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SARB: Just one major successful prosecution in 5 years

Aug 01 2017 17:54
Liesl Peyper

Cape Town – The South African Reserve Bank (SARB) has handed over 41 cases to the police over the past five years, which only resulted in one successful prosecution, Kuben Naidoo, SARB deputy governor told members of Parliament.

A delegation from the SARB, including governor Lesetja Kganyago, briefed Parliament’s standing committee on finance on Tuesday on the bank’s mandate and the macroeconomic conditions in South Africa.

During question time, MPs asked the SARB what steps they are taking to investigate financial crimes, including money being taken out of the country.

"Let me reassure you, my blood boils when I read about money being taken out of the country," Naidoo said. "We do a huge amount to try and curb that, but we're often one step behind. It’s complex, as we need the cooperation of various agencies, including the SA Revenue Service (SARS), the police and the Hawks, as well as international jurisdictions.

"When these things fall outside of our payment system we can't do anything, unless we hear about them through email leaks," he added. 

Naidoo said out of the 41 cases handed over to the police in the past five years, there was only one significant prosecution – a woman who had been sentenced for 11 years in prison for taking over R2bn out of the country.

“Yet she wasn’t convicted for exchange control violations,” Naidoo said, “but for bribing a SARB official with R20m.”

Naidoo admitted that there are “almost never” any prosecutions for exchange control violations. “We lay the charges, but there are no prosecutions.”

He added that the SARB takes illicit financial flows extremely seriously. “We’ll be the first to admit we’re chasing the tail and the tail often wins.”  

According to Naidoo he signs about two or three forfeiture orders a month and these orders are announced in the Government Gazette.

These also included the ordered freezing of the Homix bank accounts on May 29. The Homix case is concluded and the money forfeited, Naidoo said.

Fin24 earlier reported that Homix, which allegedly has links to the Guptas, contravened exchange control regulations by presenting false documentation to Mercantile Bank when it tried to send nearly R14.5m to an account in Hong Kong.

An investigation completed by FinSurv for SARB in December 2016 showed “that Homix had unlawfully transferred foreign currency from SA on numerous occasions”, the SARB revealed.

Kganyago, responding to a question from ANC MP Derek Hanekom about the prevalence of corruption in South Africa, said the allegations of wrongdoing in the country creates a very negative perception among investors. "They ask: is this how you do business in your country? Do you have a rule of law in South Africa, and if so, why isn't the rule of law taking its course?" 

He added that, unless corruption is addressed, SA may run the risk of attracting investors with "nefarious objectives" due to perceptions that corruption in the country is tolerated.

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