Banks, regulators respond to explosive ‘gold mafia’ claims
An explosive Al Jazeera investigation has alleged that staff at three SA banks have been aiding and abetting a global gold smuggling ring by laundering money in exchange for bribes.
The Doha-headquartered news organisation reported on Thursday that staff at Standard Bank, Absa and Sasfin had been on the payroll of Mohamed Khan, a reported accomplice of cigarette magnate Simon Rudland, who is alleged to be the kingpin behind multiple Zimbabwean gold smuggling gangs. These are said to smuggle gold into SA, the proceeds of which are allegedly laundered through Khan’s companies Salt Asset Management and PKSA before being transferred to offshore bank accounts.
Citing “thousands of documents and interviews” with former colleagues of Khan, who is known in the underworld as “Mo Dollars”, Al Jazeera reported that corrupt officials at the three banks assisted him in making dodgy money transfers while scrubbing bank computer systems of evidence. In exchange, they allegedly received bribes ranging from monthly cash payments to overseas holidays and home renovations.
The Financial Sector Conduct Authority (FSCA), one of SA’s two main finance regulators, told Business Day it is investigating certain of the nonbank entities named by Al Jazeera.
However, the FSCA directed questions about the alleged involvement of Standard Bank, Absa and Sasfin to the Prudential Authority (PA), which oversees the banking industry.
“We have ongoing investigations related to certain nonbank entities named in the [report] but we are unable to comment further due to these being open investigations,” the FSCA said.
“The FSCA would recommend that the questions on the banks be directed to the PA.”
The PA said it does not comment on matters relating to the institutions it regulates “as a matter of policy”. Nevertheless, the PA said it views the allegations in the Al Jazeera report “in a serious light and is giving due regard thereto.
“The PA has made significant progress in strengthening its AML/CFT [anti-money laundering and counterterrorist financing] supervisory oversight of banks and will use to its disposal a wide range of enforcement measures for noncompliance with AML/CFT obligations where deemed necessary,” the regulator said.
The sensational allegations by Al Jazeera’s investigative unit
stem from a four-part series entitled Gold Mafia that links Khan’s financial services firms to Rudland’s Gold Leaf Tobacco, which has also been accused of involvement in the illicit tobacco trade. The report claims Khan uses fake invoices and IDs to facilitate the transfer of millions of dollars obtained through illicit activities to offshore bank accounts held in Dubai, Mauritius, Switzerland and the US.
The money is allegedly laundered through Khan’s local financial services firms by claiming the illicit funds are in lieu of tobacco, clothing and gold imports that never actually enter SA.
Gold Leaf Tobacco told Business Day it denied the allegations “in the strongest terms”, describing them as “scandalous and injurious” to both Rudland and its business.
It said it intended instituting legal action against Al Jazeera “in all relevant jurisdictions that may apply.
“Neither Gold Leaf Tobacco nor Mr Rudland have any knowledge of, nor had any dealings with, any officials linked to any of the banks you mention,” Gold Leaf Tobacco told Business Day. “Mr Rudland emphatically denies any involvement in gold smuggling, money laundering or any associated activity.”
Among those named in Al Jazeera’s report are the former head of Sasfin’s foreign exchange department, who reportedly received $1,600 a month to facilitate money laundering through the bank. The report alleges that a former Sasfin IT technician would ensure that fraudulent transactions were wiped from the bank’s digital systems.
Al Jazeera also named a former financial surveillance manager at Sasfin and one of the bank’s new business executives. These bank officials were allegedly each paid bribes of between $800 and $3,200 every month.
Sasfin told Business Day it proactively closed Gold Leaf Tobacco’s accounts after identifying suspicious transactions related to the company and reported the relevant information to the authorities. It did not say when this occurred.
“Ongoing surveillance subsequently resulted in the closure of other implicated accounts,” Sasfin said.
“Decisive action has been taken against those implicated, including the laying of criminal charges. We continue to work with the relevant authorities involved in ensuring that all these participants face justice.”
At Absa, Al Jazeera alleged that a relationship manager was bribed $800 a month to open fake accounts to facilitate money laundering. Absa told Business Day it had detected alleged illicit tobacco and gold-based money-laundering activities in early 2020.
“Subsequent investigations uncovered a broad network, which linked the illicit tobacco trade and gold-based moneylaundering activities,” Absa said.
“Absa has been working with multiple law enforcement agencies on this matter and has fully discharged its regulatory reporting obligations.”
Al Jazeera also named a senior compliance officer at Standard Bank who it said ensured Khan’s companies received the documentation needed to evade regulatory scrutiny.
“Standard Bank has a zerotolerance stance relating to fraud and criminality of any kind and will report and assist in any lawful investigation,” the bank said in response to questions.
“These allegations are viewed in a serious light and Standard Bank confirms that due process is being followed internally with regards to the matter.”
Questions sent to the National Treasury had not yet been answered at the time of publication. No working website or contact details could be found for Salt Asset Management.