Op-Ed: South Africa shows why collaboration is key to tackling global crime networks

Peter Hain | University of the Witwatersrand

Lord Peter Hain tabled a series of allegations in the UK’s House of Lords relating to the possible role of British banks in alleged money laundering and illicit financial transactions centred around South Africa’s President Jacob Zuma and the Gupta family. The Conversation Africa’s Charles Leonard asked him to explain why he took the step. Hain, who was a vocal anti-apartheid activist, was born in South Africa but grew up in the UK. He is a visiting adjunct professor at the University of the Witwatersrand’s Business School.

S.A's Zuma asks court to postpone Gupta report hearing
South African President, Jacob Zuma.

In the House of Lords you said the illicit transactions were “part of a flagrant robbery of South African taxpayers”. What do you mean by this?

As I explained in my speech, the Guptas, a family from India that relocated to South African have, with the connivance of the South African Presidency, been getting government contracts and allegedly thereby robbing taxpayers of billions.

On regular visits to South Africa – most recently last month – I have been stunned by the systemic transnational financial network facilitated by the Guptas and the presidential family, the Zumas. If there had been more proactive and genuine cooperation between the multi-jurisdictional law enforcement agencies – and within and between the banks, which have been moving money for the alleged Gupta/Zuma laundering network – the devastation wrought on South Africa could have been significantly reduced. And perhaps, the financial institutions involved would have been better able to mitigate their exposure.

So does it point to South Africans benefiting from the illicit transactions?

I had delivered by hand to Philip Hammond, the Chancellor of the Exchequer, printouts of transactions, and named a British bank concerned. I asked that he again refers these to the UK’s Serious Fraud Office, the National Crime Agency and the Financial Conduct Authority for investigation.

This information allegedly shows illegal transfers of funds from South Africa made by the Gupta family over the last few years from their South African accounts to accounts held in Dubai and Hong Kong. Many of the transactions are legitimate. But many certainly are not.

The illicit transactions were flagged internally in the bank concerned as suspicious. But I am reliably informed that the bank was told by the UK headquarters to ignore it. That is an iniquitous breach of legal banking practice in the UK, which I trust ministers would never countenance. It is also an incitement to money laundering. This has self-evidently occurred in this case, sanctioned by a British bank, as part of the flagrant robbery of South African taxpayers. They have lost millions of pounds and many billions of their local currency, the rand.

Was there a specific event that triggered your request to the Chancellor?

I was asked by senior African National Congress figures and stalwarts to do this. My relationships with them go back more than half a century when we stood shoulder to shoulder fighting apartheid.

As before, my latest information has been supplied by South African whistle-blowers deep inside the system who are disgusted by the corruption at the heart of the state.

What do you hope to achieve?

There are disturbing questions around the complicity – witting or unwitting – of UK global financial institutions in the Gupta/Zuma transnational network. There are also disturbing questions about these institutions’ wilful blindness to the reality that the laundering process often necessitates financial systems with lax regulation and controls. Unless we urgently find ways to leverage our respective capabilities to coordinate and influence action between the law enforcement and banking sectors we cannot win this battle. This coordination needs to happen domestically here in the UK as well as globally.

Unless we use the opportunity to crack down meaningfully, those who want to break the law will always be one step ahead. We must therefore get the international authorities to close down any money laundering networks.

As someone who fought against apartheid, how do you feel about having to take up a campaign against the country’s democratically elected government?

Having been active along with my brave parents in the anti-apartheid struggle it’s painful for me to witness corruption within a monopoly capital elite around Zuma’s family and their close associates the Gupta brothers.

But we should look closer to home, here in the UK. The complicity of our financial institutions in this, as well as the responsibility of law enforcers and regulators in all the concerned jurisdictions, should make government ministers and parliamentarians hang their heads in shame. Just as they were complicit in sustaining apartheid, so today they are complicit in sustaining the corrupt power elite in South Africa which is now betraying the legacy of Nelson Mandela and the anti-apartheid struggle.

The ConversationWinning the war against financial crime will require coordination, influence, action and accountability between multi-jurisdictional law enforcement agencies. The success of criminal networks also relies on the action or inaction – and cooperation or non-cooperation – of the relevant law enforcement authorities.

 

This article was originally published on The Conversation. 

Related Content

The harsh taste of COVID-19 on Famous Brands

Famous Brands, the owner of several of South Africa’s best loved restaurant chains has scrapped its dividend for the second half of its financial year to preserve its balance sheet. The owner of Steers and Tashas warned that the COVID-19 pandemic has had a significant negative impact on the group. Famous Brands CEO, Darren Hele joins CNBC Africa for more.

African Bank CEO on how the bank is cushioning its customers from the effects of COVID-19

The Covid-19 lock-down has put pressure on individuals and businesses’ finances like never before. But what can be done to ease the pressure? Basani Maluleke, CEO, African Bank joins CNBC Africa for more.

Coronavirus – South Africa: Committees on Tourism welcome the continued focus of Department of Tourism to create 21 million jobs by 2030

Download logoThe Portfolio Committee on Tourism; and the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour today, in a joint meeting, received a briefing from the Department of Tourism on its strategic and annual performance plans. The committees welcome the reappointment of Mr Victor Tharage as the Director-General for the Department of Tourism for the next five years, which bodes well for the continuity of programmes and

African Natural Resources Centre unveils publication to advance critical land policy reforms

Download logoIn response to challenges across Africa around land ownership and use, the African Natural Resources Centre (ANRC) of the African Development Bank (www.AfDB.org) is launching a series of articles to aid policy debate. The articles are authored by influential international scholars whose pioneering research and analysis have helped to direct policy on land reform in Africa for more than two decades. The actions are expected to inject a new urgency into the need for land reform.

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox

More from CNBC Africa

Quite frankly, be candid… What African mining bosses and the minister call each other behind closed doors

For years it has been daggers drawn between government and mine owners in disputes over mining regulations that the latter fear are driving away investors from starting new mines.

Droppa CEO on adapting and innovating to the harsh realities of COVID-19

Covid-19 has left many businesses with the stark reality of closing down or adapting. One company that is doing the latter is Droppa. Its CEO Khathu Mufamadi joins CNBC Africa for more.

The harsh taste of COVID-19 on Famous Brands

Famous Brands, the owner of several of South Africa’s best loved restaurant chains has scrapped its dividend for the second half of its financial year to preserve its balance sheet. The owner of Steers and Tashas warned that the COVID-19 pandemic has had a significant negative impact on the group. Famous Brands CEO, Darren Hele joins CNBC Africa for more.

African Bank CEO on how the bank is cushioning its customers from the effects of COVID-19

The Covid-19 lock-down has put pressure on individuals and businesses’ finances like never before. But what can be done to ease the pressure? Basani Maluleke, CEO, African Bank joins CNBC Africa for more.

Trending Now

Elon Musk and SpaceX try to make history, plus everything else you missed: CNBC After Hours

CNBC.com’s MacKenzie Sigalos brings you the day’s top business news headlines, and what to watch as the coronavirus pandemic continues to keep most of America on lockdown. On today’s show, CNBC’s Michael Sheetz explains what’s at stake in t

South Africa downgrades lockdown rules, sending 8 million back to work

Key Points South Africa to downgrade lockdown measures to level three on June 1. This means a full reopening...

Is SA’s mining industry too deep in the COVID-19 crisis?

The Covid-19 pandemic has far-reaching economic ramifications on the productivity and profits of many industries without the exception of the mining industry. For more than a century mining was a flourishing industry in South Africa. In 2019 it contributed close to R361 billion or 8.1 per cent to SA’s GDP and over R91 billion to fixed investment. It employed 454,861 people and paid R24.3 billion in taxes. Since early March, the mining industry’s average share price has dropped 10 per cent and individual companies have lost 30 to 50 per cent of their market value. Is mining too deep in the Covid-19 crisis? How can the mining industry pave the way to total recovery and become the sunrise industry it wants to be?...

How Richard Branson Is Trying To Save His Virgin Empire

Sir Richard Branson has cut a figure as a brash and rebellious impresario who took on big businesses with his larger-than-life personality, charm, and sheer guts. The Virgin Atlantic airline Branson started and grew from an industry underdog to a maj
- Advertisement -