Chapter 10
HARMONISING LEGISLATION AGAINST ORGANISED CRIME IN SADC COUNTRIES

Introduction

The United Nations Convention Against Transnational Organised Crime was signed in the Italian city of Palermo, in Sicily. Between 12 and 15 December 2001, representatives of at least 123 countries appended their signatures. Among the signatories were Angola, Lesotho, Malawi, Mozambique, Namibia, the Seychelles, South Africa, Swaziland, Tanzania and Zimbabwe.1 The Convention can be regarded as the product of a concerted effort by the international community of nations to design a strategy for dealing with organised crime. It indicates the contemporary trends in the formulation and implementation of legislation against crime of this nature.

It is appropriate to treat the Convention as a benchmark against which to determine the steps that need to be taken and measures to be implemented in updating SADC legislation. Signatories are expected to proceed with the process of ratification, which should involve their respective legislatures. By its own terms, the Convention will become effective 90 days following the 40th ratification. The primary objective must therefore be to identify what is needed for compliance with the stipulations of the Convention.

It must not be assumed that, because most of the SADC states signed the Convention, they are all in an immediate position to ratify the Convention and implement a set of measures to comply with the obligations it creates. This chapter briefly sets out the key challenges to be considered during the ratification process. It also attempts to make a prognosis of the prospects of harmonising the organised crime legislation discussed in the preceding chapters.

At this stage, certain challenges that are bound to have an impact on efforts to fight organised crime are already evident. They are considered under the broad categories of context, content and enforcement.

Context-related challenges

The first challenge arises from the weakness of the economic systems (in some cases, the pillars on which these economies rest are disintegrating) of many of the SADC states. At a time when all of them are labouring under the demands and pressures of transformation (economic empowerment of previously marginalised groups, privatisation of an erstwhile huge public sector), the financial services sector in some of the SADC states is in a brittle state. This sector is a key player in fighting manifestations of organised crime, such as money-laundering.

In Zimbabwe, the demand for investment capital exerts pressure on the capacity of the financial services sector to police money-laundering. The attitude of a sector besieged by a shortage of investment capital to an injection of cash is likely to be ‘deal first, ask questions later’,2 especially if the cash is in hard currency. Tainted money, like a gift horse, is not likely to be subjected to too much scrutiny by a bank that is desperate to survive. Contemporary press reports indicate that the banking sector is afflicted by bad debts amounting to more than Z$10 billion (R1.4 billion) and that some banks could go bankrupt if they cannot secure heavy capital injections.3 As South points out:4

"Laundering strategies involve financial transactions the size of which are extremely profitable and hence attractive to the legitimate financial enterprises that process them; laundering diverts money from an illegal economy into needed and welcome investment in the legitimate economy; and, generally, it is now so well integrated into the 24-hour a day global network of financial transactions that its curtailment might … have consequences beyond those that legislators and enforcement officials conventionally suppose."

A major player in the banking sector in Swaziland, the Swazi Bank, has reportedly been on the verge of collapsing for a long time. Its precarious position has been attributed partly to inadequate capitalisation, precipitated by injudicious benevolence to certain well-connected individuals. The bank’s position has an adverse impact on the rest of the financial system, compromising its capacity to play a role in enforcing money-laundering laws.5

Apart from the incentive to flout a new money-laundering legislative system, there is the cost factor. Requiring financial institutions virtually to become an arm of the state involves imposing an additional administrative infrastructure, which costs money to set up and run effectively. Common elements of a money-laundering control system include:

a customer identification mechanism;

effective recordkeeping; and

a duty to report information about transactions entered into with the financial institution.

The duty to report may be onerous if it is widely defined to include both transactions of a certain magnitude and transactions which raise suspicion. Yet, a system which purports to be effective must define the duty widely.6 In addition, if reporting is to be performed timely, it must be done, in the case of a multi-branch financial institution, directly from branch level rather than through a central unit. This has significant cost implications. The resources involved even in a basic investigation of the source of an unusually hefty cash deposit can certainly be imagined.

The system envisaged in the Financial Intelligence Centre Bill in South Africa and the Anti-Money Laundering Bill in Lesotho widens the net of institutions that should file reports. The ability of these institutions to absorb the additional costs involved varies. It cannot be assumed that this is a model which will work well in all states in the region.

From the perspective of the client, the wanton violation of the principle of confidentiality can introduce a new risk to the notion of investment. The risk is magnified in environments where there is little or no trust between the public, in general, and the state system, for whom the banker will now be acting as agent. The distrust harboured by the client quickly gets transferred to the banker-agent, resulting in a breakdown of confidence in the bank. An incentive to withhold information or assets from the bank is created. The simultaneous incidence of shortages in the supply of commodities can exacerbate this breakdown of the banker-client relationship. In an economy afflicted by high inflation, the inevitable result is a tendency to keep money at home rather than in the bank.7 This, in turn, could affect key aspects of the functions of the banking sector, such as lending, and later the viability of the financial services sector as a whole. The ‘parallel market’ phenomenon tends to result from an absence of confidence in the official system. As has been demonstrated time and again, the stability of a country’s economy is closely linked to the health of its banking system.

At the same time, it is in the interest of financial institutions, and the economies in which they operate to take effective measures to prevent organised crime entrenching itself. Productive, long-term foreign direct investment is unlikely to be attracted to an institution or a country that is openly receptive to the proceeds of organised crime. There have been countries that perceived such proceeds with indifference, or even encouraged their investment, but on account of international initiatives, the latest of which culminated in the UN Convention, the number of these countries is rapidly diminishing.8

The second challenge may be attributed to fragile and/or hesitant democratic institutions. In a number of SADC countries, mutual suspicion and fear dominate the relationship between central government and other centres of power. On account of the fear of losing governing power, sitting governments perpetually seek to dominate the entire state sector, marginalising other institutions. This has two notable consequences. The first is that it diminishes the capacity of institutions outside central government to make an input in the formulation of legislation. The second is that it leaves very little room for political neutrality in decisionmaking, including decisions on the implementation and enforcement of laws. This insidiously weakens the ability of the state to deal with organised crime, particularly if it emanates from, or aligns itself with functionaries within central government.

The extent to which this has already happened varies between states. In some, police structures have been co-opted into the ruling party, in others, even the judiciary is being cowed into subservience.9 The inevitable subversion of the rule of law manifests itself in inconsistent or erratic enforcement of the law, as law enforcement dances to the tune of transient political interests.10 In almost every case where this happens, public confidence in the system of justice is eroded. Civil society becomes reluctant to entrust greater powers in the government or its agencies, on account of the apprehension that this would fortify totalitarianism. There are misgivings and even resistance in states such as Malawi, Swaziland and Zimbabwe to the extension of powers of surveillance to law enforcement authorities, in the absence of reliable safeguards against abuse.

The formulation and implementation of legislation in a number of SADC states tend to be dominated, if not monopolised, by central government. As a result, the content of legislation is determined almost entirely by government’s perceptions, as is the timing and manner of implementation. There are states in which legislation with the potential to tackle corruption and organised crime has been passed, but never brought into effect.11 A continuation of this trend may blunt the declared resolve to combat organised crime.

A related challenge is to prevent abuse at the instance of malicious functionaries for political or economic purposes. Removal of the bank confidentiality principle in suspicious transactions can easily become the thin end of a wedge, exposing every customer to surveillance and even undue harassment. The risk of such a result increases if the lifting of confidentiality is combined with the introduction of the ‘unexplained lifestyle or assets’ presumption of corruption, as is the case in Botswana, Lesotho, Swaziland and Zambia.

In Zambia, abuses were recorded on account of a combination of the Corrupt Practices Act and the Preservation of Public Security Act. Ailola notes that, during the enforcement of these statutes, many people were detained for long periods and others had their properties confiscated and bank accounts frozen or closed altogether.12 Enforcement of these measures occurred in the heyday of the one-party state in Zambia, and the centralisation of power within the state by President Kaunda. In this situation, perceived political opponents of the president were at risk of victimisation. It is a scenario which could well repeat itself in Zimbabwe and Swaziland.

Secrecy laws, some but not all of which were inherited from the era of colonial rule, present another challenge. These laws serve to insulate iniquitous conduct in both the public and private spheres from public observation. It is not surprising that they have spawned a great deal of corruption, and rendered its detection difficult.

There is a dangerous combination of official secrets legislation, and two other factors, the delegation of a great deal of discretionary power in executive bureaucrats and the absence of a framework for the protection of informants giving information on organised crime or corruption within institutions where they work. The combination has the potential to detract from the crusade against syndicated crime. Action precipitated by revelations of corruption in the public sector in Zimbabwe, for instance, has tended to be directed at those responsible for such revelations, rather than the corrupt.

Section 45 of Botswana’s Corruption and Economic Crime Act deserves to be lauded as a positive step. It is intended to encourage the free flow of information to the authorities responsible for combating corruption and economic crime. Similar provision is made in the Swazi legislation relating to corruption. Its efficacy in a relatively small community depends on the confidence which the informant is prepared to repose in the authority to which he or she reports.

Content-related challenges

The Convention pays some attention to the issue of legislative content, prescribing the substance of laws that can be used against transnational organised crime. This part of the chapter considers how much modification is required to relevant legislation in SADC states.

Participation in organised criminal activity

State parties are required to make participation in an organised criminal group a crime. This entails both conspiracy and management of such a criminal group. The Convention defines an organised criminal group as:

"a structured group of three or more persons, existing for a period of time and acting in concert with the aim of committing one or more serious crimes or offences established in accordance with this Convention, in order to obtain, directly or indirectly, a financial or other material benefit."

A serious crime is described as an offence punishable by a maximum deprivation of liberty of at least four years or a more serious penalty.

The criminal law in many of the SADC states already criminalises the ‘incomplete’ crime of conspiracy, although it is not every state that has codified the law. States whose substantive criminal law has Roman Dutch roots include Botswana, Lesotho, Swaziland, South Africa and Zimbabwe. In most of these countries, the uncodified common law generally already covers conspiracy to commit crime and managing a criminal enterprise. In addition, statutes regulating criminal procedure render conspiracies punishable in some instances. States of which the substantive law was influenced by English law have been more forthright in codifying the general principles of criminal liability in penal codes. The Malawi Penal Code, for instance, criminalises participation in an organised criminal group. Of the Roman Dutch-oriented systems, Botswana has codified principles of criminal liability, albeit somewhat restrictively.

It would not be difficult for any SADC state to adopt the recommended criminalisation of participation in organised criminal activity. South Africa and Tanzania already have dedicated statutes, which could be used as examples. The challenge becomes formidable in the enforcement of such laws.

Money-laundering

The problems likely to arise in the introduction of domestic money-laundering control regimes have been alluded to above. They assume that every state has abolished money-laundering. Out of the 11 SADC states surveyed, five had specific laws against money-laundering.13 In two states, bills are at different stages of consideration.14 Four states had no such legislation, although one had laws which could be used against money-laundering.15

It is submitted that, in this regard, all SADC states have to agree on a definition of money-laundering, to be incorporated into legislation. The conceptualisation in the Prevention of Organised Crime Act in South Africa would be a useful guide.

Corruption

There is unanimity in SADC that corruption should remain a criminal offence. This unanimity does not extend, however, to the definition of corruption. Most SADC states are comfortable with conceptualising corruption as the abuse of office to procure a private benefit. The definition is narrow, in that it seems to assume that all corruption is bureaucratic. It is also premised on the vain assumption that public and private interests can easily be distinguished. Hope offers a definition that is both more comprehensive and relevant. He takes the view that corruption is:

"the utilization of public office for private gain, either on an individual or collective basis at the expense of the public good, in violation of established rules and ethical considerations … It is an act undertaken with the deliberate intent of deriving or extracting personal or private rewards against the interests of the State. Such behaviour may entail theft, the embezzlement of funds or other appropriations of state property, nepotism, or the granting of favours to personal acquaintances, and the abuse of public authority to exact monetary benefit or other privileges."16

While the Convention only requires the criminalisation of corruption by public officers (national, foreign and international), it is clear that its stipulations are the absolute minimum. States should criminalise forms of corruption other than bribery and extortion, and consider penalising corruption in the non-state sector. The legislation in all but three states needs review on account of its narrow approach to corruption.17

Obstruction of justice

The Convention requires state parties to criminalise the intimidation of witnesses and law enforcement and judicial officials. Notwithstanding the recognition by the common law of the offences of contempt of court, and obstructing the course of justice in the states under Roman Dutch law, this is a sphere where there is a significant deficit.

The laws impacting on the welfare of witnesses in many SADC states seem to be premised on the attitude that the role of witnesses is confined to the adjudicative stages of criminal proceedings. The reality is that witnesses are more important than this. Their intervention and participation can influence the fate of an investigation, or a bail application. If the role of witnesses is conceived in wider terms, so will the breadth of the legislation relating to their protection. It is suggested that such legislation should be proactive to encompass witness protection.

Only South Africa has embraced a scheme of witness protection. Lesotho could use the Internal Security (General) Act (1984), but it was not designed with non-political transgressions in mind.

Motor vehicle theft

There appears to be consensus within law enforcement authorities in SADC that the theft of motor vehicles is a priority offence, and that it is committed by organised criminal groups. Many of these groups are prepared to use violence, sometimes with fatal results. At least three states have opted to supplement the common law of theft with legislation. The thrust of such legislation is to target the markets for stolen motor vehicles, as well as the proceeds of the disposal of stolen motor vehicles. Motor dealers are required to keep records, be on the lookout for stolen vehicles and vehicle parts, and purchasers have to obtain documents of identification.

In view of its prevalence and persistence in SADC, it is suggested that all states should consider adopting the approach taken by Swaziland, Namibia and Lesotho in criminalising the theft of motor vehicles by statute. It would then make it easier to formulate, at regional level, an administrative mechanism for the identification of stolen motor vehicles.18

Enforcement-related challenges

The Convention makes certain demands of member states relating to the enforcement of legislation against organised crime. It requires state parties to co-operate with one another to confront organised crime. For a state to be able to co-operate with other states against transnational organised crime, it must have a legal system that is conducive to such co-operation. The Convention has identified a number of factors that affect capacity to relate to other legal systems. These include laws on the extradition of persons, the confiscation and forfeiture of the proceeds of crime, and mutual assistance in criminal matters. The challenge for SADC states is to harmonise laws in these spheres.

Extradition

Most SADC states have extradition laws allowing extradition either in terms of a treaty or to designated states. The offences envisaged by the Convention would all fall within the ambit of extraditable acts. Problems might arise from disparities in respect of the extradition of nationals and the attitude to capital punishment. In addition, not all SADC states are linked by extradition treaties. Only Namibia can be regarded as having a quasi-extradition treaty with every other SADC state, in that it has designated them.19 South Africa also has extradition arrangements with most of the other SADC states.

The Convention provides a basis, in respect of organised crimes, for extradition between states in the absence of extradition arrangements. In this respect, it is similar to the SADC Protocol on Drugs, which can be used in drug-trafficking offences.

Mutual legal assistance

In terms of article 18 of the Convention, state parties are obliged to extend the widest measure of legal assistance in cases of transnational organised crime. This entails assistance in facilitating investigations as well as during criminal proceedings that are under way. Only one of the SADC states surveyed did not have a framework to facilitate this kind of assistance.20 There are two notable shortcomings:

the absence of uniformity on the scope for mutual assistance, with some states not including assistance with investigations, and



the tendency by some states to designate the countries to which assistance would be afforded.

Inevitably, not all SADC states can benefit from the assistance provisions of others. This is an area in need of harmonisation.

Co-operation in enforcing the law across national borders involves joint work not only on the part of law enforcement officials, but also among legal systems. In an environment where states differ in terms of background, values and levels of development, the practicality of co-operation is bound to be tested. Questions of the mutual compatibility of investigative systems and probative rules of evidence will arise. The former are probably easier to harmonise than the latter.

An illustration from undercover operations and entrapment could be used. State A may have a legal system that permits the use of traps and sting operations in detecting and apprehending the perpetrators of crime, while State B takes a dim view of the use of trickery by the police. Another example is the practice of ‘cordon and search’, which is acceptable to the law in some countries,21 but considered potentially unconstitutional in others.22

The problem arises where an activity is undertaken by State A (in response to an ad hoc request, or in terms of a general agreement), acting in terms of its law, which yields evidence that can be used by State B. If the methods used by State A violate the rules which obtain in State B, this evidence is potentially inadmissible at a trial held in the latter. Does this nullify the efforts of State A?

Article 18 provides no answer to the dilemma. The closest reference to what is postulated is subarticle 21(c), which allows State A to decline a request for mutual assistance if the assistance would be contrary to State A’s laws. The converse is not provided for. To give effect to the spirit of article 18, it seems that state parties have to conclude multilateral agreements to anticipate and reconcile procedural conflicts. This appears to be the objective of article 18(30).

Linked to the contest between systems of adjectival law, but technically distinct from it, is the phenomenon of the felonious state. This entails a situation where the state slides (or sinks) into criminal activity. At this stage, the state has gone beyond the classic forms of corruption, predation or kleptocracy. Certain countries exhibit the interconnection of politics with crime of an organised and transnational nature. A few such countries are in Africa. Bayart, Ellis and Hibou (1999) have proposed six indicators of the criminalisation of politics:

"the use for private purposes of the legitimate organs of state violence by those in authority, and the function of such violence as an instrument in the service of their strategies of accumulation of wealth;



the existence of a hidden, collective structure of power which surrounds and even controls the official occupant of the most powerful political office, and which benefits from the privatisation of the legitimate means of coercion, or is able with impunity to have recourse to a private and illegitimate apparatus of violence, notably in the form of organised gangs;



the participation of this collective and clandestine power structure in economic activities considered to be criminal in international law, or which are so classified by international organisations or in terms of moral codes which enjoy wide international currency;



the insertion of such economic activities in international networks of crime;



an osmosis between a historically constituted culture which is specific to the conduct of such activities in any given society and the transnational cultural repertoires which serve as vehicles for processes of globalisation;



the macro-economic and macro-political importance, as distinct from the occasional or marginal role, of such practices on the part of power-holders and of these activities of accumulation in the overall architecture of a given society."23

Developments of the last few years have yielded one or more symptoms of state criminalisation in some SADC member states. Current events unfolding in Zimbabwe, where the government is sponsoring what it calls ‘war veterans’ in pursuing a campaign of intimidation of virtually all sectors of the socio-economic fabric, probably bring this state closest to the characterisation above. Zimbabwe appears to exhibit at least the first three indicators, and possibly the sixth as well. It is difficult to say at this stage whether there is any single state that fulfils all the factors. It is probably not necessary for this to happen before a state can be regarded as criminal. The ultimate labeling is less important than the implications of the incidence of any combination of these factors for the capacity of the state concerned to contribute in combating organised crime.

There is a proven relationship between the criminalisation of a state and its participation in practices such as drug-trafficking, diamond-smuggling and money-laundering.24 It goes without saying that a criminalised state cannot be expected to take effective steps against transnational organised crime originating from itself. If anything, it becomes easier for organised crime to take root or thrive in such a state. The challenge for SADC is to ensure that member countries are assisted to prevent the slide, if need be through economic pressure.

Confiscation and forfeiture of proceeds of crime

Articles 12-14 of the Convention are devoted to the seizure and confiscation, or forfeiture of the proceeds of organised crime. Article 12 also deals with the confiscation of the means by which these crimes are committed (the so-called instrumentalities of crime). Procedures should include measures to enable identification, freezing and seizure. Bank confidentiality should not be used to deflect the identification processes. At the same time, article 12 allows for the protection of the rights of bona fide third parties.

The majority of SADC states surveyed have legislation authorising seizure, confiscation and forfeiture. Forfeiture is dependent on conviction, and civil forfeiture is rare. In one state, forfeiture is automatic for a certain kind of offence. It is only in South Africa where civil forfeiture precipitated by an investigation into organised crime can be encountered. There seems to be a revulsion against civil forfeiture in Malawi, where non-criminal forfeiture has been linked to despotism during the Banda era. One SADC state has no forfeiture provisions at all.

In most SADC states legislation on confiscation and forfeiture is part of mutual assistance law.25

Prospects

On account of the variables articulated in this chapter, it is difficult to assess the prospects of SADC states adopting collective legislative responses to organised crime. However, the positive factors which enhance the chances of these initiatives succeeding can be outlined.

It is clear that there is a universal awareness that organised crime poses a threat to human security and economic development. This awareness has evoked a commitment to combat organised crime. The president of South Africa reiterated his government’s commitment to the cause on the occasion of the opening of parliament on 9 February 2001. At SADC level, the commitment to combat organised crime has been expressed often enough to avert any lingering scepticism.

The minimum capacity exists to face up to organised crime of a transnational character. All states have mutual assistance legislation in their legal systems, a common feature of which is extradition legislation. In addition to specific extradition provisions in local legislation, ties through the Commonwealth can be utilised to trace the movements and activities of organised criminals. Most SADC states belong to the Commonwealth.

The content of criminal law in much of SADC already recognises the offences that the Convention requires to be criminalised. There is no reason to doubt that all member states are keen to criminalise money-laundering, the one offence in respect of which disparities still exist.

The formation of SARPCCO is a positive development. The organisation has already proven its value in improving the exchange of knowledge and skills among the structures responsible for detecting and investigating organised crime.

There are doubts, however, about the capacity to establish the administrative mechanisms envisaged by the Convention for the detection and nullification of money-laundering strategies. Mechanisms are also required to give effect to the imperative of protecting witnesses, both during investigations and trials. It is not every state that can afford to establish such mechanisms. In the short to medium term, there is unlikely to be much progress in this area.

Some legislative changes will need to be complemented by political reforms to be acceptable to civil society and the judiciary alike. There are disturbing signs of a retreat to autocracy in certain parts of SADC, which do not augur well for positive political reform. If the trends in Zambia, Zimbabwe, Swaziland, Lesotho, Mozambique and Angola continue, there is little hope that the expansion of state powers envisaged by the Convention will be accepted by civil society in these countries.

Notes

Other SADC states were expected to sign later. It could not be ascertained at the time of writing whether this had happened.



Adapted from N South, On cooling hot money: Transatlantic trends in drug-related money laundering and its facilitation, <www.alternatives.com/crime/SOUTH.HTML>. The attitude problem was highlighted in a submission to the Constitutional Commission in Zimbabwe in October 1999, by a local advocate of black economic empowerment, who runs a commercial bank in Harare. He submitted that, in his opinion, institutions in developing countries that were starved of investment capital should not be required to investigate the origin of funds deposited with them. His reasoning was that this would discourage investment and prejudice them in the competition for capital.



Zimbabwe Independent, 16-22 February 2001; Business Day, 21 February 2001.



Ibid.



On account of its history (as an indigenous bank set up by King Sobhuza to assist indigenous economic empowerment), the Swazi Bank is particularly susceptible to patronage politics. Over the years, dozens of well connected entrepreneurs have ‘borrowed’ from the bank for all sorts of projects, but never paid back, or only did so at a pace which prejudiced the bank. This raises two risks to which the bank is exposed: firstly, the bank would not scrutinise the source of a deposit made in repayment of a long overdue loan, and secondly, a ‘tainted’ deposit from a source introduced by an influential political patron is unlikely to be detected. The Lesotho Bank went through similar turbulence in recent years, leading to its collapse.



P Smit, Clean money, suspect source: Turning organised crime against itself, ISS Monograph 51, Institute for Security Studies, pp 56-7.



This happened in Zambia, at the time of the enforcement of the Corrupt Practices Act and the Preservation of Public Security Act, statutes created ostensibly to supplement UNIP’s Leadership Code. It also happened in Ghana, during military rule in the early 1980s. See E K Quansah, The Corruption and Economic Crime Act (1994) of Botswana, Journal of African Law 38, 1994, p 191.



The other significant initiative is the international, intergovernmental Financial Action Task Force (FATF) that was created in 1989. FATF groups governments from the world’s major financial centres. In 1990, FATF formulated a set of 40 recommendations suggesting ways to combat money-laundering for implementation in the countries represented. The recommendations were updated in 1996. Pursuant to the formation of FATF, some countries in Eastern and Southern Africa, the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), signed a memorandum of understanding in 1999 committing themselves to implement the 40 recommendations. By the end of April 2000, Malawi, Mauritius, Mozambique, Namibia, Seychelles, Tanzania and Uganda had signed the memorandum. Members expected to sign included Botswana, Kenya, Lesotho, South Africa, Swaziland, Zambia and Zimbabwe. A grouping of investment banks recently agreed on principles to guide private banking to combat money-laundering. See the Wolfsberg AML principles, <www.transparency.org/documents/press-releases/2000/wolfsberg_principles.html>.

The sentiments expressed by the governor of the Bank of Namibia in his General determinations on fraud and other economic crime, GN 16 of 1999 are instructive. He observed:

"Given the growing incidence of fraud and other forms of financial and economic crime in a global perspective, banking institutions should be continually vigilant against such undesirable activities. Apart form causing financial loss to the banking institutions the various forms of economic crime may have far reaching consequences, not only to the afflicted banking institution but can also undermine public confidence in the banking system. Banking institutions are therefore required to bolster their surveillance systems and institute adequate and appropriate internal controls in combating fraud.

While it is accepted that there are costs attached in stepping up anti-fraud efforts and in placing improved control mechanisms, banking institutions should bear in mind that their costs represent additional barriers and hence costs to the criminal also. The prevention of fraud and other forms of economic crime should be regarded as part of risk management."

The bank has set up a functional reporting system.



Swaziland, Zambia and Zimbabwe provide examples.



Zimbabwe exemplifies this situation perfectly. Corruption scandals involving senior public officers abound, without the necessary enforcement of criminal law. Patronage of the ruling party usually suffices to shield culprits from criminal sanctions. A strategy to combat organised crime needs to establish an effective regulatory infrastructure, with bodies that are institutionally independent of the government of the day. Included are the central banks, procurement boards, committees of the legislature, and anti-corruption commissions. Regulatory institutions should be given the capability to pre-empt organised crime, as well as the capacity to react to it. A study of SADC states reveals that there is no uniformity of approach on this issue. Central banks in Botswana and South Africa are relatively autonomous, unlike their counterparts in the rest of the region.



All kinds of reasons are advanced. In the case of the Procurement Act in Zimbabwe, non-implementation was put down to disagreements over who, between one of the Vice Presidents and the Minister of Justice, Legal and Parliamentary Affairs should administer the Act. Occasionally, an Act is not implemented on account of the absence of regulations to give detail to some provisions.



D A Ailola, Past undermining of banker customer relations in Zambia: Some notes on the confidentiality rule, African Law Review 6(2), 1995, pp 7-15.



South Africa, Zimbabwe, Botswana, Malawi and Tanzania.



Lesotho and Swaziland



Zambia, Namibia, Angola and Mozambique. Of these, Namibia has laws that impose reporting obligations on financial institutions which could be used to detect and intercept laundered money. When used in combination with confiscation legislation, Namibia’s laws could work against money launderers.



K Hope, Corruption in Africa: A crisis in ethical leadership, Public Integrity, Summer 1999. The definition was also quoted in T H Mothibe, Bureaucratic corruption in Lesotho: Causes, magnitude, impact and controls, Lesotho Law Journal (forthcoming).



States with extensive provisions are Zambia, Malawi and Tanzania.



SARPCCO has been calling for uniformity in procedures for the identification of stolen motor vehicles.



Act 11/96, schedule 1.



Angola.



For example, Tanzania, where unannounced searches for arms can occur in the street, in terms of section 39 of the Arms and Ammunition Act 2/91.



Unless one was acting in terms of the Criminal Procedure Act 51/77 in South Africa (with a reasonably grounded suspicion of the commission of a crime as a basis), a cordon and search which is done without the authority of a provincial commissioner of police would be unlawful.



J-F Bayart, S Ellis & B Hibou, The criminalisation of the state in Africa, Indiana, 1999, pp 25-6.



Two prominent examples are Panama under General Noriega and Zaïre during the Mobutu era. Bayart et al include Equitorial Guinea, the Comoros and the Seychelles in their list of criminal states.



See the International Co-operation in Criminal Matters Act, 9/2000 (Namibia), and the Mutual Assistance in Criminal Matters Act, 24/91 (Tanzania).

References

J-F Bayart, S Ellis & B Hibou, The criminalisation of the state in Africa, Indiana, 1999.

D A Ailola, Past undermining of banker customer relations in Zambia: Some notes on the confidentiality rule, African Law Review 6(2), 1995.

E K Quansah, The Corruption and Economic Crime Act (1994) of Botswana, Journal of African Law 38, 1994.

P Smit, Clean money, suspect source: Turning organised crime against itself, ISS Monograph 51, Institute for Security Studies, Pretoria, 2001.

N South, On cooling hot money: Transatlantic trends in drug-related money laundering and its facilitation, <www.alternatives.com/crime/SOUTH.HTML>.