The breeding ground for SA’s insurance fraud dilemma
If you thought that South Africa was getting to grips with crime and corruption in the post state capture era, it may be time to reset your thinking. The South African Insurance Crime Bureau (SAICB) Annual Conference 2025, themed ‘Adapting and facing the future fraud landscape, together’, offered countless reminders of the need for continued vigilance, and hinted that state capture was still very much alive.
SA’s foremost corruption exposés
Day one of the two-day event concluded with a presentation by Daily Maverick investigative journalist Pieter-Louis Myburgh. He has been exposing fraud and corruption in the public procurement space for over a decade, starting with a Transnet locomotive deal in 2014-2015. “I have had the misfortune (or privilege) of being involved in some of SA’s foremost corruption exposés, and some of these have led to significant fall out and cleaning out of sectors where corruption was prevalent,” he said. Instead of the usual SAICB fraud update, today’s newsletter takes a closer look at how investigative journalists uncover and report on financial crimes.
The presenter dispelled the myth that investigative journalists receive a ready-to-print dossier from some or other anonymous whistleblower. In reality, they have to complete loads of work to check the veracity of the information or tip-offs they receive. Journalists, with help from attorneys, must also ensure that their evidence and investigation approach comply with the press code, and that it is able to stand up in a court of law. “Our work must be forensically sound, and each and every allegation or claim that we put on the table must be backed up with the necessary documentation,” Myburgh said.
Active versus passive in investigative journalism
Investigative journalism goes beyond the passive approach of waiting for a ‘deep throat’ source to knock at your door, to proactively launching investigations into government departments or organisations that you suspect are awash with corruption.
In such cases, journalists will follow a forensic methodology to identify and interview the right people and source documents such as bank and company financial statements to support the initial hypothesis. “A good 80% of my time involves [office bound] forensic examination of documents,” said Myburgh. The balance is a mix of meeting with sources and obtaining or verifying information in the physical world.
Bank statements stand out as the Holy Grail of forensic investigations. “It is a truism that money does not lie,” Myburgh explained. “And a bank statement is your most useful and valuable means to prove that the cash flows and illicit cash flows are indeed as your sources suggested they were; I am loathe to publish corruption or money laundering stories if the financial payments have not been verified by a bank statement.” The balance of the hour-long presentation unpacked some of the corruption stories that Myburgh has helped ‘surface’ over the years.
His first big story featured Transnet’s massive procurement of new locomotives through a consortium of bidders which included China Railway Rolling Stock Corporation (CRRC). “Even early on, before the Gupta leaks, there were quite clear indications that the procurement processes followed were not up to scratch,” Myburgh said. This investigation soon unearthed another scandal at Transnet’s sister organisation, PRASA, which was also procuring locomotives and rolling stock. “PRASA is the story that really got the public’s attention,” he said, adding that the deal was mired in corruption and malfeasance.
Too tall for the rail
Readers should remember the furore because at the time, the front pages of major news agencies were awash with stories of the Afro 4000 locomotives procured through this process being ‘too tall’ for the country’s rail infrastructure. “The allegation was that on Transnet Freight Rail’s own specifications these trains were about 30 cm taller than the allowed vehicle height,” Myburgh said. It took four years after the story broke for the journalist to uncover how money from the deal had flowed to politically connected individuals.
In this case, some went to the Jacob Zuma Foundation, and some to a law firm with strong links to the Zuma family. “The cash flows indicate that a good half a billion rand was siphoned off from that contract to benefit private individuals,” he said. Overall, around R3.5 billion flowed from PRASA to Sifambo Rail, from where smaller sums were disbursed to a law firm, to an Angolan lady, to the ANC’s Nedbank fundraising account etc. PS, the presenter’s slide tracing the cash flows drew an audible gasp of admiration from the audience.
The Gupta leaks stand out as the country’s most significant journalism event of the last decade. Myburgh offered some fascinating backstory on how a botched hard drive repair culminated in 100-200 thousand emails and other documents eventually landing up with a team of eighteen-or-so investigative journalists from Daily Maverick, amaBhungane and News24. Ironically, some of the documents in the Gupta leaks were themselves leaked to the media before the mechanisms were in place to protect the whistleblowers; but that is another story, which you can read about in Anton Harber’s book, ‘So, for the record’.
An avalanche of corruption, fraud
“There were emails involving Jacob Zuma and his family; key Cabinet members in Zuma’s government; and some of the foremost leaders and CEOs of some of our state-owned enterprises,” Myburgh said. These leaks informed around 70 exposés over a two-and-a-half-year period, including shocking detail of how monies were funnelled from the Vrede Dairy Project to Gupta-linked accounts in Hong Kong and the UAE before being filtered back into South Africa to various Gupta front companies. Readers will remember this brouhaha in the context of the Gupta’s commandeering of the Waterkloof Air Force Base to land guests for a wedding.
“[The leaks] showed how, in pretty pointed detail, Cabinet decisions were being made at Saxonwold and not the Union Buildings (things like the appointment of ministers, key individuals at state-owned entities etc) and it also showed how a property was acquired for one of the first ladies, one of President Jacob Zuma’s wives,” Myburgh said. The leaks also helped to unpack various questionable deals under then Free State Premier, Ace Magashule. Readers who get off on this type of thing can scoop up a copy of the presenter’s book, ‘Gangster State’, for more.
If only it ended with Ace and the Free State debacles; but alas, 2020 brought pandemic and the introduction of emergency procurement protocols. “Our dear [then] Minister of Health, Zweli Mkhize, who was entrusted with overseeing government’s efforts to combat COVID-19, was embroiled in one of the biggest corruption stories during that time frame,” Myburgh said, referring to his coverage of the Digital Vibes scandal in 2021. Digital Vibes secured around R155 million in funding to handle pandemic-related communications work. The audience grimaced as the presenter shared a photograph of the head offices of the entity that scooped this contract.
Fronting and other subterfuges
It did not take much digging to establish that the listed director was merely a figurehead, and to identify the person the Department of Health was actually taking instruction from. As is often the case when breaking a corruption story, Myburgh was approached with additional information. “And that started the journey of exposing the real cash flows in the saga [including] how the minister, his children and his wife benefited financially, substantially from the Digital Vibes contract,” he said. The quantum of this benefit reached at least R8.7 million.
On a more positive note, the presenter shared that his reporting on questionable procurement decisions in a joint Department of Trade and Industry and Department of Health tender for oxygen plants helped save the taxpayer nearly a billion rand. This was the latest in a long list of scandals spanning PRASA, the Free State asbestos and dairy matters, Digital Vibes, Nkandla, the National Lottery, Life Esidimeni etc. “These are things that the public would not know about if it were not for the work of investigative journalists,” Myburgh said.
South Africa’s investigative journalist cohort face some serious challenges, not least of which the rather perilous state of finances in the media world. Investigative journalism is costlier than run-of-the-mill news reporting and it is more difficult than ever to get consumers to pay for their online news subscriptions. To make matters worse, the Protection of Access to Information Act (PAIA), which journalists rely on to support their investigations, has been weaponised against them. In one example, the Daily Maverick had still not received access to the requested information three years and nine months after their initial request.
There is no accountability
If you had to pick out a repeated phrase from the talk it was this: “Unfortunately, the Hawks and National Prosecuting Authority (NPA) have done little since”. Precious little enforcement action has taken place on the back of the Gupta leaks, Zondo Commission, and the wealth of information brought to the public’s attention by investigative journalism. In this context, South African financial institutions should not be surprised when the global Financial Action Task Force (FATF) perhaps decides to keep the country on the grey list for longer.