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Ferial Haffajee: Have our banks been lily-livered?

Sep 20 2018 08:09
Ferial Haffajee

The appearance of representatives of SA's four big banks before the Zondo Commission of Inquiry into State Capture this week was unprecedented. They had come to give evidence of the pressure they faced when, in 2016, they closed the accounts of various Gupta family members and related entities. 

The account closures and the fact that the Guptas' company, Oakbay, lost its both its JSE sponsor and auditors forced the crony family out of the market and marked the beginning of their end.

For several years prior to ending their work with Gupta-linked entities, the banks had reported suspicious activities on various accounts to the Financial Intelligence Centre. This week, the executives outlined how that had come to be.

South Africa has one of the world’s top financial systems, as noted by the annual rankings of the World Economic Forum. Our banks are conservative and compliance-heavy, and often risk averse. This latter quality often lands them in trouble with the government and radical parties like the South African Communist Party and the EFF, but that conservatism is well-respected in global financial circles. 

In addition, when South Africa joined the Financial Action Task Force, the OECD-hosted body that oversees the development of stringent global anti-money laundering laws, the banks created compliance systems which allowed them to follow the money.

They were the first institutions to be able to show that the Guptas were up to no good and their reports to the Financial Intelligence Centre were used by former Finance Minister Pravin Gordhan to push back against growing pressure he faced to get the banks to rescind the decisions to close their accounts. 

The systems the banks built mean that they saw everything: they saw how the Guptas and all their cronies moved money; they saw where the money moved to; they saw who got the money. They saw the externalisation of the family's lolly to enable them to live the lifestyle of the jet-setting global elite in Dubai.

The thing is: it’s our money. That money, as we now know from a vault full of inquiries, investigative reports and former Public Protector Thuli Madonsela’s report into state capture, is largely South African or South Africa-linked.

The family’s patriarch brother, Ajay, learnt quickly how to milk the state procurement system using the provinces (notably the Free State under then premier, now ANC secretary-general Ace Magashule) and the state-owned enterprises.

They made their biggest billions at Eskom and at Transnet, where Gupta lieutenant Salim Essa took a hefty cut of every procurement made, be it for the management consultancy business given to McKinsey and Trillian (which he co-owned) or for trains from China Rail. 

The bank bosses were frank this week: they set out chapter and verse to a shocked country how they were hauled before the ANC and before former Mineral Resources Minister Mosebenzi Zwane’s inter-ministerial committee to explain why and how they had closed the accounts.  For that they deserve credit.


The ANC has denied that it wanted to do anything more than understand how accounts are closed, but given that banks close hundreds of accounts every week, it’s odd that they only rose to activism on behalf of the Guptas and none of the other bank clients so impacted. 

A question remains, though: did the banks go far enough? Were they good enough corporate citizens in helping Judge Raymond Zondo, who chairs the state capture commission? With their X-ray vision into the Gupta businesses and their unique ability and power to follow the money, have they done enough to tell the commission where to find the money? 

It’s vital for a sense of justice, but also because the billions the family stole (it will deny this) can pay for many university fees, many title deeds, many start-up farms, many social grants and other items of development that our hard-earned taxes are meant to fund. 

When it came to the crunch, were our banks lily-livered this week? Or will they still spill bigger beans? 

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