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Challenge 'secrets' ruling on apartheid era records

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FINANCIAL CRIMES  SA Reserve Bank told it does not have to divulge information
FINANCIAL CRIMES SA Reserve Bank told it does not have to divulge information

As a country we cannot deal with corruption if institutions such as the central bank are shielding information on apartheid-era criminals, writes Michael Marchant and Nobukhesi Zulu

In recent days the public thirst for the truth of apartheid’s secretive networks has again been laid bare.

As a new generation of South Africans are learning about the apartheid propaganda machinery Stratcom and as accusations fly, the urgency of engaging in an evidence-based and informed discussion of our history is felt.

We often assume the democratic government would be eager to expose the corruption of the apartheid state and the individuals on whose shoulders it stood.

Astonishingly, some state institutions always defer to secrecy – and this means they in turn also shield the apartheid machinery from scrutiny.

A glaring example of the continued protection of apartheid-era records exposing the activities of economic criminals is in the case of the SA History Archive (Saha) and the SA Reserve Bank (Sarb).

Saha, in partnership with Open Secrets, first submitted an access to information (according to the Protection of Access to Information Act) request to the Sarb in 2014.

The request was an attempt to access records related to the central bank’s own investigations into individuals implicated in apartheid-era financial crimes.

It was one of many such requests to various state departments that led to the declassification of records and informed the research for Apartheid Guns & Money, the book that revealed the sinister criminal economy that supported apartheid.

The requests were for files on eight named individuals, known to have been involved in dodgy dealings.

Apart from three, Sarb maintains that no such records exist, despite it being its mandate to monitor carefully and control money flows in and out of the country at the time.

In relation to the remaining files that do exist, the Reserve Bank was resistant about releasing any records it held and, after three years, Saha was left with no option but to go to court.

The matter was first heard in August 2017.

Just two days before South Africans celebrated Human Rights Day in March 2018, the Johannesburg High Court delivered a judgment that not only set back civil society’s struggle for the right to access information from the state, but one that will have a chilling effect on our capacity to use the courts in this struggle.

The judgment, announced on March 19 and labelled “not of interest to other judges” and not reportable, summarily dismissed the argument that accessing information about economic crimes from South Africa’s past is of any significant public interest.

The apparent reasoning is that these events occurred “decades ago”.

Such a narrow view of what South Africans have the right to know should be widely rejected by all of us.

The economic crimes and corruption of our past are in many cases intimately linked to our struggles against these issues today.

Understanding and revealing the networks and criminal systems of our past is an essential tool in preventing them from shaping our future.

The judgment is disappointing in its refusal to grapple with these questions, relying on the time period in question to dismiss the public interest argument.

Beyond the importance of accessing these specific records, the court has dealt a deeper blow to the principle of constitutional litigation.

Not only did it reject Saha’s application, but it ordered the nonprofit to pay the full costs of the Reserve Bank’s counsel. No reasoning as to this punitive measure was provided in the written or verbal judgment.

Orders of this nature have been previously rightly rejected by the Constitutional Court in the Biowatch case, based on the fear that costs orders would create a “chilling effect” on parties litigating on constitutional issues.

Saha’s case is clearly such a case given that the right of the public to access state records is at stake.

The costs order in this case could be potentially ruinous for a nonprofit committed to documenting our past and defending the country’s archive.

Such an order should be challenged, not only because it could be ruinous for Saha, but because it will have a chilling effect across civil society.

The judgment is thus regressive in two crucial ways.

Not only does it reject the public interest in fully understanding our past, but it imposes a punitive sanction on an organisation litigating a constitutional issue in the public interest.

These issues alone are reason enough to be concerned and Saha has filed for leave to appeal the judgment in its entirety.

In this debate about the important principles at stake, it is worth remembering the exact nature of the individuals in question that Sarb has been steadfast in protecting during this process.

The Reserve Bank confirms that it holds investigative records related to the following individuals, but still refuses to disclose them. Who are they?

. Vito Palazzolo is a one-time Italian banker who was sentenced in Switzerland for his role in money laundering for the Sicilian Mafia through cocaine and heroine smuggling in the 1970s and early 1980s. While in prison, Palazzolo was able to secure a Ciskei passport through National Party MP Peet de Pontes and fled to South Africa. Noseweek has alleged that Palazzolo found such an easy welcome in both the Ciskei and South Africa because of the Ciskei’s importance as an intermediary in the movement of covert funds from South Africa. Crucially, the Sunday Times has reported that Palazzolo was described on an internal Reserve Bank document of the time as a “highly exceptional case” and that unnamed senior authorities had intervened to authorise the bending of exchange control rules to allow R14.5 million in financial rands to be released to him (the standard limit for immigrants at the time was R100 000).

. Robert Hill was a South African businessman who fled the country in 1988 to avoid alleged foreign exchange fraud charges amounting to R170 million. There were more than 500 individual fraud charges, including those involving an alleged financial rand scam through the forgery of Eskom bonds.

. Brigadier Johann (Jan) Blaauw was part of the apartheid military establishment before starting his own business as a middleman in the international arms trade from the 1970s, in violation of the UN arms embargo. He attended a meeting in 1976 when senior South African Minister Fanie Botha concluded a deal with the Israeli government to provide the government with 500 tons of uranium (yellowcake) in return for 30g of tritium, the radioactive substance used in thermonuclear weapons. Blaauw and Botha were subsequently in a public spat in which Blauuw was accused of extorting Botha into granting him a lucrative diamond concession on the coast of South Africa and Namibia. Blaauw is deceased.

Thus, Sarb has fought for four years to avoid releasing their records of investigations into a convicted fraudster, an alleged fraudster and a sanctions-buster, all of whom made a profit off the apartheid system.

Both Palazzolo (in a high-security Mafia prison in Italy) and Hill were given notice of the proceedings, but neither decided to engage in the process.

As South Africa grapples with what is popularly termed “state capture”, these characters are clear reflections of the middlemen and business people that have been revealed to be at the centre of state capture networks and corrupt deals.

The notion that we do not need to interrogate these actors from our past, interrogate their behaviour and understand these illicit networks is clearly contradicted by the fact that these behaviours are so familiar to us now.

If there was an institutional failure by Sarb to adequately address potential crimes at the time, it is in the public interest to know, question why this occurred and consider its implications for building anticorruption institutions today.

Sarb’s conduct and this disappointing judgment have the effect of shielding the Reserve Bank from public scrutiny and denying the public access to records that will inform us about the longer shadow of economic crime from South Africa’s past until today.

This is why Saha’s appeal is so important and why the quest to release apartheid era records must continue.

Marchant is a researcher at Open Secrets and Zulu is the freedom of information programme coordinator at Saha

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