Earlier this year allegations of widespread financial irregularities and distortion of the mandate of South Africa’s State Security Agency were made at the judicial commission on grand corruption. The agency is responsible for collecting intelligence on domestic and foreign threats to the country.
The allegations point to a complete breakdown of corporate governance. They have serious implications for the agency’s operational performance, matters of national trust, reputation and international intelligence sharing arrangements.
Corporate governance is essentially about ensuring accountability in how an entity conducts its work and uses its resources to achieve its goal. Internal controls must be in place and auditable.
What shocked South Africans was not only the large amounts of money involved, but the relative ease with which the money could be obtained and spent.
Sound corporate governance dictates that mechanisms should have been in place to ensure continuous accountability, at all levels of the organisation.
Can the problems be fixed? I believe they can. There are some quick fixes and existing recommendations which can be implemented while a systematic review of the problems is done.
A history of rot
The allegations made at the commission were not new. In June 2018, President Cyril Ramaphosa appointed a high-level review panel to investigate the efficiency, compliance, and performance of the agency. Led by academic Sydney Mufamadi, the panel concluded that that the agency had, among other things, distorted its mandate and squandered resources.
The panel found that the agency had been re-purposed to conduct covert operations that violated the Constitution and related intelligence legislation. It was also being used to fight factional political battles in the governing African National Congress (ANC). The executive branch of government also interfered in the agency’s operations. Large sums of cash were drawn for covert operations without any documentary audit trail.
The chief financial officer had no authority to question the motivation for demanding cash. Such was the laxity of financial controls that the agency would be automatically given a qualified audit each year, according to the testimony of the late Auditor General, Kimi Makwetu, to the review panel. He lamented the fact he was not allowed to audit the use of money for covert operations. There was no audit trail.
All intelligence services trade in secrets. They conduct covert operations with due consideration for ‘plausible deniability’, which means that government can deny any involvement in any covert operations and there would be nothing that linked it with the operations. This enables them to cover their tracks when an intelligence operative is, for example, caught infiltrating an ally or adversary.
But the need for ‘plausible deniability’ does not exempt the agency from public scrutiny, parliamentary oversight and audit processes. These are all elements of good corporate governance.
Evidence – both to the review panel and more recently to the commission of inquiry into corruption – suggests that the spy agency doesn’t have adequate internal controls in place.
Non-financial damage
South Africa, like other countries, invests large sums of money in its intelligence agency to enable it to protect its citizens, interests, and way of life. Financial losses due to abuses can, for the most part, be quantified. Not so with non-financial losses.
Testimony to the Zondo Commission has revealed critical aspects about the calibre of the agency’s leadership, quality of personnel, the morale of staff, the working procedures, the tactics, performance standards and work ethic.
These allegations have serious implications for its operations and matters of trust within and beyond the country.
Operational efficacy: Witnesses alleged that there was no synergy between the internal – which deals with domestic intelligence – and external – which deals with foreign intelligence – branches of the agency. Also, top management was left out of the loop about the success or failure of operations.
National trust: South Africa’s intelligence community is a product of sacrifices and compromises. It resulted from the amalgamation of intelligence structures of liberation movements and the apartheid regime. Harmonising the visions of former adversaries towards a common goal of protecting the national interest of the new democratic order was a tricky, risky and daunting task.
Different pieces of legislation, such as National Strategic Intelligence Act of 1994 and the Intelligence Services Oversight Act of 1994 were enacted to ensure that the intelligence services would serve all citizens.
This created trust in the intelligence services. They were lauded for their role in securing many major international events, including the 1995 Rugby World Cup and 2010 FIFA World Cup.
The litany of damning allegations may have eroded this trust.
Reputational damage: The reputational damage suffered by the agency may also affect its relations with intelligence partners in other countries. This is particularly important for the training and development work the agency provides to neighbouring countries. Its standing and benchmark status may have been compromised.
How to fix the problem
It may be tempting to over-react and assume that all the agency staff are corrupt. Conversely, a minimalist approach may not uproot the architects of malfeasance.
It is, therefore, crucial to systematically review recruitment practices, internal controls, delegation of powers, pre-approval scrutiny of covert operations and management of delinquent practitioners.
The high-level review panel has already recommended:
A review of the intelligence minister’s powers. This would clarify the boundaries between the minister and the head of the agency. The head should be appointed through a parliamentary process.
The introduction of financial controls and a move away from cash transactions.
Forensic investigations and criminal charges against culpable officials.
A review of training and education programmes offered at the intelligence academy. Performance management should be included.
The relocation of the National Intelligence Co-ordinating Committee, which coordinates intelligence from all structures in the country for use by Cabinet. This should be moved from the Ministry of State Security to the Presidency. This would limit the ability of the minister to interfere in operational matters.
Most of the interventions would be about going back to the basics. South Africa has enough laws to ensure corporate governance but they are being flouted.
One step that could be taken immediately would be the appointment of a dedicated team of vetted auditors within the Auditor-General’s office with powers to audit any operation.
In a nutshell, corrective interventions would have to be done in terms of policy, operations, process, authority, oversight and auditability of intelligence work.