South Africa

Declassified: Apartheid Profits – A President, a Billionaire and The Bounty Hunters

By Open Secrets 15 December 2017

This is the final instalment in the series, ‘Declassified: Apartheid Profits’. The series has aimed to introduce the public to the primary evidence collected during the research for the recently published book Apartheid Guns and Money: A Tale of Profit. These documents have told the damning stories of the profiteering individuals and corporations that propped up apartheid and profited in return. In this final piece for 2017, we show how a group of individuals have continued to seek to profit today from the crimes of the past. We draw on documents obtained in the research process for Apartheid Guns and Money, as well as new evidence provided in the record to the Pretoria High Court in the matter of ABSA and the South African Reserve Bank vs. the Public Protector. Together, these documents reveal the consequence of South Africa’s failure to grapple with economic crimes of the past – namely the ability of bounty hunters to manipulate these stories for personal gain.

Among all the noise around whether ABSA should pay back money related to the so-called “lifeboat” given to Bankorp in the late 1980s, it is easy to lose sight of two things. The one is how ABSA is just one small part of much larger-scale apartheid-era economic crimes. The other is who exactly the interested parties are that have consistently pushed to pursue the ABSA case.

Remarkably, the Public Protector’s record recently submitted to the High Court, combined with the Open Secrets archive, brings these issues into sharper focus. They reveal that individuals at the forefront of the ABSA debt narrative in South Africa are backing a vast claim against the South African state by an apartheid-era arms sanctions buster. As part of their lobbying efforts, they have even drawn in South African President Jacob Zuma. Sadly, Zuma’s response in apparently failing to reject these overtures suggests a lack of ethical judgement, not inconsistent with allegations which implicate him in corruption in the arms deal.

This past week, the North Gauteng High Court heard argument from ABSA, the South African Reserve Bank (SARB), Treasury, and the Public Protector in the review of the Public Protector’s report related to the “CIEX report”. Especially, the Public Protector considered whether the democratic South African government should have acted on the CIEX report that superficially alleged a range of apartheid-era economic crimes. The report into apartheid-era loot was commissioned by the South African government in the late 1990s from a British investigative firm known as CIEX.

In her controversial findings, the Public Protector demanded repayment from ABSA for the unlawful “lifeboat” – a gift dressed up as a loan – given to Bankorp in the late 1980s before it was purchased by ABSA (though she has subsequently walked back on this in court papers). While the legal arguments around whether ABSA should be held liable for the “lifeboat” are now left to the court, Open Secrets has expressed concern at the Public Protector’s apparent tunnel vision on this matter at the expense of other apartheid-era economic crimes. We did this in an unsuccessful application to act as a friend of the court last week.

What is unlikely to be raised by any party to these proceedings, however, is the back room dealings and lobbying that have defined these issues for two decades. This is despite the fact that all the parties have full access to the record that exposes it. Their interests are narrow and not easily reconciled with the full truth. What follows is an important example of what happens when not dealing with apartheid-era economic crime. To understand this tale, we start at the height of the arms sanctions against apartheid in the 1980s, and a sanctions-busting deal.

Sanctions-buster’s claim

Jorge Pinhol is a Portuguese racing car driver and arms middleman, the kind that Armscor relied on heavily during the sanctions period to break international law. He has claimed to have done weapons trafficking work for a range of parties in the 1970s and 1980s, from the Rhodesian military to Israel and Iran. From 1985 he developed a close relationship with Armscor and in 1986-87 assisted them in negotiating a deal to illicitly ship 50 Super Puma Helicopters from France, via Portugal, to South Africa. Named Project Adenia, this was a clandestine project typical of the time. Pinhol alleges that Armscor relied on him to secure the “channel” via Portugal, as he was well connected in the Portuguese military.

The deal typifies the Armscor modus operandi laid out in an earlier piece in this series – Inside the Arms Money Machine. Pinhol even claims that Kredietbank Luxembourg (Armscor’s chief sanctions-busting bank) set up a bank account for him as part of the trade.

Yet as with so many deals done on the sly, Jorge Pinhol claims that he was cheated. While the helicopters were delivered, Pinhol says that he was never paid an agreed 10% facilitation fee by Armscor. The deal was ultimately worth around $3-billion, so Pinhol has at various times over the past 25 years claimed up to $300-million (over R4-billion) for his role in busting the UN arms embargo. This claim against Armscor (and thus the South African people) is in front of the court in Portugal today.

To try to secure payment, Pinhol has litigated in a range of jurisdictions around the world, with little success. However, in 2006 his cause received an important boost when a Canadian billionaire, John Risley, agreed to back his cause. Risley came on board as a kind of “venture capitalist” – agreeing to fund Pinhol’s case and legal team in exchange for profiting from any victory, which as outlined above would result in a substantial monetary payout.

With this renewed support, Pinhol and his legal team launched two fronts of attack. The first was against Kredietbank in Belgium which was unsuccessful. The second is against Armscor and has turned into a decade-long battle in Portuguese courts. Armscor has been forced to defend these claims. Of course, being a state-owned arms company, should Armscor lose, it will be forced to pay billions of rand in taxpayer money to an apartheid-era sanctions buster for assisting the apartheid state to violate the arms embargo. This would understandably make most South Africans furious.

Yet the tale has taken an even more sinister turn. During research for Apartheid Guns and Money, Open Secrets came across a document that recorded a pre-trial meeting between Pinhol’s lawyers and Armscor’s lawyers in Lisbon in 2010, where a potential settlement would be discussed. The document records a surprising addition to Pinhol’s team that held up the proceedings as Armscor would not continue with this individual in the room.

The person was Liesl Göttert, PR specialist and fixer who worked with Jacob Zuma during his rape trial in 2006. She claimed to be at the meeting to represent the interests of President Zuma. This was confirmed in the minute by a member of Pinhol’s legal team who says that “Ms. Göttert had been asked to attend the meeting and… prior to accepting to do so she had sought and received the agreement of the RSA President to do so”. Despite pressing her case, Armscor would not proceed with any discussions with Göttert present, though she emphasised that she had held further discussions with Zuma overnight.

It is not possible to establish, if true, what the motive was for Zuma sending a personal emissary to a meeting of this nature. Is it unthinkable that someone claiming to be the president’s emissary would sit on the side of an apartheid ally claiming money from a democratic South African state? This is unless Göttert was misrepresenting the president (an incredibly dangerous move). The disturbing question is unavoidable – was Zuma trying to insert himself into a potential deal, and if so, why?

At this point, you are probably wondering what this story, disturbing as it is, has to do with the case of the Public Protector, ABSA and the “Lifeboat” saga. To find the golden thread, we must consider the origins of the CIEX report.

Lobbying by CIEX

The CIEX report was commissioned by the South African government in 1997 to investigate and help recover public funds and assets misappropriated during the apartheid era. The South African agency that entered the agreement was the South African Secret Service (SASS), and specifically its then Director-General, Billy Masetlha. The South African state paid £600,000 for the investigation that was conducted by CIEX, a UK-based asset recovery agency headed up by former British intelligence officer, Michael Oatley.

Yet there was a far larger prize on offer for CIEX. The contract included a commission to be paid to CIEX on any recovery of assets or funds achieved through the process. Considering that the ABSA payment alone could be R1,125-billion (as demanded now by the Public Protector), there is significant profit to be made. In fact, Oatley went so far as to request a legal opinion in 2002 on whether he could lawfully obtain such payment based on supplying the necessary information to recover money, even if the South Africans did not decide to act on the report.

But who stands to benefit now should money be recovered? The court record contains documents from the CIEX archive which confirm that in 2006, “International group of experts sponsored by Canadian philanthropist John Risley inherit[ed] CIEX archive and legal rights”. This was confirmed in a 2014 letter from Michael Oatley to Billy Masetlha.

This means that Risley, who is also bankrolling the arms sanctions buster Jorge Pinhol’s litigation against the South African state in Portugal, is also backing the ABSA claim.

A series of correspondence in the court record shows that Risley’s group has engaged in long-running lobbying of President Zuma, largely conducted through Michael Oatley and seemingly with assistance from former South African spy chief Billy Masetlha. Most disturbing, Zuma’s responses have been consistently positive towards the claim even after he must have been aware of the Portuguese court case in which Armscor could be forced to pay billions of rand in taxpayers’ money to an apartheid arms dealer.

The first meeting between Oatley and Zuma confirmed by the record occurred in November 2008, just 11 months after Zuma was elected president of the ANC and just after Risley had bankrolled the litigation against Armscor in Portugal. Records reveal that Oatley updated Zuma about CIEX’s research and the ABSA matter. It’s alleged that Zuma indicated in the meeting that while he understood Mandela’s reluctance to pursue the issue at the time of his presidency, he “would not feel similar inhibitions when he was in the office of the presidency”. Oatley also took the opportunity to update Zuma about John Risley’s “work on apartheid-era corruption”.

So Zuma was apparently positive about supporting CIEX’s claim, and was aware of Risley’s connection to CIEX and other “apartheid-era claims”. Was the president aware that this team of bounty hunters was trying to claim back billions from the South African state for an apartheid-era sanctions-busting claim? Further documents suggest that he was.

On 20 April 2014, a month before South Africa’s national elections, Oatley wrote to Billy Masetlha to thank him for meeting with Zuma and reporting back to Oatley. In the letter, Oatley says how pleased he is that “President Zuma indicated his intention to appoint a panel to advise him on the government’s claim against ABSA/Barclays and the potential for recovering the monies stolen in the so-called ABSA ‘lifeboat’ conspiracy”. Crucially, according to the letter, Zuma “confirmed recognition of the continuing CIEX entitlement to commission”.

Oatley goes on to inform Masetlha how reassured the Canadian venture capitalist John Risley is that this is the president’s approach, and that they are looking forward to working with Masetlha and the president’s team on this issue.

It is curious that when this was reported in the Mail & Guardian, Zuma’s spokesperson denied that the April 2014 meeting ever took place, while both Masetlha and Oatley refused to comment.

If we consider the timing, this is a full four years after Zuma is alleged to have sent an emissary, Liesl Göttert, to Portugal to intervene on the side of Jorge Pinhol against Armscor. He must therefore have been aware that the group currently lobbying him in favour of CIEX were simultaneously litigating against a South African state-owned company.

The record also suggests that Göttert remained in the picture at this point. One of Jorge Pinhol’s lawyers, the Swiss-based David Lawson, wrote to Göttert on 29 November 2013 to thank her for her work lobbying senior members of the ANC and SA government regarding supporting CIEX’s claims. The letter ends by pushing Göttert to get a response as to whether the officials she is lobbying are willing to support the claims of Lawson’s “clients”. Given the timing of the letter, and the April meeting between Zuma and Masetlha outlined above, this may indicate that the lobbying was successful.

The final piece in the puzzle is to what extent the Public Protector, Busisiwe Mkhwebane, considered the nature of this lobbying. One of the important bones of contention in the current dispute over her report is that she met with the Presidency before releasing the report. The Public Protector has confirmed that she met with President Zuma on 7 June 2017. Responding to allegations that this was to discuss changing the Reserve Bank’s mandate, the Public Protector is on record as stating that this meeting was not about the SARB mandate, but rather regarding the proposed remedial action as it related to a commission of enquiry.

Did the meeting also discuss President Zuma’s attitude to the Oatley/Risley team? The Public Protector had full access to the record, which Open Secrets too has accessed, and so should have been aware of the extent of the lobbying and vested interests behind the CIEX complaint and their alleged interactions with the president. This record also sets out an apparently supportive view by Zuma. This represents a clear conflict of interest for the South African president who should represent the people of South Africa – but was seemingly backing a group of bounty hunters claiming money from the state. Why he would do so remains a mystery deserving the attention of state authorities concerned with matters of conflicting interests and corruption.

Conclusions

The case remains deeply troubling for many reasons. To begin, the fact that an apartheid-era sanctions-buster is claiming money from the democratic state in 2017 is appalling. The mere possibility that the President of the Republic may have attempted to insert himself into those proceedings, in support of the sanctions-buster, is worse. At the very least, the court records indicate that Zuma has allowed himself to be continually lobbied by the same interest groups behind the apartheid claim.

It is also disturbing that our failure to address economic crimes of our past mean that they have been left to bounty hunters to pick up and pursue for private gain. There is extensive evidence of apartheid-era economic crimes that requires full investigation and the pursuit of restitution. However, this is impeded when secretive profit-seeking operations such as CIEX dominate the public narrative on apartheid economic crime.

The behaviour of this small group of people exemplifies what happens when we do not deal with past crimes. It invites intrigue and sinister dealings involving bounty hunters and alleged secret emissaries for the president, rather than open public debate and investigation. It also serves to obfuscate far greater crimes that remain hidden from public view as a result.

The less we know about our past, the greater the opportunity for it to be manipulated for personal and narrow political gain. It is a toxic affair that undermines the public’s interests.

Timeline

  • June 2006: John Risley, Canadian billionaire, inherits the CIEX contract to pursue claims related to apartheid-era economic crimes.
  • 2008: Risley’s team of lawyers launches litigation against KBC Bank and Armscor in Belgium and Portugal respectively, on behalf of Portuguese arms dealer and sanctions-buster, Jorge Pinhol. The litigation seeks a payment of up to R4-billion from Armscor.
  • November 2008: Documents show that Michael Oatley meets President Zuma to lobby for support of Risley’s work.
  • September 2010: Documents show that Liesl Göttert appears at a meeting between Pinhol’s legal team (team Risley) and Armscor lawyers in Portugal. Göttert claims to represent the interests of Jacob Zuma but is intervening on the side of Pinhol’s legal team.
  • November 2013: David Lawson (one of the lawyers representing Pinhol) writes to Liesl Göttert to thank her and urge her to continue lobbying senior ANC officials to support the Risley/CIEX claims.
  • April 2014: Michael Oatley writes to Billy Masetlha, thanking him for meeting with President Zuma and for the president’s assurance that he will support claims related to the “lifeboat” matter and the payment of CIEX’s commission. Zuma denies this meeting took place.
  • 7 June 2017: The Public Protector meets with the Presidency to discuss its attitude towards her ongoing investigation into apartheid-era missing money. DM

Photo: President Jacob Zuma (EPA) and Public Protector Busisiwe Mkhwebane (EPA)

Read more articles in the DM ‘Declassified: Apartheid Profits’ series

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