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British politician claims UK law firm complicit in state capture in SA

Jan 16 2018 07:35
Jan Cronje
 Cape Town - British politician Peter Hain has accused London-headquartered law firm Hogan Lovells of being complicit in state capture in South Africa. 

Lord Hain, a Labour party peer and former anti-apartheid campaigner, is an outspoken critic of President Jacob Zuma, the Gupta family and companies he says have been involved in corruption linked to the SA government. 

In his latest salvo in the UK House of Lords on Monday evening, Hain said that he had referred law firm Hogan Lovells to the UK’s Solicitors Regulation Authority (SRA) for allegedly enabling corruption at the South African Revenue Service (SARS). 

The SRA is the independent body that regulates solicitors and law firms in England and Wales. 

“I have asked the SRA to withdraw Hogan Lovells’ authorisation as a recognised body and to examine what other disciplinary action can be taken against its leading partners, including withdrawing their permission to practise as solicitors,” he said. 

Hain said a "whitewashed" report by the law firm had “spared” SARS head Tom Moyane and top executive Jonas Makwakwa from “accountability for their complicity in and cover up of serious financial crimes”.

Hogan Lovells, which has an office in Johannesburg, was asked to conduct an investigation into Makwakwa in late 2016, after the Financial Intelligence Centre (FIC) red-flagged suspicious transactions into his bank account and that of his partner Kelly-Ann Elskie.

These allegedly amounted to some R1.7m over six years. Makwakwa has denied he did anything wrong. 

Hain told the UK House of Lords that the report the law firm produced was an “incomplete, fatally flawed whitewash of a report, which ultimately cleared Makwakwa, despite reams of evidence to the contrary".

Following the submission of the report in June 2017, SARS held a disciplinary hearing that concluded Makwakwa was not guilty. He then returned to SARS in early November, after having been being suspended with full pay for about a year. 

After criticism in the media at the time, the revenue service later put out a statement to say the disciplinary inquiry was a “patently fair, unbiased and independent process”.

Hain said that the Hogan Lovells report had failed to include evidence from a separate inquiry by PricewaterhouseCoopers, and another by the Hawks into the suspicious transactions.  “That meant that Makwakwa has answered to only a fraction of the allegations levelled against him - a serious deviation from Hogan Lovells’ mandate,” he said. 

Hogan Lovells responds

The law firm responded to Hain’s speech late on Monday by saying his accusations of collusion in state capture were “unfounded”, reflected a lack of understanding of the work it was asked to carry out, and were based on incorrect South African media reports. 

It has previously argued that it was never asked to investigate the suspicious transactions directly, as its inquiry only dealt with whether Makwakwa and his partner had contravened any “internal policies” related to their work and employment contracts.

Lavery Modise, the firm’s SA head, told a parliamentary committee on December 5 that the criminal sections of the FIC’s case against Makwakwa were being investigated by the Hawks, while PwC was investigating possible tax compliance evasions. 

“I hasten to add therefore that any suggestion that Hogan Lovells decided not to investigate any aspect contained in the FIC Report is fallacious,” he said in a statement. 

'Terms changed' 

However, in his speech on Monday Hain said it appeared the terms of reference of the inquiry had been altered by Moyane. He said while they had initially encompassed the suspicious transactions, the terms were later downscaled to deal only with internal work policies. 

And he claimed the law firm had been a “willingly gullible or malevolent accomplice” to what he termed Moyane’s “obfuscation”. 

“Why has Hogan Lovells failed to release its documents - including the original terms of reference, its final report and any other relevant documentation which would help clear its name - to the South African Parliament?” he asked. 

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