Picking on the small fry
When it comes to grey- and blacklists, some countries are more equal than others
First the good news: it turns out our National Prosecuting Authority (NPA) is world class. The bad news is world class isn’t up to much when it comes to nailing high-profile baddies — or rather, alleged baddies.
A week or so after the NPA’s case against all but one of the accused in the Nulane Investments court action fell apart, the UK’s Serious Fraud Office (SFO) had to abandon its prosecution of three former executives of the UK-based international security firm G4S.
The case against the men related to several years of overcharging the UK ministry of justice for electronic tagging of offenders. In 2014, G4S agreed to repay £109m plus VAT for overcharging on contracts dating back to 2005.
In addition to that civil settlement, in 2020 G4S had to pay a penalty of £38.5m in terms of a deferred prosecution agreement relating to the fraud. It was also required to implement corporate reforms and co-operate with the SFO investigation into its former executives. In exchange the company was granted amnesty.
After 10 years of investigation and given that G4S had accepted responsibility for fraud, the case against the executives seemed straightforward. It was anything but, or at least the SFO’s handling of it was anything but. Legal commentators said the long investigation was blighted by delays, mismanagement and confusion.
The case collapsed without any evidence being heard.
It wasn’t the first time the SFO failed to prosecute individuals involved in high-profile corporate wrongdoing. Not even the first time it failed after the company signed a deferred prosecution agreement. In fact, the SFO has never successfully prosecuted individuals.
An analysis of SFO failures will be chillingly familiar to South Africans accustomed to hearing criticisms of the NPA.
However, to its credit the SFO has secured significant success against companies, the most recent being Glencore, which had to pay £281m in fines, confiscated profits and costs as punishment for “sustained criminality”. All of that criminality involved bribery in one or other commodity-rich African country.
The SFO is still considering whether to pursue related charges against 11 former Glencore employees. After its spectacular G4S failure, it’s unlikely the individuals are suffering many sleepless nights.
It seems in this regard the UK is not unlike South Africa; it has all the laws it needs to tackle financial crime and illicit finance but lacks the capacity to enforce them.
But here’s the thing: the SFO’s botched handling of criminal prosecutions against high-profile individuals is no doubt an embarrassment to the UK government, but it won’t be used in an assessment of whether the UK should be added to one or other of the greyor blacklists drawn up by the OECD, the Financial Action Task Force (FATF) or the EU.
Sadly, the NPA’s botched handling of the Nulane case will be used to confirm the
FATF’s decision last month to place South Africa on its antimoney-laundering greylist. More worryingly, it will probably be used to justify the EU’s almost inevitable decision to add South Africa to its antimoney-laundering (AML) list before the year is out.
The EU list is even more whimsical than the FATF’s. For a start, all 27 EU members are excluded, which is inappropriate given that the EU is home to so many of the world’s leading money-laundering centres.
As one analyst noted, Cyprus and the Baltic states were the main transit countries for most Russian money-laundering. Remember the €200bn Danske Bank affair in 2018? It was the biggest money-laundering scandal in EU history but none of the complicit countries will feature on EU lists.
The former president of the Central Bank of Cyprus reckons almost all the recent EU money-laundering scandals originated in Russia or the former Soviet Union. But until recently Russia didn’t feature on any grey- or blacklist, and that is because it is powerful and the world’s third-largest oil producer. Last month, the EU added Russia to its tax blacklist and it’s likely to be added to the AML before the year’s out.
When you’re strong and oilrich, you have to invade an innocent country to get on a list. But when you’re a developing former colony with declining international political clout and an inept prosecutorial body, it doesn’t take quite so much.