Silence Over Apartheid Corruption

Time, it appears, may both heal wounds and erase memory. An example is the argument made by Tony Leon, the former leader of South Africa’s Democratic Alliance, that despite the brutality of its system, the apartheid political elite practised greater internal accountability than we see today.

Hennie van Vuuren's picture


August 22nd, 2013

Time, it appears, may both heal wounds and erase memory. An example is the argument made by Tony Leon, the former leader of South Africa’s Democratic Alliance, that despite the brutality of its system, the apartheid political elite practised greater internal accountability than we see today.

This argument is part of a greater pathology that far too many South Africans have come to tolerate: that economic crime has blossomed in the post-apartheid era, and that public accountability has withered. The suggestion is that the new dispensation is both more corrupt and lazier in applying the rules of accountability.

This shouldn’t be reduced to an argument about which system of governance is more corrupt. Rather, we need a serious conversation, involving all South Africans, about the long tail of corruption in South Africa. We need this because we are in a messy middle ground in which the democratic government has been unwilling or unable to investigate the economic crimes of the old order — some of which may far outstrip the scale of corruption alleged in the multibillion-rand post-apartheid arms deal.

Most countries that undergo transition from a secretive autocratic state to an open democracy grapple with this. We’ve seen it from Kenya to Indonesia to Egypt. Wherever there have been attempts to include economic crimes as part of the transitional justice process — they have simply failed. Where corruption has been excluded from the transitional justice agenda, either by design or oversight — such as with SA’s Truth and Reconciliation Commission — the problem festers. Those networks stay in business, and rather than face justice they invite members of the new elite to the table.

Arguably, this is where South Africa finds itself today.

The baffling silence on apartheid corruption benefits the powerful and the carpetbaggers within the new and old elite. Any attempt to pick at this issue is a threat to the status quo, and thus a threat to the interests of politicians and businesspeople across the political spectrum. Hence, these are open secrets, which few people wish to tackle. Given the difficulty we face in grappling with the alleged network of elite criminality in the post-apartheid arms deal, one can imagine how vested interests will push back against investigations that implicate the country’s old elite (who still hold considerable economic influence) and their new business partners.

These networks extend well outside South Africa’s border to include multinational corporations, financial institutions and individuals who all benefited from apartheid graft. Sanctions-busting for arms, oil and sophisticated technology relied on a mix of ‘goodwill’ by supporters of the apartheid ideology, and those who were simply willing to profiteer off the back of injustice. This was not an ideological pursuit but rather relied on criminal enterprise that made some people fabulously rich. For these reasons, it is an issue that is fiendishly difficult to investigate. Yet, our refusal as a society to investigate these issues is undermining our stated constitutional commitment to the rule of law.

One recent investigation of apartheid grand corruption is being led by the public protector, who is reportedly investigating the role of financial institutions (possibly also implicating the South African Reserve Bank) in economic malfeasance during apartheid. At the centre of this is the ‘lifeboat’ scandal, involving loans by the Bank to some of the country’s largest banks in the 1980s and early 1990s, which were essentially converted into gifts (‘lifeboats’). Former Finance Minister Barend du Plessis signed off on these — to the benefit of his brother, among others, who sat on the board of one of the banks.

However, there is a litany of other issues which demand equal attention from state bodies tasked with tackling corruption. We have selected a few examples of Open Secrets that may have slipped citizens’ minds:

Oil sales and Swiss bank accounts: In 1984, Progressive Federal Party leader Frederik van Zyl Slabbert received documents concerning oil sales to South Africa, allegedly reflecting corruption in the oil trade. These were handed to then president PW Botha and the advocate-general — but nothing came of the investigation. The matter may have been too hot to handle.

Smit murders and secret accounts: In the wake of the 1978 murder of Robert and Cora Smit (he was a former IMF representative for South Africa and a National Party parliamentary candidate), rumours have persisted that he was silenced for stumbling on secret overseas bank accounts, which were linked to members of the apartheid elite. At the same time, allegations persisted, based on investigations by the Rand Daily Mail, that former Minister of Finance Nico Diederichs may have had links to a secret bank account in Europe.

South African Defence Force (SADF) secret funds: About R378 billion (current value) was spent to fund secret defence projects and procure weapons. This happened with limited oversight from the auditor-general. Given what we know about the international arms trade, it is fair to assume that this was open to possible systemic abuse by individuals, corporations and financial institutions, but there has never been an opportunity for public scrutiny.

The apartheid Bantustans: These entities were allowed extraordinary tax breaks for white companies, some of which sidestepped exchange control laws. Concerns of an improper relationship between South African business and the homelands are typified by allegations that Sol Kerzner paid R20 million (current value) in bribes and facilitation fees for gaming licences to Transkei chief George Matanzima. Kerzner argued it was extortion, and all charges were dropped by Transkei attorney-general Christo Nel in 1997.

International criminal networks: Vito Palazzolo, charged with links to organised crime in Italy following his recent extradition from Thailand, was made a special representative for the Ciskei. Noseweek has alleged that he was used by intelligence agencies to clean ‘hot’ money to finance arms and nuclear co-operation. Although a National Party parliamentarian was convicted in 1990 for having improperly secured residence permits for Palazzolo, in 1993 FW de Klerk’s cabinet reportedly approved a new residence permit for him, despite the fact that he was wanted by Italian police at the time.

SADF and ivory: Nearly 100,000 elephants were allegedly slaughtered during the civil wars in Angola and Mozambique. This appeared to benefit the leadership of UNITA and possibly a small group of senior SADF officials. The post-1994 Kumbleben commission of inquiry found substantial proof of SADF involvement through a front company, but no action was taken.

Apartheid death squads: The Civil Co-operation Bureau was allocated about R116 million each year (current value) and members were handed huge wads of cash on trust. The expenditure of about R45 million (current value) was found to be improperly authorised with little consequence.

Exchange controls amnesty: The 2003 Treasury Exchange Control Amnesty process tried to address capital flight from the 1980s onward — 42,672 applications were processed and a total of R68.6 billion was disclosed. Individuals and corporations made a one-off payment for being in violation of exchange controls and income tax. However, there is no indication of prosecutions or legal action having been undertaken against those who had not been transparent about their offshore holdings. Economists have suggested this represented a large underreporting of the actual value of illicit capital flight that had taken place during that period.

Addressing these and other allegations of economic crime will require a deeper understanding of the problem, an inclusive conversation and a form of justice to find resolution. But before this process can begin, millions need to swallow the bitter pill of truth: in secretive societies all people — including white folk — are prone to unimaginable crimes of blood and money. This is the lesson for a free South Africa.

This article originally appeared in  


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