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It’s 1985. A South African Airways Boeing has just touched down in Switzerland. It’s filled with gold.
The apartheid government is facing a significant debt crisis, exacerbated by President P.W. Botha’s recent Rubicon speech. It owes a lot of foreign banks money it can’t repay. Government debt has increased by 50% in the first half of the 1980s and the banks are clamouring for their money.
Director-general of the Treasury at the time, Chris Stals, estimates that the government has enough US dollars to survive a few weeks.
A small Swiss bank gets wind of the SAA Boeing and attempts to confiscate the plane and its precious cargo as payment against the debt owed to it by the South African government.
“During the course of the day Dr Senn of UBS, who was a great friend of SA, bought the bank,” recalls former finance minister Barend du Plessis. “He never told me the name of the bank as it was confidential at the time – and he fired the very brave CEO.”
Talk about friends having your back.
The chief executive of financial services firm UBS bought a bank to save the apartheid state the embarrassment of having a plane full of gold bullion confiscated on a Swiss runway. As Du Plessis says, Nikolaus Senn was a “great” friend of the previous regime.
This little anecdote from academic and civil society activist Hennie van Vuuren’s new book, Apartheid Guns and Money, is very instructive on the symbiotic relationship between bankers and the apartheid state, which he details at length in his 610-page tome.
Profiting from apartheid
Between 1968 and 1990 Switzerland was at the centre of the world gold market due to its relationship with the apartheid state. In some years it purchased or sold up to 80% of South Africa’s gold output.
“Unsurprisingly some of the largest Swiss purchases of gold occurred during some of the apartheid regime’s most severe crises,” writes Van Vuuren. “The 1976 Soweto uprising, the need for enriched uranium in 1981, the debt rescheduling in 1985 and the liquidity crises in 1983 and 1988.”
As Van Vuuren writes, “there was a fortune to be made in misery”.
Switzerland acted as a base for South African financial operations, with the apartheid government opening a financial consulate in Zurich in 1987, and many South African companies transferring their foreign assets there.
In 1987, Anton Rupert’s Rembrandt established Richemont in the Swiss town Zug, and in 1990 De Beers put its foreign assets in a holding company in Lucerne.
This connection between Swiss bankers, the apartheid state and captains of industry in Corporate SA is vitally important.
As Van Vuuren points out in his book, the private sector has not atoned for its involvement in and gains from apartheid. Its statements before the Truth and Reconciliation Commission were hardly sufficient.
“The industry bosses who, like Johann Rupert were bold enough to appear at the hearings, tended to shift the focus to their humble efforts in opposing apartheid and their corporate charity programmes.”
As journalist Max du Preez noted at the time, “one could at times be forgiven for thinking this was a meeting of anti-apartheid movements”.
As Van Vuuren argues, a lot of apartheid-era business has been reduced to narratives of “cunning businesspeople who outsmart rivals”.
“The truth is far less glamorous than this,” argues Van Vuuren. “These men were, through their actions, part of the system that supported apartheid and they profited thereby.”
Van Vuuren details numerous examples of these bankers and middlemen being hosted by prominent families in SA, on wine estates, golf courses and at game farms. Many of these families are still key shareholders in the South African economy.
The bankers’ role
As French arms trader and apartheid sanction-buster Georges Starckmann reminds the reader in Van Vuuren’s book, “it is not in the weapons trade that one finds the worst crooks… it is in the world of banking”.
“There, gentlemen of the most honorable appearance benefit with absolute impunity from every kind of trafficking,” he adds.
It was these bankers who facilitated the illegal arms dealing by the state.
Van Vuuren writes that at one point Armscor had 844 bank accounts in 196 banks across at least 27 countries. Sixty-three percent of these banks were located in Luxembourg and Switzerland alone.
These bankers were not just financial facilitators; they were setting up front companies and front directors to hide the transactions from prying eyes. As Van Vuuren writes, the bankers were the creators of the architecture.
The outing of Senn in Van Vuuren’s book is a small example of why Apartheid Guns and Money is one of the most fascinating and important South African books to be published since the dawn of democracy.
However, it doesn’t just shine a light on many secretive deeds that were allowed to flourish in the shadows of apartheid propaganda; it also goes for the jugular of the brazenly corrupt men who committed those deeds.
Outing the shady middlemen
For the first time we can see who exactly the shady middlemen were that profited from an illegitimate state’s needs for bankers with tight lips and arms dealers with no ethics.
As Van Vuuren writes, “as long as banks believe they can operate outside the law in tax havens, they will continue to help finance wars and create a financial system that facilitates the flow of cash for guns”.
“The link between the international finance sector and human rights abuses must receive more public attention in view of the consequences suffered by ordinary people.”
Conveniently, a lot of these middlemen and bankers who are still alive and who were approached by Van Vuuren for comment tried to claim that profit was their only motive.
However, Van Vuuren debunks many of these claims by pointing to outright racist statements made by the men in defence of apartheid, at different times in the past.
“Though none of the men I interviewed suggested that they were completely blameless, they did give the impression that any blame was simply irrelevant,” he writes.
He makes the point many times in the book that these profiteers, their families and businesses need to be held accountable for supporting and benefitting from apartheid.
“Some might balk at this suggestion, but the super-rich in particular need to repatriate far more of their wealth and invest in South Africa’s future,” Van Vuuren writes. “They and their children can no longer look away and pretend as if the source of the luxury with which they surround themselves is untainted.”
One of the best examples of these unscrupulous businessmen was Tiny Rowland, the man who led conglomerate Lonrho, which is today known as Lonmin, for decades.
Van Vuuren points to a recollection of former Zambian minister Vernon Mwaanga to give a sense of just what kind of man Rowland was.
“Peering through the window of his Gulfstream at an African landscape, Tiny Rowland remarked to the Zambian foreign minister, ‘There is not a president down there whom I cannot buy.’”
Apartheid Guns and Money is not just revealing for the spotlight it shines on our past. Sure, it’s fascinating how the apartheid state planned to fund coups in foreign countries and risked South African citizens’ lives by smuggling weapons in on SAA passenger planes.
In fact, if the Calvinistic support base for the National Party actually knew at the time that its government was doing dodgy arms deals with communist states like Russia and China, the party would have faced a crisis back home.
But Apartheid Guns and Money also helps the reader understand in some ways why in 2017, South Africa finds itself in the mess it is in.
As Van Vuuren writes, the “past and present are inextricably entangled”.
A captured state
The patronage networks that surrounded the apartheid state were never dismantled, because they were never exposed or discussed in public. So we shouldn’t be surprised to find the same profitseekers involved in both pre- and post-democracy arms deals.
Van Vuuren makes the distinction in his book between the “state” and the “deep state”. The latter is “where the decisions that really matter were taken in secret, without accountability and with little consequence for criminal behaviour”.
An example is the Special Defence Account (SDA), which was set up in 1974 and is stated as having spent at least R50bn between 1974 and 1994 on propaganda and arms.
Van Vuuren points out that this is over R500bn in 2017 terms and that these transactions were all off the books.
“If this book had been written two decades ago, it would have ended with a well-worn argument that history should not be allowed to repeat itself,” he writes. “But history has done so.”
“In South Africa the deep state is making a slow comeback,” writes Van Vuuren. “As corruption and state capture become entrenched, elite groups within the state are increasingly turning to the use of the state security apparatus to protect their interests.”
Apartheid Guns and Money makes one thing very clear: anyone who says that “white monopoly capital” doesn’t exist is as much a propagandist as the person who insists that “state capture” began with the Gupta family.
Van Vuuren’s book shows that the state was captured a long time before the Guptas entered the scene. If anyone should get credit for state capture, surely it’s the Broederbond.
This is a shortened version of an article that originally appeared in the 6 July edition of finweek. Buy and download the magazine here.
