Business and government agreed in June to partner on workstreams to target a trifecta of woes undermining South Africa’s economic potential: energy, transport, and crime and corruption.

Neal Froneman, CEO of diversified miner Sibanye-Stillwater, is leading the crime and corruption initiative on behalf of business, along with Remgro CEO Jannie Durand.

In an interview with Daily Maverick, Froneman revealed some of the measures that business is taking to tackle a scourge that he said was costing the economy up to R1-trillion annually.

“Ensuring there’s capacity within the National Prosecuting Authority (NPA), the specialised skills it needs, is one of the workstreams we are working on. And that does have the support of the minister of justice and we have the appropriate MOUs [memorandums of understanding] in place with the NPA,” Froneman said.

“We also intend as business to build a state-of-the-art forensics laboratory that should assist the NPA conducting its work. And, of course, a lot of forensics work now is using AI and data analysis, and smart computers to track these illicit flows. That’s one workstream to capacitate these organisations to perform and deliver.”

The location of such a lab and cost estimates are still being worked out, but this could be a potential game-changer as the woeful state of South Africa’s forensics capabilities has been a thorn in the side of law enforcement. The main laboratory is in Pretoria, and others are in Cape Town, Durban and Gqeberha.

Public Service Commission commissioner Anele Gxoyiya expressed his concerns about the state of forensic science laboratories in late June. He noted that backlogs meant the facilities “cannot fulfil their critical role effectively and are therefore contributing to delays in the criminal justice system”.

Froneman also said various business sectors would pool their intelligence-gathering resources to provide the authorities with the spoor to track down criminal syndicates.

“The other area is giving Business Against Crime South Africa some real horsepower,” he said, referring to the division of Business Leadership South Africa that focuses on this issue.

“Each industry has got its own organisation,” Froneman said. Examples include South Africa’s Minerals Council, which represents the mining sector, and the Banking Association, which represents the banks.

“All of these organisations have good crime and corruption capacity for their own industry. But it’s been very disjointed. Business Against Crime is going to coordinate all that intelligence and information better, and we are going to use that to disrupt these illicit supply chains.”

Froneman said he could not disclose precise details because that would in effect be a tip-off to the criminals.

“I can’t say exactly how we are going to use it because, if we do that, we will be neutralised. But let’s just say that we know how to disrupt these supply chains. And once we have got information, we will take it to the appropriate authorities.

“But we are not going to rely on somebody else to make a move. And we are going to be very active in disrupting these mafias and supply chains. What used to be Business Against Crime monitoring screens and dealing with petty theft is going to change focus to dealing with syndicated and organised crime,” Froneman said.

“It’s using all the intelligence across business networks and then using business itself to disrupt these illegal activities and then passing on the intelligence in parallel to the prosecuting authorities.”

Call centres and cop shops

Froneman also stressed that business was not trying to assume the role of the state or undermine the independence of the police or prosecuting authorities.

“I don’t want to create an impression that we are going to do the police’s job. What business is able to do is to provide assistance and capacity to organisations like the NPA. Now, clearly that’s got to be done in a way that does not negatively impact their independence. Another workstream is ensuring the independence of these prosecuting authorities and that they remain independent. We are going to work to ensure their independence,” he said.

A source familiar with the government’s approach to the matter confirmed this was the case and said the MOUs in place addressed the issue of independence. A Chinese wall on this front is important because there are certainly factions in the governing ANC that are suspicious of business.

So, for example, if a lab is built, business is not going to try to dictate what cases should be subjected to forensic analysis.

In a joint statement on 8 June, when the initiative was announced, government and business explained how this would work.

“Business will provide support, on a carefully governed arm’s-length basis, to combat crime and corruption, in particular – expert resources to further capacitate the NPA and the ID [Investigative Directorate].”

Other initiatives involve call centres and cop shops, said Froneman. “This is a joint initiative with government and, together with government, they’ve identified a number of issues they would like us to work on.

“One is as simple as ensuring this 10111 call centre works properly and is modernised. The other one is improving the performance of police stations.

“This is where you can make a sustainable difference by looking at training, capacity, and so on. And business has significant resources to also ensure that it is done in the right way. We are not going to train policemen as business, but we can ensure that, together with government, there are proper programmes put in place. We can use our business strategic planning and project management to make these type of things happen,” Froneman said.

Economic costs

There is broad agreement that crime and corruption are a huge cost to the South African economy, which is why the issue has been identified as a priority in this partnership between government and business.

Estimates of their cost to the economy range widely because it is difficult to pin down a precise number, not least because of the ripple effects such as thwarted investment and lost production.

Froneman said the estimates that have emerged within the workstream are massive and material. “As you participate in this workstream, you become aware of how bad things really are. Crime costs the country somewhere between R500-billion and R1-trillion annually. That is equivalent to between 10% and 20% of GDP. It’s really, really material and that is direct costs.

“But it impacts on foreign investment; it impacts on investor sentiment. The knock-on effects are much bigger,” Froneman said.

Business Leadership South Africa spokesperson Tumelo Muteme said in response to Daily Maverick’s query on the matter that “it is very difficult to give an accurate number”, but that the organisation agreed with Froneman’s estimate.

One organisation that has come up with an estimate is the Institute for Economics & Peace, which recently published its Global Peace Index.

Among other things, it looks at the “economic cost of violence” to a country as a percentage of GDP.

For 2022, it ranked South Africa 15th overall out of 163 countries in terms of the size of the cost as a percentage of GDP. Its estimate for South Africa was 15%.

“The illicit copper industry alone exceeds R40-billion annually,” Froneman said. “These are big numbers. This is copper cable theft, and copper taken from transformers and resold.

“And the loss to a company like ourselves [Sibanye-Stillwater] is even bigger where we have operational disruptions not included in that number – that’s just the illicit supply chain.”

Sibanye said in March that it lost more than R1-billion in production last year as a result of copper cable theft. Such costs ultimately mean there is less capital available for investments that create jobs and economic opportunities.

“Our focus is on anything that harms the legitimate economy and the wellbeing of the country. If you improve the economy, you reduce unemployment and, if you do that, you are contributing to uplifting people. It’s not a selfish business interest.” DM

Additional reporting by Ray Mahlaka.

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.