Parliament – National Director of Public Prosecutions Shaun Abrahams on Thursday indirectly accused former finance minister Pravin Gordhan of hampering the fight against illicit money flows and money-laundering by failing to establish a special advisory council provided for in the previous version of the Financial Intelligence Centre Act (Fica).
At a media briefing by Justice Minister Michael Masutha, ahead of his department’s budget vote, both the minister and Abrahams said prosecution of financial crimes had suffered because successive finance ministers never set up the council.
Masutha said the body was critical to ensure that illicit financial dealings were not merely identified, but actually referred to law enforcement bodies for investigation. It was of concern that the amended version of the act did away with the council, he added, and suggested that it should be reintroduced via regulations.
“Since the council was envisioned in 2002 in legislation it was not caused to come to life and that was a fundamental mistake. The onus was on the ministers of finance during the entire period of 15 years while Fica existed for the council to come to life because they were responsible for the administration.”
Abrahams added: “The challenges that we face today as a country in our ability to combat money-laundering, illicit financial flows and terror financing is a as direct result and I say this respectfully of various finance ministers failing to constitute or have constituted the Counter Money-Laundering Advisory Council.”
He said the Financial Intelligence Centre Act had placed a strict responsibility on the finance minister to appoint a chairman to the council, so that the chairman could formally constitute the council.
The council was meant to include the director generals of finance and justice, the commissioner of the South African Revenue Service and the governor of the Reserve Bank.
The briefing continued to other subjects, but Abrahams interrupted Masutha to say Gordhan was responsible for the fact that an attempt to hold the inaugural meeting of the council in January had failed because he did not abide by the regulations governing it. These determined that the meeting needed to be chaired by one of the members, but Gordhan had asked the then deputy minister of finance, Mcebisi Jonas, to chair.
“There was an attempt to convene the advisory council in January but the council had not been properly constituted. The meeting could not constitute a sitting of the council because no chairperson had been appointed by the minister.
“In fact the minister had requested the deputy minister to chair the meeting but the law does not empower the deputy minister or the minister to chair the meeting so that was pointed out…. We cannot the label the meeting a meeting of the council, it would be irregular.”
Masutha said he had brought the subject with Gordhan’s successor as finance minister, Malusi Gigaba.
“We had a conversation meeting with the new minister of finance to try and improve co-operation in this regard. We will be approaching Cabinet possibly collectively with proposals to remedy the weaknesses that have bedevilled the functioning of the Fica system.”
Abrahams is best known perhaps for announcing late last year that Gordhan would face fraud charges related to the early retirement and re-employment of former SARS deputy commissioner Ivan Pillay. The charges were widely viewed as politically motivated and were later dropped.
Asked about his remarks after the briefing, he said “I’m not taking a pot shot at anybody”, but reiterated that Gordhan had failed to follow proper procedure and that without the council, there was no way of holding the Fica accountable.
“Every effort must be made to retain this council otherwise we are going to continue to face the challenges that we have been facing.”