Global firms cannot hide behind a jurisdictional veil or client confidentiality in their quest to claim ignorance of State Capture, money laundering and the corruption that has devastated South Africa.
Some of them have provided the international pipeline through which the Guptas were able to “passport” their illicit gains out of the country and now need to acknowledge the role they played.
Testifying at the State Capture Commission on Monday, British MP Lord Peter Hain named a string of international “enablers” that continued to provide facilities to the Guptas and their companies even after an abundance of red flags had gone up around them.
He pleaded for the international community to acknowledge its own role in State Capture and named Standard Chartered Bank, HSBC, Bank of Baroda, KPMG, Bain & Company, SAP, McKinsey and law firm Hogan Lovells among those who have either intentionally or unintentionally helped the Guptas.
State Capture could not have happened without the financial network that helped them to create complex systems to disguise ownership of those stolen funds, he said.
In addition to the global banks and consulting firms, Hain also named the governments of India, Dubai and Hong Kong for having provided the Guptas with refuge or, for failing to actively assist South Africa to repatriate the illicitly acquired assets back to the country.
And, sometimes, as in the Estina dairy farm case, the accountants (KPMG) had helped the Guptas to bring the cash back into SA, undetected, so they could use it to fund a wedding later on, Hain said, in reference to the Gupta family’s notorious Sun City wedding in 2013.
“They [banks] helped the Guptas by allowing accounts to be opened and in so doing allowed access to the international pipeline in either Dubai or Hong Kong, where it then disappeared.”
Effectively, he said, the banks had granted the Guptas, subsequently blacklisted by the US government, an open door to their international financial network.
“For [the banks] to claim, as they have to me, that they have no responsibility to what happens in Dubai, that is disingenuous.
“There were lots of warning signs that this was happening and frankly, the banks concerned did not stop it. As far as I am concerned, they were complicit, Bank of Baroda in particular.”
He highlighted one particular transaction involving the Gupta-linked company Trillian and another with Gupta ties, Centaur Mining, in relation to a R160-million loan.
In this case, he said the Bank of Baroda had allowed its facilities to be used for the “loan” while no loan documentation has to date been located.
And, Bank of Baroda, he said, had in other cases issued guarantees for loans and quashed internal flags about some of the transactions from its own staff.
While the same level of complicity may not necessarily apply to Standard Chartered or HSBC, Hain says he would assert that they too have a case to answer.
He said tell-tale signs of money laundering, the secretive nature of some of the Gupta-linked transactions, obscurity around the ultimate beneficiaries and the unexplained payments flowing from and to third parties, and the use of shell companies were classic systems used by the Guptas.
Hain submitted a 10,000- word statement to the commission and highlighted the impact of corruption under the rule of former president Jacob Zuma at the National Prosecuting Authority, SARS, the Hawks and state-owned companies.
The renowned anti-apartheid campaigner, whose parents were South African-born, said he hoped to shine a bright light on the international dimension of State Capture because he feels great pain that the struggle for freedom had been “prostituted by shameless looting”.
He has provided the Zondo Commission with a lengthy list of recommendations that he believes will assist the fight against corruption.
“Financial crime threatens the prosperity and stability of all,” he said.
Criminals launder vast sums each year and thereby transform their ill-gotten gains into legitimate funds.
Corruption, he said, affects South Africa’s ability to provide social justice services and global action, and cooperation is required to tackle it effectively.
After first exposing the international dimension of State Capture in the British parliament, Hain said he had met with senior directors of both HSBC and Standard Chartered.
“Frankly, I found a great reluctance [to help] by both, citing client confidentiality.”
Standard Chartered, in an affidavit, has told the commission that it has conducted a thorough investigation into the allegations and made disclosures to authorities in several jurisdictions.
But, the bank maintains that it had discharged all its obligations and is committed to working with anti-crime organisations and regulators to combat corruption and financial crime.
Standard Chartered says it can only disclose information when requested via proper legal channels, which Hain described as “shameless”.
“They never came forward at the beginning to help in any way to track down this money.”
While he said he accepts client confidentiality may be an important factor, he could not understand how it could be justified in the case of criminals.
“The international banks are hiding behind this principle to conceal their complicity in international money laundering,” Hain told the commission.
He said Standard Chartered in the UAE says it has made disclosures relating to Gupta accounts, but a crucial factor is why this money has not been returned to the SA taxpayer.
Criminals, he said, are known to transfer dirty cash to different jurisdictions, often to places where there are less stringent regulatory requirements, to protect their loot.
But banks ought not to be able to hide behind the jurisdiction factor and should take responsibility for what happens in their branches around the world.
Similarly, accountants KPMG and consulting firm Bain came in for a hammering during Hain’s testimony.
“They [KPMG] were responsible for auditing various Gupta companies for around 15 years and flagrantly ignored the warning signs, allowing funds for a wedding to be recorded as ‘business expenses’. Their fees were ultimately paid for by laundered funds,” Hain said.
In the case of Bain, Hain repeated details of how the firm had coached former SARS commissioner Tom Moyane long before he was appointed to head up the tax agency.
Thereby, Hain said, the firm had helped Moyane to turn one of the most respected tax agencies in the world into a dysfunctional one – through those coaching sessions, some of which had taken place at Nkandla [Zuma’s homestead].
These global firms should be the first line of defence against State Capture, corruption and the robbery that went down on an industrial scale in SA, Hain said.
*Lord Hain’s testimony continues. DM
"We must have a pie. Stress cannot exist in the presence of a pie." ~ David Mamet