Business and government agreed in June to partner on action streams to target a trio of problems undermining South Africa’s economic potential: energy, transport, and crime and corruption.
Neil Fronman, CEO of diversified mining company Sibanye-Stillwater, is leading the crime and corruption initiative on behalf of the business, along with Remgro CEO Jani Durand.
In an interview with The Daily Maverick, Fronman revealed some of the measures companies are taking to tackle a scourge he said costs the economy up to one trillion rand annually.
“Ensuring that there are capabilities within the NPA, and the specialized skills that you need, is one of the courses of action that we are working on. This has the support of the Minister of Justice and we have the appropriate memorandums of understanding in place [memorandums of understanding] Fronman said.
“We also intend as a business to build a state-of-the-art forensics laboratory that will assist the NPA in conducting its work. Of course, a lot of forensics now use artificial intelligence and data analytics, smart computers to track these illicit flows. This is one course of action to enable these organizations of performance and implementation.”
The location of such a laboratory and cost estimates are still being worked out, but this could be a potential game-changer because the dire state of forensic capabilities in South Africa has been a thorn in the side of law enforcement. The main laboratory is located in Pretoria, and the others are in Cape Town, Durban and Jacques Bhd.
Public Service Commission Commissioner Anil Jexoya expressed concerns about the state of the forensic laboratories in late June. He noted that the backlog means that facilities “cannot effectively perform their critical role and thus contribute to delays in the criminal justice system.”
Fronman also said that different business sectors will pool intelligence-gathering resources to provide authorities with flexibility to track down criminal gangs.
“The other area is giving South Africa some real power for business against crime,” he said, referring to the South African Business Leadership division focused on the issue.
“Every industry has its own regulation,” Fronman said. Examples include the Minerals Council of South Africa, which represents the mining sector, and the Banking Association, which represents banks.
All of these organizations have a good ability to combat crime and corruption in their respective industry. But it was very disjointed. Business Against Crime is going to better coordinate all of that information and information, and we’re going to use that to disrupt these illicit supply chains.”
Fronman said he could not reveal exact details because that would, in effect, be a tip-off to criminals.
I can’t say exactly how we’re going to use it because if we did, we’d be neutered. But let’s just say we know how to disrupt these supply chains. Once we have the information, we will take it to the appropriate authorities.
“But we are not going to depend on someone else to make a move. And we are going to be very active in disrupting these mafia and supply chains. What used to be Business Against Crime monitors and dealing with petty theft will change the focus to dealing with criminal and organized crime,” said Fronman.
“It uses all the intelligence across the business networks and then uses the business itself to disrupt these illegal activities and then relay the intelligence in parallel to the prosecution authorities.”
Call centers and police shops
Fronman also stressed that businessmen are not trying to assume the role of the state or to undermine the independence of the police or prosecution powers.
“I don’t want to create the impression that we’re going to do policing. What business can do is provide assistance and capacity to organizations like the NPA. Now, obviously, that needs to be done in a way that doesn’t negatively affect their independence. Another course of action is to ensure that these prosecuting authorities are independent and remain independent. “We will work to ensure their independence,” he said.
A source familiar with the government’s approach to the matter confirmed this to be the case and said that the memorandums of understanding in place dealt with the issue of independence. The Chinese wall on this front is important because there are certainly factions in the ruling ANC that are suspicious of business.
So, for example, if a laboratory is set up, the business will not attempt to dictate which cases should be subject to forensic analysis.
In a joint statement on June 8, when the initiative was announced, the government and business explained how this would work.
“The business will provide support, on a carefully controlled commercial basis, to combat crime and corruption, in particular – expert resources to increase NPA and ID capabilities. [Investigative Directorate]. “
Other initiatives, Fronman said, include call centers and police shops. “This is a joint initiative with the government, and in collaboration with the government, they have identified a number of issues they want us to work on.
“One is as simple as ensuring the 10111 call center is working properly and is up to date. The other is improving the performance of police stations.
“This is where you can make a sustainable difference by looking at training, capabilities, etc. And the business has great resources to ensure it’s done in the right way. We won’t be training policemen as a business, but we can ensure that there are appropriate programs in place with the government. Fronman said: “We can use our strategic business planning and project management to make this kind of thing happen.”
There is broad agreement that crime and corruption is a huge cost to the South African economy, which is why the issue has been identified as a priority in this partnership between government and business.
Estimates of its cost to the economy range widely because it is difficult to put an exact number, not least because of cascading effects such as discouraged investment and lost production.
Fronman said the estimates that have emerged in the course of action are huge and material. “As you take part in this course of action, you become aware of how bad things really are. Crime costs the country between 500 billion and 1 trillion rand a year. That equates to between 10% and 20% of GDP. It is really, really material and these are direct costs.” .
But it affects foreign investment. It affects investor sentiment. “The indirect effects are much larger,” Fronman said.
“It’s very difficult to give an exact number,” said South African Business Leadership spokesperson Tumelo Mutim, in response to The Daily Maverick’s query on the matter, but the organization agreed with Fronman’s estimate.
One organization that has reached an estimate is the Institute for Economics and Peace, which recently published its own Global Peace Index.
Among other things, it looks at the “economic cost of violence” to a country as a percentage of GDP.
For 2022, South Africa ranked 15th overall out of 163 countries in terms of cost volume as a percentage of GDP. Its estimate for South Africa was 15%.
“The illegal copper industry alone is in excess of R40 billion annually,” Fronman said. “Those are big numbers. This is copper cable theft, copper being taken from transformers and resold.
A loss for a company like ours [Sibanye-Stillwater] Even bigger when we have operational disruptions that aren’t included in that number – that’s just the illicit supply chain.”
Sibanye said in March it lost more than R1 billion in production last year as a result of copper cable theft. These costs ultimately mean that there is less capital available for investments that create jobs and economic opportunity.
Our focus is on anything that harms the legitimate economy and well-being of the country. If you improve the economy, you reduce unemployment, and if you do that, you contribute to the upliftment of the people. It is not a selfish commercial interest.” DM
Additional reporting by Ray Hovercraft.
This story first appeared in our weekly Daily Maverick 168, available nationwide for R29.