Defrauding Parliament: NPA’s deadliest low-hanging fruit

Vincent Smith’s charges set the precedent: Julius Malema, Floyd Shivambu, Fikile Mbalula, Malusi Gigaba and Cedric Frolick could follow - while Cyril Ramaphosa might just skirt it.

Former ANC MP Vincent Smith has pleaded not guilty to two charges — one of corruption and another of fraud. It is the fraud charge, arising from an alleged attempt to defraud Parliament, that will give his parliamentary peers heart palpitations. EFF leaders Julius Malema and Floyd Shivambu should have sleepless nights, while ANC heavyweights Fikile Mbalula, Malusi Gigaba, Cedric Frolick and even Cyril Ramaphosa have different shades of worry.

The National Prosecuting Authority’s (NPA) new-found willingness to charge a parliamentarian is a dramatic development, particularly for Malema and Shivambu.

As unexceptional as it may seem, the Smith indictment is the equivalent of Shamila Batohi, National Director of Public Prosecutions, demanding our attention, saying “the real NPA is standing up”. But what does it mean for longstanding ANC parliamentarians such as Mbalula, Frolick and Gigaba, as well as Ramaphosa and his CR17 campaign funds?

The nine lost years of Jacob Zuma’s tenure were characterised by kept politicians — financial freeloaders who routinely accepted “donations”, “loans” and favours to prop up their celebrity-style lifestyles.

These political sellouts managed to betray the South African dream of a “better life for all” without hindrance, thanks to a deliberately crippled justice and crime prevention system.

Batohi and her lieutenant Hermione Cronje, who heads the NPA’s investigative directorate that was set up last year to focus on bringing state capture villains to book, now have the ability to change it all.

In an announcement that reverberated through governing and opposition parties alike, Cronje made this an October to remember with her indictments against Smith on charges that carry possible jail-time.

In essence, the former MP stands accused of having received “gratification” — gifts, benefits and cash — that he did not declare to Parliament while knowing that he had a legal duty to so so.

The requirements are laid out in Parliament’s Code of Ethical Conduct and Disclosure of Members’ Interests, which outlines the minimum standards that South Africans expect of public representatives: upholding propriety, integrity and ethical values, among other things.

The purpose is to create public trust and confidence in parliamentarians and to protect the integrity of Parliament. Being dishonest with Parliament is therefore a serious offence deserving prison time, as seen in the landmark 2003 case in which ANC MP Tony Yengeni was sentenced to four years in jail.

The case of The State vs Smith and others will test one of the sharpest but perhaps most-neglected arrows in the NPA’s quiver of tools for holding South Africa’s most influential politicians to account.

The legal framework

The crime of fraud is committed when someone intentionally uses deception, in word or action, to obtain some unlawful benefit.

In Smith’s case, the state alleges that he received security upgrades and cash deposits in bank accounts associated with him from Angelo Agrizzi, Bosasa conman-turned-whistleblower, for his personal benefit. The charge sheet says Smith tried to hide this “gratification” from Parliament by not disclosing it in the register of members’ interests.

In constitutional expert Pierre de Vos’s reading, a case of “defrauding Parliament” will turn on the intent to “hide and deceive”. In Yengeni’s case, the court found beyond reasonable doubt he had intended to deceive his fellow MPs because of “the stubborn denials” of the truth.

In the judgment in Yengeni’s case, the court said misrepresentations to Parliament amounted to actions “with the intent to defraud Parliament”, which were punishable by jail-time.

In the deep end: Floyd Shivambu and Julius Malema

The EFF leaders may face the same difficulties. Evidence collected over the past two years suggest that both are “kept” politicians who routinely accept “donations”, “interventions”,

“gifts” and other favours propping up their lifestyles.

The largesse at VBS Mutual Bank, where just over R20-million in loans and cash was funnelled through front companies into their pockets, is but one illegal source of income for Shivambu and Malema.

Shivambu’s Limpopo wedding to Siphesihle Pezi, his Range Rover, some of his property rental leasing contracts and his lifestyle have been funded by VBS loot and private business people wishing to do business with the state.

This is detailed in reams of bank statements, WhatsApp discussions, documents and Scorpio’s conversations with his benefactors. In return, Shivambu utilises his political power to assist his benefactors, the evidence suggest.

Between late 2016 and early 2018 Scorpio’s calculations based on relevant documents show that he received just over R10-million in VBS cash and loans, while an additional R9-million or so has been confirmed as having flowed to him from other benefactors outside of VBS.

Yet Shivambu officially told Parliament he had nothing — no gifts, benefits, shares or businesses — to declare.

In the past Shivambu has denied all wrongdoing and repeatedly evaded dealing with the merits of the evidence against him.

He has the added complication of having told Parliament in October 2018: “We are going to state here, categorically clear, without any fear of contradiction, that the EFF and ourselves as MPs never benefited anything from the VBS Mutual Bank looting and the socalled heist that happened there.”

Malema, too, offered blanket denials when Scorpio asked for comment on his personal riches.

Yet between the middle of 2017 and 2018, documents suggest R4.8-million in VBS loot was diverted to Malema’s personal benefit, while Scorpio has confirmed he received just over R5-million more from other benefactors. The illicit money was spent on, among other things, upgrades to a house in Sandton, the Malema kids’ school fees, the Mekete Lodge events venue in Limpopo, clothes and groceries.

Malema declared no gifts, sponsorships or benefits to Parliament.

According to De Vos, a court would only be able to find MPs had the intention to defraud when it was very clear that they knew they had a duty to declare the financial benefit.

Malema and Shivambu have been MPs since 2014. Every year since then — so at least seven times — the EFF leaders have declared their financial position and other interests to Parliament.

Whenever they are questioned by journalists, Malema and Shivambu repeat their denials that they received any benefits that should be declared.

The Catch-22 is that Shivambu and Malema could not declare the money they received because it was clearly the proceeds of crime. Essentially, they committed a crime to cover up another crime.

Headache levels rising: Fikile Mbalula, Malusi Gigaba, Cedric Frolick and then-Deputy President Cyril Ramaphosa De Vos said that in the sticky situation where an MP is accused of receiving a financial benefit in suspicious circumstances, it is possible to avoid criminal liability by admitting receipt of the benefit and arguing that its nondeclaration was an oversight, or to argue that there had been no obligation to declare it.

If the obligation to declare is clear-cut and well known an MP may be in trouble, but if there is uncertainty with regard to declaring a particular financial benefit it would be difficult for a court to find the MP had an intention to defraud, he

said.

The issue of Mbalula’s R684,000 family holiday in Dubai over the 2016/17 New Year period may be such a case.

Mbalula’s long-standing friend, Sedgars Sports director Yusuf Dockrat, paid at least R300,000 towards the holiday. Sedgars Sports was a technical sponsor of the South African Sports Confederation and Olympic Committee, which fell under the jurisdiction of Mbalula, who was Minister of Sports and Recreation at the time. Mbalula did not declare this benefit in the parliamentary register of members’ interests.

Public Protector Thuli Madonsela investigated and found he had violated the Executive Ethics Act — a different set of rules altogether. She found Mbalula “exposed” himself and that his conduct was “improper” and “inappropriate”, but made no adverse recommendations against Mbalula.

“He further did not see it as inappropriate to undertake a trip abroad whilst he had no sufficient funds to finance it,” Madonsela said. Mbalula described the R300,000 as a “loan” and claimed to have paid it back, denying any conflict of interest.

Quizzed by Scorpio, Mbalula was clearly aware of his duty to declare benefits to Parliament. But he argued that the “loan” was not a benefit he was duty-bound to declare.

The question is whether Mbalula would have paid back the loan, as he claimed he did, had he not been caught out by EWN, which first reported on the case.

Mbalula seems to argue that he had no intent to defraud Parliament because he had no duty to declare the Dockrat benefit. In a 26-minute telephone discussion about the matter, Mbalula repeatedly said, “I am not like Smith.”

A court may find it difficult under these circumstances to find beyond reasonable doubt that Mbalula had the intent to defraud Parliament.

Frolick’s case is similar. In the first week of October, the veteran ANC MP testified before the Zondo commission about claims Agrizzi made to the effect that he had received cash and other financial benefits from the Watsons.

Under oath, Frolick denied receiving cash, but he did say: “I have to add that during the course of 2013/14, I received a desktop computer for my constituency office that was arranged by Mr Cheeky Watson for learners and students to assist them in their studies, and I also received two shirts, two pairs of shoes and a belt from Mr Cheeky Watson some time on my birthday and I subsequently declared that in Parliament in the members’ register.”

Yet, the register reflects no declaration from Frolick relating to any gifts or sponsorships received from the Watsons or Bosasa.

When quizzed by Scorpio, Frolick, in a 20-minute telephone interview, declined to discuss why he appears not to have declared these gifts timeously.

Frolick did however maintain at the Zondo commission that after Agrizzi made his allegations, he visited the office of the registrar of the register of members’ interests to check what he had declared, and that he belatedly filed a disclosure annexure to cover the gifts.

If Frolick argues that his nondeclaration was an oversight or that the registrar’s office “lost” earlier declarations he made, the NPA will again find it difficult to prove beyond reasonable doubt that Frolick had the intention to defraud.

In another case before the commission into state capture, a former driver and protector of Gigaba’s testified that the then cabinet minister frequently received bags of cash, apparently from the Guptas. Gigaba denied the claims.

The difficulty with these untested allegations is that a prosecutor could find it hard to prove beyond reasonable doubt that Gigaba was on the scene and really did receive mountains of cash. So a case against Gigaba accusing him of defrauding Parliament would fail.

De Vos said that bearing this in mind, there is little risk in the strategy followed by Ramaphosa in relation to his CR17 campaign funds in 2017, when he was lobbying to succeed Zuma as president of the ANC.

“The president has consistently argued that the public protector [Busisiwe Mkhwebane] got it wrong and that Parliament’s membership code does not oblige him to declare donations made to the CR17 campaign. In the context of these denials the NPA will find it difficult to prove that the then deputy president had the intention to defraud Parliament,” De Vos said.

The need and rationale for combatting corruption

In the preamble to the Smith indictment, Cronje borrows from the 2011 Glenister judgment written by Constitutional Court justices Dikgang Moseneke and Edwin Cameron. Their remarks on the case, which related to the dismantling of the Scorpions, the establishment and independence of the Hawks and the fight against corruption, serve as a stark reminder that public officials are supposed to serve the South African public.

“There can be no gainsaying that corruption threatens to fell at the knees virtually everything we hold dear and precious in our hard-won constitutional order,” the judges said.

“It blatantly undermines the democratic ethos, the institutions of democracy, the rule of law and the foundational values of our nascent constitutional project. It fuels maladministration and public fraudulence and imperils the capacity of the state to fulfil its obligations to respect, protect, promote and fulfil all the rights enshrined in the Bill of Rights.

“When corruption and organised crime flourish, sustainable development and economic growth are stunted. And in turn, the stability and security of society is put at risk.” DM168

The Catch-22 is that Shivambu and Malema could not declare these monies as it was a clear proceeds of crime. Essentially, they committed a crime to cover up another crime.