South Africa Watch

How banks delivered Zuma to state capturers


At closer scrutiny the latest revelations about President Jacob Zuma’s selling out to state capturers, patterns and threads emerge which can be traced to at least apartheid times.

When joining all the dots it also becomes clear how South African banks, starting within a year after him becoming the ANC national chairperson in 1994, delivered him as a soft target for state capturers. In 1995, for example, he was granted a bond despite having defaulted on a bond with a different bank only months earlier.

This happened in conflict with the bank's own internal rules. As Mr Zuma was drifting deeper and deeper into financial stress, it became a pattern with several of the banks.

In the case of at least one bank, there was very little ethical or moral, difference in their motivation in affording him special treatment on the basis that he was "politically and strategically valuable.”

Drifting into financial trouble

In December 2012 the Mail & Guardian published an article which described how he “spent far in excess of his salary, buying properties and cars on credit, repeatedly exceeding his bank overdrafts' limits and defaulting on his debts.”

While the banks often flouted their own rules, and tolerated his actions, his then “financial adviser,” Schabir Shaik, often intervened with promises that benefactors would step in to repay his debts. but it did not always happen.

In 1997 Standard Bank put its foot down, cancelling his credit card and obtaining a court order against him, just to abandon it the next year. By 2005 the bank dropped the pursuit of a R128 300 overdraft and wrote off his bond of almost R200 000 as bad debt.

This pattern repeated itself with FNB, Nedbank and ABSA. It adds up to a situation turning Mr Zuma into what a 2006 forensic report by KPMG described him as a “kept politician.” It also reveals that Mr Zuma’s financial “difficulties” started as early as January 1995.

The KPMG forensic report was the main building block on which the trial and eventual conviction of Shaik rested, and so does the, at this stage withdrawn corruption charges, against Mr Zuma.

Weapons trade

The charges on which Shaik was convicted, and those against Mr. Zuma under review with the National Prosecuting Authority (NPA), all relate to South Africa’s weapons procurement programme, embarked on in the 1990s.

In this regard it is fascinating to, now again read a report by Noseweek of September 1994 under the headline “A cute little bankhaus in Bisho.”

The report posed the following questions: “In the 80s, at the time of the international banking freeze on South Africa, were tons of drug dollars laundered through Ciskei to pay for apartheid South Africa’s “hot” trade in arms, oil and other international sensitive commodities? Perhaps even flown in plane loads to Ciskei’s “International” airport, to be banked at a mysterious small bank with mafia and spy connections?

“Or, was the mere threat of such competition from Ciskei-based operators enough to persuade the South African conventional banking sector to “wash” the dirty money themselves – leaving buccaneer hopefuls from Pretoria, like Albert Vermaas and Eugene Berg with no role, except as scapegoats for a show of law enforcement?”

The report tells of a “Geheime Kamer,” (secret room) a soundproof room in then Volkskas Bank’s Pretoria headquarters where, billion-rand currency transactions were done, unrecorded.

While convicted criminal and self-confessed gangster Glen Agliotti features strongly in the latest revelations surrounding Mr. Zuma, and claims how boasted to other underworld figures about his influence with Zuma and that Zuma “is a gangster like us,” while attempting to put together a cigarette smuggling operation, another reputed gangster, with Mafia connections, featured strongly in the 1980s. 

Vito Palazzolo, a Sicilian-born money launderer and banker to the Mafia, came to the Ciskei in 1985. According the Noseweek report, he was recruited to help setup a a national bank in Ciskei. A circle of senior officials and conmen surrounding the Minister of Information, Dr Connie Mulder and the Director-general of Information, Dr Eschel Rhoodie, were planning to set up an “independent” bank in the then ‘homeland,’ as a channel for covert funds.

Within a month of Palazzolo’s arrival, he was trying to organise the shipment of arms supplies, embargoed in France, to South Africa.

Nuclear connection

And, while alleged secret deals between the Zuma/Gupta network and Russia on nuclear power is presently also strongly in the news, the 1994 report, amongst other, states about the 1980s developments: ”At about that time David Kimche, described as Mossad’s leading force in Africa, and  Israel’s real-life equivalent of Le Carre’s spy character, Smiley, appeared on the scene.

“Kimche became a close friend of … Dr Rhoodie, when Rhoodie headed one of South Africa’s most important secret projects: code-named Operation David, it encapsulated the secret collaboration between the Apartheid State and Israel. The pebble in this David’s sling was, of course, The (nuclear) Bomb.”

And, while reports have it that the present Minister of Finance, Malusi Gigaba, when serving as Minister of Home Affairs, fast-tracked the Guptas’ residence permits, Palazzolo had similar ‘luck’ in the 1980s. 

Attorney Peet de Pontes, National Party member of parliament at the time, arranged Palazzolo’s migration to the Ciskei, which he achieved by absconding from jail in Switzerland and flying to South Africa on a false passport. 

Ironical twist

In an ironical twist to the 1980s developments, in September 1989, as reforms and moves for a negotiated political settlement in South Africa gained traction, and barely a month after F.W. de Klerk became president of South Africa, Palazzolo was issued a visa to re-enter South Africa to testify for the prosecution in a fraud charge against De Pontes.

De Pontes was convicted in January 1991 after, with help of Palazzolo’s testimony, prosecutors proved that he has assisted in the illegal immigration of an Italian financier, being Palazzolo.

With the flood of leaked information surrounding the so-called Zupta-gate, and the 2006 KPMG-report due to come under detailed scrutiny, if or when the 700-plus charges against Mr. Zuma are reinstated, he just might be hit by a similar ‘irony.’

by Piet Coetzer

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