Apartheid’s economic crimes set stage for state capture, says Hennie van Vuuren in ‘Apartheid Guns and Money’

WHEN attempting to understand the phenomenon of corruption, our recorded history suggests a trajectory that starts with relatively small crimes and mismanagement in the Mandela era (think of the speaker of parliament, Baleka Mbete, and her fake driver’s licence).

This was accelerated under the Mbeki administration with the postapartheid multibillion-dollar arms deal with corrupt European arms companies. This was the first big scandal that rocked our politics.

It has undermined the constitutional order as public institutions were weakened to protect the corporations, their middlemen and South African politicians from prosecution for alleged crimes linked to the deal. This happened against the backdrop of narrow black economic empowerment and other types of collusive corporate behaviour, such as price fixing that have damaged the economy at the expense of the poor.

Jacob Zuma, a man implicated in over 783 acts of criminality linked to the arms deal, enters this timeline as proof of a country gone wrong, a politician allegedly steeped in the practice of corruption and patronage who now uses the might of state security to cling to power.

Missing from this analysis is an important prequel, an understanding of a crucial period in South Africa’s history from the mid- 1970s to the mid-1990s.

During this 20-year period a mix of factors gave rise to a perfect storm that left an indelible impact on our history and society. It was a time of unparalleled abuse of power. When the struggle for South Africa’s freedom was at its fiercest, economic crime not only festered but became state policy. Corruption, money laundering, sanctions busting and organised crime, the elements of such economic crime had become a necessity for the survival of the state.

This was not only a pattern of practice that would be inherited at the end of apartheid. Many of the actors that were corrupt under apartheid rapidly ingratiated themselves into the new order. This created a new elite pact based on criminality and corruption.

The arms deal is the most potent example of the devastating impact this new criminal class had on the country’s democratic institutions.

The old and the new were quickly interwined and found in each other partners and protectors.

Understanding the sanctions period, starting in the mid-1970’s, and the apartheid wars of the time are crucial to understanding why the democratic state was so quickly corrupted.

With a civil war in Angola raging and the securocrats under PW Botha in the ascendant, plans had to be made to circumvent these sanctions. Weapons were needed to make war and oil was needed to fuel an economy that had become part of the war effort. Such plans were devised by the securocrats under PW Botha, the influential bureaucrats in the security sector such as the military, the intelligence services and police who dominated government thinking at the time. This book sets out the implementation of this plan.

Firstly, heightened state secrecy was key to the plan, criminalising any reporting – be it by journalists or nominally independent oversight mechanisms – that could undermine the anti-sanctions effort. The security state became a central tenet of PW Botha’s administration.

In the process the public were fooled into complacency after the apartheid-era Information scandal of the late 1970s, which led to the promise of a new, cleaner and more ordered regime. In reality a new, more sinister, secret, money-forarms machine was developed by Botha’s securocrats. It was far larger than the Information scandal by an order of magnitude.

All government departments were drawn into the anti-sanctions effort in different ways. Within the defence force, the establishment of Armscor as the state-owned arms company was a crucial element. It established an international network to procure weapons and technology, which were reproduced or improved at home, tested in battle in countries such as Angola, and then subsequently marketed overseas to foreign clients as a source of foreign revenue.

Secondly, a secret economy was required that bound the interests of domestic corporations into the “anti-sanctions” campaign. Reliant on procurement by the state for its growing war economy, corporations were accomplices to the project of the NP: funding the party, defending the status quo and busting sanctions as required.

A key element of the secret economy was the covert channelling of oil to South Africa from across the globe by supplier countries, traders and shipping companies that reaped the profits from the premiums they were able to charge.

Thirdly, trusted banking allies were called on to keep the lines of credit flowing in the face of growing calls from the anti-apartheid movement that apartheid should no longer have access to easy money on international capital markets.

This was successful, thanks in part to the European lenders. However, the banks also played a far more sinister role. They acted as money launderers for tens of billions of rands (more than half a trillion rands in current values) used to purchase weapons on the international market.

The 1980s, which ushered in electronic banking systems connected via primitive internetlike networks that made the largescale, rapid movement of cash across the globe easy and instantaneous, could not have come sooner. Armscor, with requisite approval from the SA Reserve Bank and the executive, began to move cash between front companies in Panama and Liberia, with the complicity of one notable European bank in particular.

Fourthly, allies were called on to secretly lend a hand. The most important group were the Big Five permanent members of the UN Security Council, the most powerful nations on earth at the time and the biggest arms manufacturers.

France was an old ally that looked the other way despite a socialist president. The United Kingdom and the United States were far safer bets with the emergence of the conservative governments of Ronald Reagan and Margaret Thatcher. Their brand of neoliberalism wanted apartheid “reformed” without fundamentally challenging white rule. Within all these countries there is significant evidence of deep state networks at play – the confluence of interests between intelligence sectors, governments, corporations, arms producers and political parties.

At the other end of the Cold War spectrum we can reveal that the liberation movement’s traditional allies in the Eastern bloc, including Russia and China, were also finding ways to accommodate and trade weapons with the apartheid state.

Finally, we have found evidence of at least four dozen other countries that acted as proxies for the big powers in providing the apartheid state with weapons. They were located in Africa, Asia, Europe and the Americas. In turn, they were matched by the eager assistance provided by fellow pariah states such as Israel, Argentina and Chile, whose authoritarian regimes or domestic policies made them fellow outcasts and natural allies of the apartheid regime.

Support for apartheid South Africa relied on more than just racial solidarity: by the 1980s money was driving covert politics across the globe.

Apartheid Guns and Money: A tale of profit (Jacana) is available online and at bookstores nationwide