for Business School 101 but of little practical value in the real world. Big mistake. A 2000 survey by the Ethics Resource Center found that 43% of respondents believed their supervisors don't set good examples of integrity. The same percentage felt pressured to compromise their organisation's ethics on the job. That's a startling number, two years before Enron imploded."

To come back to our continent, the "Financial Times" of 8 August 2006 reported that, "The investigation by the UK's Serious Fraud Office into an alleged Nigerian bribery scandal involving a Halliburton subsidiary is the latest twist in a case that exemplifies the lucrative, murky and highly political world of western oil interests in Africa...

"The SFO probe comes after criticism that London was doing little on the case even though a British-based company and a British lawyer were allegedly at the centre of a plot to pay more than $170 million of bribes to win $7 billion of building contracts.

"(Commenting on notes taken at a meeting of the companies under investigation), Halliburton itself has admitted that the notes show the building consortium had 'considered payments to Nigerian officials'...The big money, high politics and strategic oil interests involved in the SFO's case could be a quintessential test of the credibility of Britain's anti-corruption pledge."

In the speech to which we have already referred, the Attorney General of Lesotho also said: "Bribery involves two parties, the briber and the bribee. Therefore in a given situation it is normally difficult to establish who initiated the corrupt transaction. There seems to be a perception in the first world, in casu in the context of construction contracts, that in the third world the initiative comes from the bribe taker rather than the bribe giver. In the African context this has been described as 'the Africa problem'. This has however not been the evidence in the present prosecutions in Lesotho. The evidence has shown that Mr Sole's first Swiss accounts were opened for him by the intermediary acting on behalf of French contractors...

"The purpose of these prosecutions has not only been to get convictions. The objective has also been to get to the bottom of this problem and to seek to prevent it from recurring. To this end overtures have been made to various persons or entities involved to rather cooperate with the prosecuting authorities, in return for possible exemption from prosecution. All this has fallen on deaf ears. Even Mr Sole, now languishing in jail, has chosen to remain silent. Perhaps the reason why no-one speaks out is because those that know about the bribery normally have something to hide themselves. It may perhaps not be this particular bribery transaction, but another...Those involved in bribery tend to stick together...

"What needs to be done then is firstly to create an atmosphere in which bribery is not allowed to thrive. One must make it known to the ordinary people that those involved in bribery are not latter day Robin Hoods but are actually stealing mostly from the poor in the country, because the bribes paid out could have been utilised for their benefit. This, I am happy to say, is indeed a perception that is starting to take hold in Lesotho...

"The lesson to be learnt is that international corporations wherever they operate, and particularly in Africa, must make their profits with integrity. If they do not, we will go after them and we will urge the World Bank and others to debar them. A clear message coming from the Mountain Kingdom is that 'the rules of the game have changed; it is no longer business as usual.'"

All of us as Member States of the African Union would do well to draw on Lesotho's example and experience of challenging corporate immorality, as we honour our obligations as spelt out in the AU Convention on Preventing and Combating Corruption and the benchmarks set by the African Peer Review Mechanism.

16th International AIDS Conference

It is time to deliver

The 16th International AIDS Conference, being held in Toronto, Canada under the theme 'Time to Deliver', is taking place at a time when the world is faced with the threat of terrorism and the suffering of ordinary people, especially women and children, as a result of the ongoing conflict in the Middle East.

While we engage in the measures to ensure global stability, we need not lose focus of the major challenges of poverty and underdevelopment that continue to undermine health and well-being of people particularly in the African continent. Africa understands that it is time to intensify efforts to address its challenges. South Africa and other countries in our region have undergone the peer review process which, among other things, promotes good governance in the African continent as envisioned in the New Partnership for Africa's Development (NEPAD).

The international community has made various commitments encompassed in the Millennium Development Goals and other global resolutions to address the challenges of poverty and support development efforts in poor regions of the world. The time has come for the long-standing commitments to debt relief, a fair global trade environment and the pledge by the OECD Member States to commit 0.7% of gross national income for official development assistance to be fulfilled. It is time to deliver.

Progress in delivering on these commitments will significantly boost the world's ability to meet the commitments made at the United Nations High Level meeting on HIV and AIDS held in New York in May this year. UNAIDS estimates that between 20 and 23 billion US dollars are needed annually to attain the commitment we made in New York with regard to universal access to prevention, care and treatment by 2010.

At the replenishment meeting of the Global Fund to Fight AIDS, TB and Malaria, held in Durban more than a month ago, South Africa pledged an additional R1 million to the US$10 million that we are contributing to the Global Fund over five years (2003-2007) to demonstrate our commitment to the mobilisation of resources for the response to these infectious diseases.

We need not forget that the New York meeting also acknowledged the social determinants of health as crucial in addressing the challenge of the spread of HIV infection and impact of AIDS in our society. These are issues that were highlighted by President Thabo Mbeki during his address to this conference in Durban six years ago. He urged us to not only address HIV and AIDS only as a medical problem but also deal with the underlying factors such as poverty, food insecurity and malnutrition, gender inequality and illiteracy.

Over the past 12 years of our democracy, the South African government has made significant progress in addressing these challenges.

Our government is implementing arguably the biggest and most comprehensive programme as outlined in the Comprehensive Plan for Management, Care and Treatment of HIV and AIDS. We believe that countries need to mobilise national resources as much as it is possible - depending on the resources available in each country - to implement their national plan. We are convinced that this approach will ensure sustainability of national programmes and that our interventions respond to local needs.

Our Comprehensive Plan is 90% funded by the government of South Africa. Because we are convinced of the need to intensify delivery, we have tripled the budget allocation for the Comprehensive Plan over the last four years from just over R1 billion in 2002 to R3.5 billion in 2005.

As there is still no cure for HIV and AIDS, we continue to put emphasis on prevention as the mainstay of our response. Most surveys indicate a very high level of awareness about HIV and AIDS among our people, ranging between 92-98%. This is a result of the awareness campaigns which encourage our people to abstain from sex and to be faithful to one partner. Government also provides free, high quality condoms for prevention of sexually transmitted infections including HIV infection and re-infection, as well as unwanted pregnancies.

Male condom distribution was at 346 million in 2004 and female condom distribution doubled from 1,3 in 2003 to 2,6 million in 2004. We hope to increase the supply of female condoms to three million this year.

The Report on the National HIV and Syphilis Antenatal Sero-prevalence Survey indicates that HIV prevalence rates for 2004 and 2005 are very similar. The prevalence profile continues to confirm the expectation and projections of numerous groups whose models suggest that South Africa will begin to see a decline in the prevalence profile. The studies conducted over the years show that intervention programmes, which emphasise prevention, have a very important role in moderating HIV prevalence and the epidemiology of HIV infections in general.

We hope that the conference can pay particular attention on issues of prevention especially since this year has been declared the year of accelerated prevention by the African region of the World Health Organisation. This should cover research work on reducing the risk of mother-to-child transmission of HIV including the best infant feeding options.

We are also promoting uptake into voluntary counselling and testing (VCT), which is now available in 89% of public health facilities. There are many services that we provide as government to delay the progression from HIV infection to development of AIDS defining illnesses and to maintain optimal health for people living with HIV and AIDS. We firmly believe that delaying this progression is the most critical area where we need to make maximum impact.

We have engaged in the Healthy Lifestyle awareness campaign encouraging people to exercise regularly and to eat nutritious and healthy food, particularly vegetables and fruits, and this is supported by initiatives to promote community vegetable gardens and food security. Many people are benefiting from the provision of nutritional supplementation within the Comprehensive Plan.

We provide rigorous treatment of opportunistic infections in most of our facilities. We are also encouraging research and development of African traditional medicines that are effective in alleviating symptoms associated with HIV and AIDS by boosting the immune system. Very soon we will be launching the Council for Traditional Health Practitioners and establish a Presidential Task Team on Traditional Medicine.

All our districts and 72% of local municipalities have an accredited service point for providing antiretroviral therapy which is delivered by government free of charge. There are indeed challenges which we are continuously trying to address, particularly with regard to monitoring and evaluation of our programmes. Data collection for the Comprehensive Plan is still limited to:

• accumulative number of patients assessed;
• accumulative number of patients initiated on treatment;
• CD4 counts and viral loads done;
• the number of accredited health facilities

We are making efforts to expand this programme to record patients that have exited the treatment programme, adherence and adverse events. We have established pharmacovigilance centres in three universities to monitor and investigate adverse events. There is also a need to work with both non-profit and for-profit private sectors to ensure the harmonisation of indicators.

There is a need for strengthening of health system as this is fundamental to provision of quality health care for our population including people living with HIV and AIDS. We have to address the issue of shortage and uneven distribution of certain health professionals in the country. We are finding innovative ways to address this issue through the development of a mid-level health worker category which includes medical, pharmacist and nursing assistants. All these interventions are within the framework of the Human Resources Plan for Health launched during this year's World Health Day on 7 April.

The reduction of the prices of medicines and other essential commodities remains a very critical area of intervention. Affordability of these commodities is critical in improving accessibility and sustainability of treatment interventions. We also have to encourage innovation and research into additional tools for our response including vaccines and microbicides, traditional medicine and other forms of therapies.

There is hope that our determination to address the challenge of HIV and AIDS in our country is beginning to render results. Overall HIV prevalence is no longer increasing as significantly as it was in the early 1990s. Particularly encouraging is that the prevention messages regarding abstinence, faithfulness and condom use are being taken to heart, especially by the young. Most of the vulnerable children are receiving social support and have free access to health services and education.

During the conference, we hope to learn from presentations on the interventions and research advances being made in various parts of the world. We are also using the opportunity to share our experiences and hope to highlight the progress we are making towards curbing the spread of HIV infection and reducing the impact of AIDS in our society.

** Manto Tshabalala-Msimang is a member of the ANC National Executive Committee and Minister of Health. This is an edited version of a speech at the opening of the South African government exhibition at the16th International AIDS Conference, Toronto, Canada, 13 August 2006.

Local Economic Development

Local economic growth needs cooperation of all

The times in which we live call for the harnessing of a dynamic public opinion to the government-led task of setting our country on the path of sustainable development. This requires two kinds of partnerships: the first set of partnerships involves effective intergovernmental coordination, and the second one is about coordination between government and social partners. In this regard, it bears emphasis that local economic development (LED) is not about local government per se. Rather, it is about what the entirety of government does in local spaces. In other words, our collective efforts must be directed towards ensuring optimisation of intergovernmental impact on every part of our space economy.

Prior to 1994, our country was among those which had a very poor record of economic growth over a long period of time. In addition to the problem of stagnant or declining growth, the opportunity structure which prevailed then was shaped by systematic arrangements and processes that confined some places and people to an underdevelopment condition. The racial inequality and the legacy of spatial exclusion survived the demise of apartheid. Our conception of the 'strategic way forward' therefore, takes its point of departure in the reality that putting our economy on a higher growth trajectory is an indispensable condition for the realisation of the goal of a better life for all.

The National Conference on Developing Local Economies, held in Gauteng this week, was visualised as an integral part of our 'plan to make government work better'. It forms part of the action steps which are contained in our '5-year local government implementation plan'. In terms of the plan, the conference serves as an important backdrop to the Growth and Development Summits which must be held in all the 46 district municipalities and the 6 metropolitan municipalities by March 2007. The summits must, in turn, feed into a process of ensuring that our next generation of municipal integrated development plans (IDPs) are more credible.

For our actions at local level to be meaningful and effective, we need to develop a common understanding of the geography of our national economy. It is for this reason that, in the context of trying to determine local government's contribution to the national task of pursuing a 6% growth target, we are conducting a rigorous analysis of economic opportunities and potentials of each of the districts and metropolitan municipalities. We are intent on identifying interventions for skills developments according to the make-up and potential for economic development of each local area.

It has become a matter of mounting importance that we sharpen the spatial focus of government programmes. The macro-framework for this is already in place. The National Spatial Development Perspective (NSDP) has been developed, and was recently updated, with a view to guide us as we seek to direct growth-inducing investment in a coordinated and spatially-targeted way.

This has implications not only with respect to attracting private sector investments into prioritised geographic spaces, but also with respect to social provision of sustainable modes of living to people who were previously marginalised. This means that as a government, we must keep a close watch on our fiscal interventions and the distributional dynamics which are unleashed by these interventions. The test is whether our fiscal interventions, including the way we distribute nationally-raised revenue to local jurisdictions, serve to buttress existing inequalities or they help hitherto marginalised geographic spaces to overcome their inheritance of disadvantage.

We are making progress in this regard. For instance, appreciable progress was recorded with respect to improving our capacity to plan, manage and monitor infrastructure investment and the provision of municipal services. In 2005/06, we set aside R5,4 billion for the Municipal Infrastructure Grant (MIG). By the end of March 2006, the entire amount had been transferred to municipalities, and the municipalities were able to realise a 72% spending rate on municipal infrastructure.

The experience of working together with municipalities has given us better insights as to the impediments which stand in the way of rapid progress, and we now have a better idea of what we should do together to remove those blockages. The trends therefore, firmly support the prognosis of accelerated and shared growth.

The entirety of government must respond to the challenge of growing our economy within the context of some coherent national framework. That framework must help us achieve the necessary synergies between the National Spatial Development Perspective, the provincial growth and development strategies, and the IDPs.

This week's conference is part of a continuum of initiatives whose purpose it is to find more creative ways of optimising the impact of our developmental endeavours. I hope that the conference will meet the collective expectations of our people, namely that it will take us beyond the current levels of developmental optimism.

** Sydney Mufamadi is a member of the ANC National Executive Committee and Minister for Provincial and Local Government. This is an edited version of opening remarks at the National Conference on Developing Local Economies, 14 August 2006.

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