Budgeting for Success:

The Costs of Fighting Corruption

The ANC-led government, in particular deputy President Thabo Mbeki, has committed itself to fighting corruption by launching the National Anti-Corruption Initiative. So far this has involved hosting two public conferences and repeated public statements articulating a "zero tolerance" approach to corruption. These policy objectives need to translate into budgets which are adequate to effectively address corruption.

While difficult to quantify, the costs of corruption are high as it negatively affects economic growth by, for example, deterring foreign investment. There are also costs involved in fighting corruption. For one, bodies tasked with fighting public sector corruption in South Africa, such as the Heath Special Investigating Unit (SIU) and the Office of the Public Protector need adequate funding to be able to fulfil their mandates effectively.

Although independent, both the Public Protector and the Heath Special Investigating Unit derive their budgets from the Department of Justice. In the past year, the Justice budget has needed to address numerous priorities, of which fighting corruption is but a fairly recent addition. The total Justice budget for 1995—1999 and the estimated expenditure for 2000—2002 are shown in Figure 1. While both bodies had asked for better funding, Minister Omar’s acknowledgement that "we have not been able to satisfy them in all respects" rings true.



Figure 1 Justice budget
* Medium term expenditure estimates

Source: National Expenditure Survey — Justice, SA Department of Finance

The Public Protector

The Department of State Expenditure allocates the funds for the Public Protector via the Department of Justice. The Public Protector’s budget forms a separate line item of the Justice budget, and since its establishment in 1996 has steadily received an increase in funds, which in the medium term framework will continue to increase (Figure 2). This is, however, still insufficient to open offices in all provinces. While originally it was anticipated the public protector’s office would deal with an estimated 40 complaints per month, demands for its services are such that in August 1998 the office was handling 4 419 cases.



Figure 2 Budget of the Office of the Public Protector
* Medium term expenditure estimates

Source: Correspondence dated 29/3/99 from the Public Protector’s Office

The Heath Special Investigating Unit

The Unit does not form a separate line item on the Department of Justice’s budget, falling under auxiliary and associated services which also includes the Truth and Reconciliation Commission, Human Rights Commission, Commission on Gender Equality and the Investigating Directorate for Serious Economic Offences.

The funding of the Heath Special Investigating Unit has spilled over into the media when, in replying to the debate on the budget, Minister of Finance Trevor Manuel attacked Heath calling him the "Don Quixote of South Africa" who "takes on everything, regardless of budgetary constraints." He also questioned "the billions of rand" that Heath claims to have recovered. Heath subsequently met with both the ministers of Justice and Finance to detail the assets his unit has recovered through their unique legal machinery of instituting civil proceedings. More recently, Manuel has asked the Auditor-General to review the Unit’s claimed recoveries to try to resolve the debate.

Over the past year the Unit says it has saved, recovered or protected over R848 million (Figure 3). If the value of recovered assets is compared with the current budget, the budget only forms about 2.5% of these recoveries. Heath has urged business to lobby government to give the unit at least 5% (±R40million) of its recoveries to be able to function effectively.

Year	Allocated	Requested	Recoveries/ Savings/ Prevention	Cash Recoveries
1998-1999	R16.19million	R34.7million	R891 388 036	R41 362 842
1999-2000	R16.89million	R33.6million
2000-2001		R47million
2001-2002		R52.3million

Figure 3 Health Special Investigating Unit budget

Source: Heath Special Investigating Unit Summary of Case Recoveries, Savings and Preventions as at 31 January 1999.

Caseload Facts

The Unit is currently pursuing cases worth R8—R9 billion



The number of cases as of March 1999 was 95 000



The Unit has 100 staff members of which 57 are investigators



On average this means 1 666 cases per investigator although these are shared between teams. (If one adds the Gauteng House Subsidy Scheme with 950 000 files to possibly investigate, the amount of work will increase exponentially.)

While the budget for the 1999—2000 financial year increased by R700 000, in real terms, taking into account inflation and increased workload, it has decreased.

While the expansion of human resources and infrastructure is severely handicapped by budgetary restraints, more importantly this reliance also affects the independence of the unit. From the spirit and objectives of Act 74 of 1996, which established the Unit, Heath argues that it should receive a separate budget vote directly from the National Parliament.

One agency whose independence is promoted by receiving a separate budget vote directly from parliament is the Independent Complaints Directorate (ICD). The ICD’s mandate is to deal with police misconduct, with cases involving corruption being referred to the SAPS Anti-Corruption Unit. However it appears from the fact that six ICD officials were recently present at an international conference on corruption that the ICD may be preparing itself to handle corruption cases in the future.

According to the budget (Figure 4) the ICD is currently better off than the Heath Unit and the Public Protector with a staff component of 130 employees and offices in seven of the nine provinces. However, the ICD Head of Investigations, Julian Snitcher, warned that this was "wholly inadequate" and that "staff and logistical shortages" placed an enormous challenge on the ICD with a static budget for the next 3 years. One of the areas he drew attention to was the fact that limited resources meant relying on the police in some cases to secure a crime scene and conduct a preliminary investigation, which invariably compromised the independence of the directorate.



Figure 4 Independent Complaints Directorate budget

Source: ICD finance department

Conclusion

As a stated priority of the government, anti-corruption activities need to be adequately budgeted for in the medium term expenditure framework. This is agreed by Cabinet each year and comprises government’s spending plans for the next three years. Chapter Two of the Manual on the Financial Planning and Budgeting System of the State compiled by the Department of State Expenditure notes that "Government’s expenditure allocations must reflect its political priorities". Further it notes "expenditure allocations therefore represent an important political choice." If the National Anti-Corruption Initiative is to be taken seriously, stated policy objectives need to be translated into concrete resources capable of effectively fighting corruption.

Lala Camerer,
Institute for Security Studies