Sketching a picture of the sophisticated workings of the state capture project globally, its impact on South Africa and the continent, House of Lords peer and anti-apartheid activist Peter Hain on Monday said about 5% of the global GDP (gross domestic product) amounting to $2 trillion (R29.5 trillion), was laundered each year by criminals.
While the true scale of the flagrant theft from the South African taxpayers’ money during the Jacob Zuma presidency could not be fully-quantified, Hain – in his submission to Deputy Chief Justice Raymond Zondo at the commission of inquiry into state capture – said direct and indirect costs of the phenomenon gripping the country stood at an estimated R1.5 trillion.
He warned: “Financial crime threatens the security and prosperity of the international community; and the global financial network.
“It undermines the integrity of financial systems and damages the international reputation of the states where it flourishes.
“Criminals launder vast sums of illicit funds every year; transforming their ill-gotten gains into seemingly legitimate assets.
“Developing countries seem particularly prone to forms of corruption and the abuse of their domestic financial and regulatory systems.
“They are also particularly unable to navigate the web of global money flows or to enforce reasonable standards of transparency and fairness in international business and banking.”
The impact, said Hain, left many countries “without the levers to prevent flows of illicit funds from their economy and so keep many of their citizens in perpetual and abject poverty”.
Turning to South Africa, Hain said state capture in the country was in part facilitated by “the massive complicity of international financial institutions, global corporates and foreign governments – in India, Dubai and Hong Kong”.
READ MORE: Lord Hain pleads with international community to acknowledge its role in state capture
He urged foreign governments and corporates to act in partnership with the South African National Treasury to recover the billions of rands looted from SA taxpayers – “much laundered abroad”.
“Having spoken under parliamentary privilege in the UK House of Lords in September 2017 to January 2018 on these matters, on the basis of interaction with whistle-blowers within the South African state and private sectors, my focus is upon the global dimension, especially money laundering, because without that, state capture could not have been as monumentally lucrative to its perpetrators as it so tragically has been.
“It is incumbent upon the relevant foreign governments implicated and their enforcement and regulatory agencies to resource and prioritise cooperation to bring to justice those responsible for the international looting from South African taxpayers.
“The same must be the case for the global corporates involved. But, so far, neither has happened,” said Hain.
He said the Gupta family’s corrupt activities formed part of case studies in his submission, with some banks and international consulting firms, forming part of enablers of state capture.
“While South Africa must reflect on the domestic changes it needs to make as a nation to prevent corrupt individuals infiltrating public offices and looting from the South African people, it is also crucial that the international community fully acknowledges the roles that various international actors played in the capture of the state.
“It was international actors who helped and continue to help corrupt individuals to enjoy the spoils of their illegality by offering them the means to move their ill-gotten gains out of South Africa – as in the Estina dairy farm scandal.
“It was international actors who helped corrupt individuals create complex corporate structures disguising the true ownership of funds and complicating the tracing and repatriation of stolen funds while earning fat fees out of the looting.
“It was international actors that provided refuge to corrupt individuals and the means to continue their activities through less regulated open economies.”
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