Batohi questions magistrate’s decision to strike Koko case off the roll:
National director of public prosecutions Shamila Batohi on Wednesday said the decision by a Middelburg regional court magistrate to strike the fraud and money-laundering case against former Eskom chief executive Matshela Koko off the roll was questionable.
Asked about the case at a media briefing, Batohi said magistrate Stanley Jacobs’ decision to strike the case off the roll for unreasonable delays was the harshest option he had at his disposal.
“In that particular case, the magistrate could have made one of several orders. Several. He took the most drastic order of striking off and we must ask the question why,” she said.
She added that the National Prosecuting Authority (NPA) was, as a rule, cautious not to openly criticise court rulings.
“But in this case, it is a fact that various orders could have been made. The most drastic one was made and now there may be an understanding of why that was the case.”
Batohi was referring to the fact that since Jacobs made the ruling in November last year, it has emerged that he failed to disclose his history of business dealings with Eskom.
News24 reported that he was a director and shareholder of a company called BEP African Consulting. He reportedly resigned as a director in 2001 but was reappointed in 2008. The company had secured a number of small contracts to supply material to power stations.
Koko was arrested at dawn on 27 October 2022 for seeking to derive personal benefit from contracts at Kusile power plant awarded to the local affiliate of Swiss engineering firm Asea Brown Boveri (ABB).
But a year later, the NPA was not ready to proceed to trial.
Defence counsel demanded an inquiry in terms of section 34(2) of the Criminal Procedure Act after the prosecution asked for another postponement to obtain six outstanding witness statements from abroad — three each from Germany and the United States — and to await a finalised forensic report, plus a separate data analysis report.
At its conclusion, Jacobs struck the case against Koko and seven co-accused off the roll and cautioned: “Matters don’t just get enrolled in the regional court or the high court for purposes of investigation.”
Advocate Tiny Seboko, the junior counsel enlisted to lead the prosecution, had argued that the investigation was nearly complete, but Jacobs said the state could surely do nothing without the forensic report detailing the money-flows between the suspects.
He was exasperated at the unwieldy scope of the investigation, given that the data being perused by the investigating officer amounted to 18 gigabytes, or a “mind-boggling” billion pages, and said the court was not a warehouse for cases not ready for trial.
It marked the second time in seven months that the NPA’s Investigating Directorate was unable to sustain money-laundering charges in what are considered entry level state capture cases.
In April last year, the Nulane Investments trial ended in the discharge of key associates of the Gupta brothers.
There the Free State high court held that the state failed to pass the barest threshold to prove that Iqbal Sharma, Ronica Ragavan, Dinesh Patel and a clutch of Free State officials colluded to defraud the province of more than R24?million.
The NPA is appealing that ruling.
“That was probably one of the most scathing judgments I have ever read in my life,” Bathoi said of Acting Judge Nompumelelo Gusha’s ruling.
She said the NPA and the Investigating Directorate were trying to draw lessons from the setbacks.
“We more than anyone know the risks that these cases are to the NPA and we cannot simply say ‘well, we did everything fine’, that there is nothing we could have done differently and blame everyone else for it.
“We have to have very hard, difficult conversations with ourselves to make sure that we learn from what went wrong and make sure that we put in place interventions to make sure that the risk of that happening again are minimised.”
Andrea Johnson, the head of the ID, said the directorate did not believe it could be “flippant” about the losses it had suffered and had done extensive soul-searching.
“We have taken lessons. Because that is the reality, you can’t have a repeat but you will have a repeat if you do not have that internal introspection and very difficult discussions with the team that was involved.”
In the Nulane case, the prosecution stumbled at the first hurdle because it was unable to prove that Free State officials broke the law and illicitly awarded a contract worth for a feasibility study to Sharma’s newly founded Nulane Investments.
Without proof that the money was stolen, it was then hard-pressed to sustain the charge of money-laundering in relation to the myriad transfers that followed between companies in the Gupta brothers’ business empire.
But questions were asked as to why it could not adduce evidence from Bank of Baroda records at its disposal to prove the fraud that eventually paved the way for the Vrede Dairy Farm scandal.
On Wednesday, Johnson said the directorate was still severely understaffed, with only 20 members, and that it was waiting for President Cyril Ramaphosa to promulgate the National Prosecuting Authority Amendment Bill which conferred permanency on the entity to enable it to recruit more staff.
The bill was sent to the president for assent last month after it was approved by the National Council of Provinces.
Observers have cautioned that the Investigating Directorate’s challenge was not simply to recruit more staff but to find people with the skill to prosecute complex financial crimes.
Explainer: How new government standards will affect solar and battery energy bidders:
South Africa’s complex regulatory processes are a barrier to the development of renewable energy projects that could play a role in resolving the country’s energy crisis.
To streamline the process of bringing renewable energy projects to fruition, the sector has called for regulatory hurdles to be removed, and for infrastructure upgrades to be done to enable the addition of renewable energy to the electricity grid.
One of the difficulties is securing permits and licences crucial for project commencement, said Alecia Pienaar, of law firm Cliffe Dekker Hofmeyr.
Pienaar said bureaucratic red tape often results in prolonged delays and inflated costs, which hurt companies relying on external investments. Added to that, limited capacity has created a bottleneck to the integration of renewable energy into the national grid.
Tariff structures and pricing mechanisms add another layer of complexity, as do environmental regulations and land acquisition processes. Overcoming these regulatory barriers requires concerted efforts from government bodies, regulators, industry players, and affected communities, she said.
The measures renewable energy providers can do to expedite the legal processes include undertaking environmental consultations and research beforehand, Pienaar said, adding that regulatory bodies had made significant strides in easing regulatory obstacles to accelerate energy projects.
Energy companies that have called for streamlined regulatory processes and clearer policy frameworks include Solar Capital, Biotherm Energy, ACWA Power and Enel Green Power, which faced delays in obtaining permits and grid connections for their solar projects.
Over the past decade, the department of forestry, fisheries and the environment has undertaken strategic assessments of energy technologies and grid infrastructure aimed at identifying activities that can be exempt from environmental authorisation under the National Environmental Management Act (Nema), streamlining the approval process.
One notable initiative involves the exclusion of specific activities related to solar photovoltaic and battery energy storage systems from environmental authorisation requirements under certain conditions.
Last month, in response to the calls by the companies in the sector, Forestry, Fisheries and the Environment Minister Barbara Creecy gazetted two standards to address the bureaucratic challenges.
These include:
Battery energy storage systems exclusion norm: This excludes certain activities associated with the development or expansion of battery storage facilities in areas of low or medium environmental sensitivity from environmental authorisation requirements.
Solar exclusion norm: This excludes activities related to the development or expansion of solar PV facilities in areas of low or medium environmental sensitivity.
The rules also specify that re-registration is needed when ownership of the battery storage or solar PV facility changes, whether it is before, during or after construction.
Non-compliance with various provisions of these standards is an offence in terms of Nema and may attract a fine of up to R10 million or imprisonment of 10 years, or both, according to the gazette.
Both norms apply to projects in areas identified by the environment department and the environment’s screening tool as having low or medium environmental effects, Pienaar explained.
The norms cover listed activities specified in the Environmental Impact Regulations and extend to associated infrastructure, including electricity transmission and distribution infrastructure.
Procedures
These norms expedite grid connections for companies and adherence to procedural requirements remains essential.
According to the gazette, before starting a project, experts need to check the area to ensure it will not harm the environment.
For companies to have a seamless process they must write reports summarising their findings, after which consultations with affected people will be required, Pienaar explained.
“A physical site sensitivity verification (SSV) inspection [is] to be undertaken by qualified specialists and to be supplemented by available desktop information,” she said.
“Should it be confirmed as part of the SSV process that species of concern will be impacted, or that the cumulative impacts are not acceptable, the exclusion under the norms will not apply and application will have to be made for an environmental authorisation.”
Only after the consultation process is completed can the application to the environment department be made to register the project.
“The competent authority must register projects within 10 days of receiving all required information. Non-compliance constitutes an offence under Nema, with penalties of up to R10 million or imprisonment,” Pienaar said.
She reiterated the importance of compliance with environmental regulations, not only to ensure faster project approval but also to promote environmental protection and the involvement of the affected people.
“By navigating the regulatory landscape efficiently, stakeholders can foster innovation and investment in renewable energy projects while safeguarding environmental interests,” Pienaar said.
SA must tread carefully as it leads Africa to next generation network technology:
South Africa’s mobile network users will join consumers in leading global markets with access to next generation networks as domestic mobile network operators (MNOs) prepare to switch off legacy 2G and 3G for more advanced 4G and 5G technologies.
This change, however, requires some careful management. While it can help the country to catapult its digital economy into the future, it also holds some significant risks. This is why the Association of Comms and Technology (ACT) is advocating for an industry-led but state-enabled transition, an approach that has been successful elsewhere in the world.
While the department of communications and digital technologies has pushed the switch-off date for both technologies out to 31 December 2027, the ACT does not believe this approach is ideal because it continues to put the state in the driving seat setting out strict government-imposed deadlines.
A more prudent approach is to encourage users to adopt these newer technologies and allow the market and industry to lead the pace of the transition. To do otherwise could risk disrupting services for millions of users who still rely on legacy technologies. We need to manage the transition at a realistic pace.
The decision by the department to change the timeline implicitly acknowledges the ACT’s arguments that obligations placed on network licensees need to consider certain realities. Among these is the risk of digitally excluding poor people, particularly in the rural areas.
This is especially crucial because the telecommunications sector has encountered significant economic problems, including reduced consumer spending. The MNOs have also had to make substantial capital investments in power supply solutions to ensure connectivity in the face of load-shedding.
An industry-led but government-enabled change would also reflect the international experience.
The Global System for Mobile Communications Association (GSMA), a body representing industry interests worldwide, has been monitoring global developments with regard to technology sunsets.
At the beginning of 2022, over a period of seven years, a total of 56 networks were shut down, of which 36 were 2G networks and 20 were 3G networks. None of the network shutdowns observed were because of strict government-set deadlines. These shutdowns were mainly market-led, with regulatory guidance provided by the relevant regulator.
The government can, however, assist with efforts such as community programmes providing digital skills, access to e-services and public awareness to help accelerate the transition to next generation technologies.
It should be prohibiting the import of 2G and 3G devices, for example, because they will shortly have no utility on next generation networks. The state can also help enable the adoption of smartphones, which will be needed to use the 4G and 5G networks.
This is a pressing problem to be overcome in the next two years. The ACT has had discussions with the department of trade and industry to look at a possible reduction in customs duties to make these devices more affordable to all.
According to the ICASA State of the ICT Sector report 2023, there are 73 million smartphone subscribers in South Africa with the overall number of mobile subscriptions at about 106 million, which gives a sense of the internal digital divide when it comes to access to smartphones.
The South African Revenue Service classifies imported smartphones as luxury items and are subject to a “luxury tax” of 15%, as well as an additional duty of 7%. So, a device priced at R10,000 would immediately attract another R2,750 in taxes.
Operators need to have consumers who can use their networks for the transition to next generation technology to make business sense.
While 60% of mobile internet subscriptions still rely on 3G, this is predicted to drop to 22% by 2025, but a careful approach is necessary to mitigate the risk of coverage gaps, particularly in rural areas where these legacy technologies are more prevalent.
Consumer usage of 2G is much lower. For example, because consumer volume on Telkom’s network is less than 1% of its traffic the company has already shut down most of its 2G.
2G is mainly used for voice and machine-to-machine interfaces such as emergency services, tracking services, metering, security systems and remote industrial interfaces. The ICASA sector report says South Africa has more than 11.5 million machine-to-machine connections that either use 2G or 3G connections. These connections need to be considered in the transition.
But it is unlikely poorer South Africans will be able to upgrade to smartphone devices without some sort of state intervention.
There is a precedent for such a move in the provision of set-top boxes in the migration from analogue to digital broadcasting. Free set-top boxes were provided to indigent or low-income households who underwent a means test to qualify for the upgrade. According to the communications and digital technologies department, about 1.5 million applications for set-top boxes were received.
The broadcast migration has taken nine years and is still not completed; the final date to switch off all analogue television broadcasting services above 694MHz is 31 December 2024. The current timeline for the 2G/3G switch-off is much tighter, highlighting the need for an industry-led process.
But moving away from legacy technologies presents a wealth of opportunities for South Africa’s digital economy, so it is important to get it right.
By freeing up spectrum for more advanced 4G and 5G networks, MNOs can enable the development of new, innovative services and applications that will drive economic growth and job creation.
The Genesis Analytics report, “South Africa in the Digital Age”, highlights the significant potential of the digital economy to generate new jobs and incomes in both the tradable and domestic sectors. The study estimates that 500,000 cumulative net new jobs in globally traded services in South Africa could be created through the digital economy by 2030, mainly by expanding existing business process outsourcing operations in key markets like the United States, Canada and Australia.
Numbers like that justify the steps South Africa is taking to sunset legacy technology in favour of these future-enabling network capabilities, which will place the country in a leading position on the continent. But we will have to tread carefully to ensure we do not disrupt digital access to millions in the process.
Nomvuyiso Batyi is the chief executive of the Association of Comms and Technology, which focuses on matters of importance to the ICT sector in the South African economy.
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