Defend Truth


Why the extradition of Manuel Chang from SA is a big deal


Marianne Thamm has toiled as a journalist / writer / satirist / editor / columnist / author for over 30 years. She has published widely both locally and internationally. It was journalism that chose her and not the other way around. Marianne would have preferred plumbing or upholstering.

The former Mozambican finance minister, dirty money and the curse of financial sector collusion are a blight on Africa.

While not reported on widely, it is noteworthy that the British government has turned down an appeal by the Labour Party’s Lord Peter Hain for the UK to back the establishment of an international anti-corruption court.

Why this is vitally important is the shameful fact that the amount of illicit funds that have been siphoned out of Africa more than equals what the continent has received in development aid and loans.

In 2015, African countries received $162-billion, mainly in loans, aid and personal remittances. In the same year, $203-billion was funnelled out through multinationals repatriating profits and illegally moving money into tax havens.

In South Africa, at least $3.5-billion left the country during the nine years of State Capture, with the assistance of banks, consultants and chartered accountants.

This week, the FBI swooped in to extradite former Mozambican finance minister Manuel Chang, who was being held in South Africa and who almost collapsed Mozambique’s economy and currency through deals with American financiers and the International Monetary Fund.

Chang hocked the impoverished and war-torn country to the tune of $2-billion in secret borrowing by state-owned entities.

In this instance, Mozambique’s central bank governor, Ernesto Gove, approved illegal debt contracts.

The corruption ran deep in Mozambique and fatally so, as evidenced by the indictment of three state intelligence agency directors – the director-general, the director of economic intelligence and the director of studies and planning – for receiving about $30-­million in bribes to facilitate the contracts.

That person rooting in the rubbish bin at the traffic lights, that homeless community huddled under a bridge in the rain and winter cold, all the children who cannot read for meaning, the collapsing hospital infrastructure – all are a symptom of this type of predatory politics and business. No matter where you are in the world – New York, Lagos, Cape Town – it is a direct result of this venal 21st-century plunder.

Financial sector collusion

The UK and the US have long been chosen destinations for mega-rich oligarchs and other politically connected thieves to invest in properties and businesses, and to move money through those countries’ banking systems.

The notion of an international body has been gaining momentum as the scale of plunder of sovereign countries by political elites and organised crime, together with the financial sector, has been widely exposed in multiple scandals.

The role of the financial sector in the movement of dirty money to offshore tax havens and shelf companies, and through shadow banks, was revealed in the Panama Papers and the FinCEN Files, to name two exposés.

The Panama Papers was a 2.4-terabyte leak of documents in 2016 from the legal firm Mossack Fonseca that showed clearly how and where the politically malevolent, the rich and the celebrated hid their stashes. In the trove, journalists found the names of 35 sitting and former heads of state.

The FinCEN Files investigations by BuzzFeed News, in collaboration with media organisations in several countries and coordinated by the International Consortium of Investigative Journalists, revealed how major banks continued to process payments identified as being at high risk of money laundering and other crimes.

Hain noted: “Canada, the Netherlands, Ecuador, Moldova, Nigeria and the European Parliament have recently called for the establishment of an international anti-corruption court, as have over 300 leaders from over 80 countries, over 45 former Presidents and Prime Ministers, and 30 Nobel laureates.”

He added that a group of leading international jurists and other experts was in the process of drafting a model treaty and that the UK should support this.

To which UK Deputy Foreign Minister Tariq Ahmad responded that “now is not the time to endorse a new, bespoke institution of this nature”. However, he added, the idea was not completely “off the table”.

In the meantime, the UK’s own “international anti-corruption unit”, Ahmad said, was “a world-­leading institution that had achieved much since it had been established in 2017 in close coordination with UK partners”.

Hain persuaded the Conservative government in 2022 to ban the US-based consultancy firm Bain & Company from doing business with the British government for three years as a result of the international firm’s complicity in State Capture during Jacob Zuma’s presidency.

Remarkably, in March this year, the UK lifted the ban early. That is how serious they are.

How to stop corporate thuggery

In the case of the UK, a 2022 report by the University of Cambridge and the University of Texas showed how easy it still was to breach regulations aimed at stemming the international flow of black money.

As reported by David Batty in The Guardian, a test of 5,000 banks and 7,000 other financial intermediaries in 273 countries from 2020 to 2021 showed that one in 30 banks failed to comply with international regulations, including the Magnitsky Act.

Known as the Magnitsky sanctions test, it is named after lawyer Sergei Magnitsky, who acted for London-based investor Bill Browder and who died in a Russian prison.

The study set up 12 shell companies “in countries recognised as a low risk for corruption including the UK and the US, and a high risk including Papua New Guinea and Pakistan, as well as in offshore jurisdictions, such as the British Virgin Islands”.

“They then posed as representatives of those companies and sought to open bank accounts for them,” writes Batty.

Offshore expert Jason Sharman, a professor of international relations at the University of Cambridge, told Batty: “It will take you one day to break these sanctions. You don’t have to break a sweat too much to send out 20 emails.”

Global Witness, an NGO that exposes links between corruption, natural resources and conflict, has in the past suggested that governments should hold senior bankers personally responsible. That would work in an instant.

Impediments should also be removed that prevent authorities from holding senior executives accountable for implementing tighter compliance with anti-money laundering legislation. Easy-peasy.

Governments also need to introduce registries of beneficial ownership of companies and trusts that allow banks to check the identity of the real indivi­duals who benefit from accounts held in corporate entities.

While solutions are there, political will is clearly not. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.


Comments - Please in order to comment.

  • Max Ozinsky says:

    It is good that Chang gets held accountable. But how many of the bankers in the European banks who pushed this scam have been arrested?

  • Epsilon Indi says:

    As usual the ultra-woke Ms Thamm goes overboard in terms of her statements regarding the “illegal” flow of funds overseas. Companies are fully entitled to repatriate profits, it’s a standard business practice and not illegal. It would be rather inane for foreign countries to invest in SA if they were unable to repatriate funds at will. Moreover, to accuse South African banks and financial institutions of illegal activity merely because they assisted in the transfer of funds is truly nonsensical and is indicative of Ms Thamm’s rabid opposition to the establishment. How exactly are banks to know whether funds they are transferring are licit or illicit ? Financial institutions can only establish the provenance of funds to a small degree, it’s impossible for them to trace all funds back to their origin without the complete co-operation of the transferring party, beyond that the institution’s hands are tied. What’s more, given that financial institutions do not have detailed knowledge of the activities of a transferring party, how can they know the true source of any funds ? This is something that anyone who rails against the involvement of financial institutions with any illicit funds does not seem to understand. Ms Thamm, as a supposedly reputable journalist, should be aware of these facts but allows her overzealous opposition to capitalism to blind her to the realities of modern finance.

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