State cap­ture, apartheid style

A new book by Hen­nie van Vu­uren delves into the murky deal­ings be­tween the apartheid gov­ern­ment, lo­cal busi­ness­men, for­eign arms deal­ers and un­scrupu­lous Swiss bankers.

Finweek English Edition - - ON THE MONEY BOOK REVIEW -

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1985. A South African Air­ways Boe­ing has just touched down in Switzerland. It’s filled with gold.

The apartheid gov­ern­ment is facing a sig­nif­i­cant debt cri­sis, ex­ac­er­bated by Pres­i­dent P.W. Botha’s re­cent Ru­bi­con speech. It owes a lot of for­eign banks money it can’t re­pay. Gov­ern­ment debt has in­creased by 50% in the first half of the 1980s and the banks are clam­our­ing for their money.

Di­rec­tor-gen­eral of the Trea­sury at the time, Chris Stals, es­ti­mates that the gov­ern­ment has enough US dol­lars to sur­vive a few weeks.

A small Swiss bank gets wind of the SAA Boe­ing and at­tempts to con­fis­cate the plane and its pre­cious cargo as payment against the debt owed to it by the South African gov­ern­ment.

“Dur­ing the course of the day Dr Senn of UBS, who was a great friend of SA, bought the bank,” re­calls for­mer fi­nance min­is­ter Barend du Plessis. “He never told me the name of the bank as it was con­fi­den­tial at the time – and he fired the very brave CEO.”

Talk about friends hav­ing your back

The chief ex­ec­u­tive of fi­nan­cial ser­vices firm UBS bought a bank to save the apartheid state the em­bar­rass­ment of hav­ing a plane full of gold bul­lion con­fis­cated on a Swiss run­way. As Du Plessis says, Niko­laus Senn was a “great” friend of the pre­vi­ous regime. (See box.)

This lit­tle anec­dote from aca­demic and civil so­ci­ety ac­tivist Hen­nie van Vu­uren’s new book, Apartheid Guns and Money, is very in­struc­tive on the sym­bi­otic re­la­tion­ship be­tween bankers and the apartheid state, which he de­tails at length in his 610-page tome.

Prof­it­ing from apartheid

Be­tween 1968 and 1990 Switzerland was at the cen­tre of the world gold mar­ket due to its re­la­tion­ship with the apartheid state. In some years it pur­chased or sold up to 80% of South Africa’s gold out­put.

“Un­sur­pris­ingly some of the largest Swiss pur­chases of gold oc­curred dur­ing some of the apartheid regime’s most se­vere crises,” writes Van Vu­uren. “The 1976 Soweto upris­ing, the need for en­riched ura­nium in 1981, the debt reschedul­ing in 1985 and the liq­uid­ity crises in 1983 and 1988.”

As Van Vu­uren writes, “there was a for­tune to be made in mis­ery”.

Switzerland acted as a base for South African fi­nan­cial op­er­a­tions, with the apartheid gov­ern­ment open­ing a fi­nan­cial con­sulate in Zurich in 1987, and many South African companies trans­fer­ring their for­eign as­sets there.

In 1987, An­ton Ru­pert’s Rem­brandt es­tab­lished Richemont in the Swiss town Zug, and in 1990 De Beers put its for­eign as­sets in a hold­ing com­pany in Lucerne.

This con­nec­tion be­tween Swiss bankers, the apartheid state and cap­tains of in­dus­try in Cor­po­rate SA is vitally im­por­tant.

As Van Vu­uren points out in his book, the pri­vate sec­tor has not atoned for its in­volve­ment in and gains from apartheid. Its state­ments be­fore the Truth and Rec­on­cil­i­a­tion Com­mis­sion were hardly suf­fi­cient.

“The in­dus­try bosses who, like Jo­hann Ru­pert were bold enough to ap­pear at the hear­ings, tended to shift the fo­cus to their hum­ble ef­forts in op­pos­ing apartheid and their cor­po­rate char­ity pro­grammes.”

Be­tween 1968 and 1990 Switzerland was at the cen­tre of the world gold mar­ket due to its re­la­tion­ship with the apartheid state.

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