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Imagine a time when South Africa has been lifted out of greylisting, no longer under the scrutiny of international watchdog the Financial Action Task Force (FATF); the Guptas are in custody or facing trial for their alleged part in state capture; all necessary processes are being followed to the tee to ensure justice; and the many whistle-blowers who testified before the Zondo commission are not only vindicated, but fully protected and supported by government.

President Cyril Ramaphosa and some members of his executive would like us to believe that all these scenarios are within reach, but the reality is that the prospects look more daunting than most South Africans would have expected.

The first state capture case, built by the National Prosecuting Authority’s (NPA) Investigative Directorate (ID) on fraud and money laundering allegations relating to Gupta-linked company Nulane Investments in a R24-million Free State government contract in 2011, has resulted in the acquittal of the six accused. The acting judge who discharged the case, Nompumelelo Gusha, scolded the NPA for its failure to prove common purpose in the fraud charges against Nulane, headed by former Transnet board member and close associate of the Guptas, Iqbal Sharma, who is also one of the accused. The others include current and former officials of the provincial government.

The case also forms the basis on which the South African government applied for the extradition of Gupta brothers Rajesh and Atul from the United Arab Emirates (UAE) last year, who were reportedly arrested at the time following the issuance of a red notice against them. It was only on 6 April this year, almost two months after it happened, that the South African government learned that not only had the pair been set free by the UAE authorities, but that its extradition request had been denied on 13 February. The brothers were meant to join the accused in the Nulane case, which was billed as the entry point to bigger ones being built by the ID in an effort to bring the family to book for their alleged multitude of crimes related to state capture.

National embarrassment

The Nulane case failure comes just as we were starting to get used to the glut of embarrassments relating to the extradition: the Department of Justice has admitted that it knows nothing of the Guptas’ whereabouts following the February ruling, and was just as surprised as anyone that the UAE authorities view them as citizens of the South Pacific island of Vanuatu, and not South Africa. The announcement by Justice and Correctional Services Minister Ronald Lamola, sprung on us on Good Friday morning, was followed by a series of promises that all would be done to continue to pursue extradition.

All these developments are a blow to law enforcement’s efforts in holding the alleged state capture players accountable, but nonetheless should not be viewed in isolation from all others that point towards bad governance decisions by our government. The recent greylisting of South Africa by the FATF – an organisation that monitors enforcement against illicit financial practices, including money laundering, around the world – also happened in February. The FATF declared South Africa’s greylisting on the basis that the country had failed to meet set standards for compliance in the management of, among other areas, the anti-money laundering environment. 

Back in 2021, the FATF found that South Africa failed in 20 out of 40 standards and in all 11 of the measures to combat money laundering that had been set against an early 2023 deadline. Granted, government has made some strides, including pumping funding into the NPA (R1.3-billion) and the Financial Intelligence Centre (over R265-million) for each institution’s efforts towards the country’s money laundering framework. Furthermore, the General Laws Amendment Act and the Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act were promulgated in 2022. Corruption Watch made submissions prior to the promulgations over the haste in developing the General Laws Amendment Act, citing the impact on its effectiveness. 

Despite these inroads, however, the two incidents – damaging to the country’s reputation – occurred, incidentally, within days of each other, with little in the way of accountability from the executive for such major faux pas.

UAE uncooperative

Lamola argued during his press conference on Good Friday that it was through no fault of any one person in his office or in the law enforcement sector that the extradition application failed. If anything, he inferred, the circumstances surrounding the hearing of the matter, and the ultimate judgment – handed down in February – pointed to a UAE judiciary that was unsympathetic to South Africa’s cause to hold the alleged state capture masterminds to account.

“This level of non-cooperation is highly unprecedented,” he said, going on to declare that South Africa was “being denied justice”. Granted, the minister further pronounced that his office would be taking steps to appeal the decision by the UAE authorities – which the country says was made because of a technicality regarding the warrant of arrest. But the damage, both to the country’s reputation and public confidence in the justice sector, has been done.  

Lamola’s counterpart in finance, Enoch Godongwana, had this to say when the FATF delivered its statement on the greylisting, which effectively gives South Africa a window period for remedying its laws and practices to counter illicit financial crimes: “We accept they’re not a quick fix, but the time that we’ve got to fix it is sufficient enough. Mind you, we’ve been given almost two years. A period from now until 1 January 2025. But our own assessment is by the middle of next year, we would’ve exited.” He was being interviewed on 702.

Godongwana’s enthusiasm is shared by President Cyril Ramaphosa, who has declared that his administration has a clear plan to meet the FATF’s required standards to exit the greylist. Whether or not we make good on these plans and manage to exit the greylist remains to be seen, but it’s important to note how we got here, and why it may take far more than just encouraging words from Ramaphosa and Godongwana to allay South Africans’ misgivings.

Better organised than government

Back in 2018, at the beginning of the state capture commission’s hearings, the Guptas – through their legal representatives – wrote to the chairperson, Chief Justice Raymond Zondo, following allegations raised in the public protector’s State of Capture report. They requested to testify under terms that did not involve setting foot in the country. One of the options they presented was for their testimonies to be heard via video conference from their base of Dubai, while another was for the commission to consider sending a team to that country to hear their version. Zondo refused this outlandish request, telling the brothers that if they wished to put their versions forward, it would have to be at the hearings venue, as this was within the commission’s jurisdiction.

Around this period, the NPA had its sights on the brothers, and they faced arrest in relation to another Free State-based case, related to the Vrede dairy farm corruption matter that had at that point been enrolled in the Bloemfontein High Court. What the NPA may or may not have missed is that the brothers’ request on Zondo may have well been a calculated tactic to test whether or not extradition was within its plans.

Also around this time, the FATF clock had started ticking, indicating that South Africa had to act decisively within a certain period to meet its standards and its deadline.

Several revelations before the Zondo commission make the Gupta case a unique one in relation to what the local authorities had to focus on, both in moving to apply for extradition, and to speed up its efforts to mitigate greylisting:

  • The testimony of Shadow World Forensic Investigators director Paul Holden in 2021 points towards an intricate money laundering operation by the Gupta enterprise of companies and associates during the period investigated by the commission. Holden quantified the loss for the country to some R54-billion in terms of the alleged state capture crimes engineered by the enterprise, about R16-billion of which left the country through the international money laundering scheme.
  • The mechanics of Gupta associate Salim Essa’s dealings – on behalf of the Gupta enterprise – with foreign companies either involved in, or associated with major infrastructure tenders in Transnet. These would include an alleged dubious relationship with China South Rail (a company that bid, and won, a portion of the manufacturing contract that was part of Transnet’s R54-billion locomotives acquisition campaign); an alleged dubious relationship with China Development Bank, which was involved in the financing structure for the same project; and Tequestra, a Hong-Kong based advisory firm listed with Essa as a director, through which he allegedly orchestrated part of the funding scheme for the Transnet procurement. All these revelations came out during the testimony of expert witness Tshiamo Sedumedi of MNS attorneys, the company that was commissioned by the former Transnet board to carry out a forensic investigation into Transnet’s locomotives procurement deal.
  • In the Denel stream of evidence, it was revealed that the establishment of Denel Asia was for the benefit of the Gupta empire, which at the time included a company called VR Laser. A previous director of the latter testified that he was the victim of a hostile takeover by Gupta associates Iqbal Sharma and JP Arora. Former Denel GCEO Riaz Saloojee testified that the strategy behind establishing Denel Asia was to have a subsidiary that could operate under Denel, in the Indian market, “making them (the Guptas) substantial amounts of money”.

We can keep watching this space to have a view of government’s efforts to lift South Africa out of the grey list, but without effective criminal investigation and prosecution of those alleged to have taken part in the illicit crimes that we committed to fighting with the FATF, we run the risk of being viewed as a country that is doomed to fail in bringing corruption under control.