South Africa investigates alleged $7B corruption at state-owned companies

South Africa has active investigations into alleged corruption totalling more than $7 billion at some of its top state-owned companies, according to a report published Tuesday by the national anti-graft unit.

The investigations are not new, and some have been running since 2018, and all of them were cited by the Special Investigative Unit (SIU) in a report to a parliamentary committee to give an update on the status of the probes.

Those investigations involve six state-owned businesses: ports and rail company Transnet, arms company Denel, power utility Eskom, the National Lotteries Commission, national airline South African Airways and passenger rail company PRASA.

Around 60 suspicious contracts and hundreds of cases of conflict of interest and other alleged corruption worth nearly $4 billion of public money are under investigation at Transnet alone, according to the report.

Also, there are nearly 40 other ongoing investigations into alleged corruption involving different state-run businesses and national and provincial government departments worth billions more dollars. Even more investigations have been finalized by the SIU ahead of being made public.

SIU Unveils Scale of Corruption Over 15 Years

The SIU’s work reveals some of the scale of South Africa’s corruption problem over the last 15 years.

There were allegations of widespread corruption over lucrative government contracts during the administration of former President Jacob Zuma, who led Africa’s most advanced economy for nine years before stepping down in 2018 because of the allegations.

A judicial inquiry into high-level corruption during that era implicated numerous government officials and executives at state-run businesses in taking kickbacks and bribes from businessmen in return for government contracts or favors. The culture of graft permeated through all levels of government, according to the allegations. Hardly any of those implicated have faced criminal charges.

It had devastating impacts on South Africa’s economy, including the near collapse of its electricity supply because of graft and mismanagement at power utility Eskom, a company at the heart of many of the scandals. South Africa was plunged into record levels of nationwide blackouts last year because of the crisis at Eskom.

More than 270 contracts at Eskom worth around $2.2 billion are under scrutiny in an SIU investigation that has been running for six years.

PRASA’s $540 Million Corruption Scandal

Investigators believe $540 million was lost to corruption at passenger rail company PRASA, some of it through a scheme where money was allegedly stolen through payments made to more than 1,200 “ghost employees” who didn’t exist, the SIU’s report said. One contract under investigation worth more than $300 million dates back to the 2010 soccer World Cup that South Africa hosted.

South Africa’s then-ruling African National Congress party became synonymous with allegations of corruption during Zuma’s presidency. Graft was a central issue in this year’s national election in South Africa, when the tainted ANC lost its majority in parliament for the first time since the country became a democracy at the end of the apartheid system of white minority rule in 1994.

Current President Cyril Ramaphosa has pledged to clean up his party and government and bring those responsible to justice, but anti-corruption experts have said it’s unlikely that much of the money will be recovered.