Parliament moves to curb illicit cash flows

Committee to be set up, MPs agree Bank decries lack of prosecutions

The persistent lack of action by the investigating and prosecuting authorities against those illegally taking money abroad has prompted a call for the formation of an interministerial committee under the leadership of Finance Minister Malusi Gigaba to tackle the issue.

There have been reports of billions of rand being taken out of the country by the Guptas and while charges have been laid with the police, nothing seems to have materialised out of these cases.

Business Day reported on Monday that the National Prosecuting Authority (NPA) had failed to prosecute a R120m tax and customs fraud case linked to the Guptas 12 years ago.

South African Reserve Bank deputy governor Kuben Naidoo expressed his frustration about the lack of progress with exchange control contravention cases referred by the Bank to the police. He was speaking at a meeting of Parliament’s finance committee on Tuesday.

He said the Bank had handed over 41 cases of exchange control contraventions to the police for further investigation and prosecution over the past five to six years, but there had been only one significant prosecution. This was the case of a woman who was found guilty not of allegedly taking R2bn illegally out of the country, but of attempting to bribe a Bank official with R20m.

Committee chairman Yunus Carrim said he had heard that about 5,000 cases dealing with illicit financial flows had been reported to the police over the past few years, but only an “abysmal few” had been pursued. Police Minister Fikile Mbalula was also concerned about the lack of action, he said. The finance committee resolved

that an interministerial committee be established to drive the process of dealing with those guilty of illicit financial flows. Carrim said it was “extremely worrying” given the gravity of the crisis that the government had not proposed such a structure to deal with the lack of action by the prosecuting authorities, but that it had been left to Parliament.

All political party representatives on the committee agreed that not enough was being done by the authorities to curb the “obscene” amounts of money leaving the country illegally. “We are reaching the end of our tether in this matter. We want drastic action. We want to see some of the names in the public domain to appear in court. We are really fed up, to put it mildly,” Carrim said, promising that the committee would be pursuing the matter vigorously.

The committee is planning a meeting on August 29 to assess progress. The meeting will be attended by representatives of the Hawks, the police, the NPA, the South African Revenue Service, the Bank and the Financial Intelligence Centre. The trade and industry, mineral resources and the police committees will also be involved.

Bank governor Lesetja Kganyago said the Bank had laid charges, but prosecutors had declined to prosecute.

Naidoo said the Bank was often not able to curb illicit financial flows because it was a complex issue requiring the cooperation of numerous agencies locally as well as abroad as the payments often took place offshore and outside the national payments system.

“The system is not perfect and is not functioning as well as it should,” Naidoo said. “We are chasing the tail and the tail often wins.” However, the Bank issued about three to four forfeiture orders a month, amounting to R2bn-R3bn a year, for exchange control contraventions.

Kganyago strongly defended the independence of the Bank and said private ownership of its shares did not affect this in any way. Buying out these shares would be very costly, he said.

Attempts to get a response from the NPA were unsuccessful. Spokesman Luvuyo Mfaku said that he could only respond to questions as to what the NPA had done with regard to exchange control contraventions on a case-by-case basis.

He said the NPA could only prosecute cases submitted to it by the police.

No response was given by the Hawks.