The threat of a possible Phase 3bis evaluation, leading to a public statement of non-compliance, is a sure sign that the Organisation for Economic Co-operation and Development (OECD) Working Group has encountered a brick wall.
A Phase 3bis evaluation is conducted by the OECD’s Working Group for any party demonstrating an inadequate implementation of the anti-corruption convention or an inability to assess such implementation.
Both factors appear in the OECD’s March 2014 Phase 3 South Africa Report.
Despite praising what was described as a “robust” legislative and regulatory framework, the Working Group — a high-powered U.S. and Hungarian team — repeatedly expressed exasperation with South Africa’s failure (since becoming a party to the Convention in 2007) to prosecute a single foreign bribery case.
The Working Group pointed out that since 2007, only 10 allegations had been raised with authorities. Of those, only five were being investigated, and those investigations were rather desultory, as evidenced by the absence of any mutual legal assistance requests.
The dearth of enforcement or even any assistance with international enforcement undermined the utility of the Phase 3 monitoring report and prefaced almost every monitored topic.
The diagnosis for the failure was that political and economic considerations were influencing the decisions to investigate and prosecute foreign bribery cases in potential breach of Article 5 of the Convention.
Article 5 requires parties to ensure that foreign bribery investigations and prosecutions are unfettered by extraneous considerations.
Particular concern was expressed about the lack of independence and absence of consultation in the appointment of key anti-corruption personnel.
The Working Group welcomed recent legislative developments but noted concern that the head of The Directorate for Priority Crime Investigation (also known as the Hawks) was an executive and non-consultative appointment.
Concern was also expressed about the lack of resources and integration of the newly formed anti-corruption agency and the failure to use well-established investigative tools to reveal and establish corruption.
The risk of retaliation for corruption whistleblowers was highlighted as a major failure. So was the absence of any reported enforcement of money laundering legislation or any maintenance of comprehensive money laundering statistics — despite Phase 2 representations that they were being monitored.
Due to a lack of information, the Working Group was unable to assess the efficacy of false accounting offenses and external auditing obligations.
Rather pointedly, the Working Group said it was unable to meet with representatives from the Department of International Relations and Cooperation, legal academics, and members of the South African judiciary.
Alistair Craig is a commercial barrister practicing in London.