Columns 30.5.2016 08:01 am

When the ‘white collar’ is filthy

Citizen digital editor Charles Cilliers

Citizen digital editor Charles Cilliers

State capture? When you start looking more closely, it’s pretty obvious people like the Guptas have just been trying to capture a share of a state that’s long been captured by many others before them.

In the May edition of Noseweek (which is pretty old by now, sure, but I’m not here to try to break any news), financial journalist Barry Sergeant writes about Investec in much the same way that most other journalists write about the Guptas. He even accuses the financial services giant of “state capture” and says that Investec perfected the “game” of state capture long before any infamous Indian moguls compounded in Saxonwold started contemplating which ministers they liked best.

Over six brutal pages, Sergeant writes about how Investec was at the heart of frauds masterminded by the flamboyant corporate crook Brett Kebble – but somehow Investec managed to co-opt the National Prosecuting Authority (NPA) into selectively pursuing which cases get heard in court and which not. What Sergeant describes as a “scam” now worth R38 billion revolved around the troubled South Deep mine that is currently owned by Gold Fields.

He writes: “For a decade, South Africa has seen no prosecutions of serious white-collar crime. As a Durban attorney recently put it in private correspondence to a client: ‘The criminal justice system is in a state of collapse, and it would be a senseless waste of money for me to try to make it work.’”

At the heart of Sergeant’s allegations is the fact that a forensic accountancy firm called John Louw McKnight and Co successfully uncovered evidence that a number of parties looted the assets of the Randgold mining company and ran away with the spoils, and among them was Investec, which took a humble R106 million of the then R1.9 billion pie.

Sergeant is a master of the kind of financial journalism writing that hurts my head, but I understood the gist of it: that Investec used clever lending strategies using offshore accounts that they would prefer no one looks at too closely today.

The report from John Louw’s forensic accountants, though, does exactly that and is probably the reason why Sergeant was able to scoff at big financial powerhouses such as KPMG and Investec when they threatened him years ago that they would sue him. He’s written books on the subject since then and is still waiting to be sued. He says he would love to be sued, because then they’d have to examine the documents in court. But that’s not going to happen.

The man is yet to be dragged to court, despite the people he writes about having billions and him having an old leather hat.

By the time everyone realised several years ago that Kebble was crooked, by some miracle the NPA failed to submit the John Louw incriminating forensic report to the case’s chief investigators (in those years, the Scorpions).

If you’re wondering why I care about this, there are two reasons: the first is the media frenzy that surrounds the Guptas. We all love to hate them. But their biggest flaw, as far as I can tell, lies in their arrogance. They blatantly drop the names of the government bosses they have in their pockets; they know more about Cabinet reshuffles than anyone in Cabinet, and they’re not scared to advertise that. They tried to trade on their closeness to power. But that only made them enemies.

By contrast, there are few people who can easily name a single boss at a company like Investec, which hides behind its zebras (those stripes are apparently good camouflage on the savannah, you know) and its many sponsorships of many admirable or just well-publicised causes and events. Most people know a name like Ajay or Atul Gupta, and pictures of them now fill us with distaste because they apparently represent everything that’s wrong with South Africa.

But they’re just the obvious ones. It’s not just government; it’s not just gaudy Guptas that we need to worry about. It’s the fact that the country is, in Sergeant’s words, a “paradise for white-collar criminals”.

The second reason I care is that shortly before reading Sergeant’s story I actually signed a document that says I will be paying Investec a fixed amount for (probably) the rest of my working life so that I can earn interest tax free and have the good people there invest it for me.

I sent my young and well-meaning broker the article about Investec, expressing the concern that if any of the less palatable evidence about their past does ever end up before a judge, the company might not survive. He reassured me that, in that very unlikely event, they would then simply move the investment elsewhere and my money would be safe.

Ah. Really? How reassuring.

I was about to put up a fuss about it when he asked me: “Do you know of any investment firms that are totally clean, that don’t have any of these sorts of troubles hanging over them?”

I tried going through a list, but it wasn’t promising and it certainly wasn’t fruitful. My broker’s exact words on his later email were that “most financial services firms will have their issues”.

Quite the understatement.

But that’s how it is. And so I handed over my meagre bit of “investment money”, though part of me was thinking that at least the underside of my mattress has never stolen anything from anyone.

 

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