Johannesburg - As the country scrambles to avoid being greylisted by international financial institutions, the robbery at President Cyril Ramaphosa’s Phala Phala farm involving millions of undeclared foreign cash in his private residence might push the country over the edge.
This is the view of Econometrix chief economist Azar Jammine, who was reacting to the Mutual Evaluation Report by the Financial Action Task Force (FATF).
The global money laundering and terrorist financing watchdog has raised concerns about the country's significant deficiencies in anti-money laundering/combating the financing of terrorism (AML/CFT) systems, which could result in a greylisting.
“The whole Phala Phala story is a classic manifestation of the concern that FATF and international investors have about our ability to control money laundering,” said Jammine.
The scandal came to light when the former head of state security Arthur Fraser laid a charge with the Rosebank police station over the alleged concealment of the crime.
In his affidavit, Fraser accused Ramaphosa of failing to report the robbery at any police station and instead asked the head of the Presidential Protection Unit Whally Rhoode to trace the robbers and retrieve their loot.
Fraser claimed that five robbers were tracked and apprehended and allegedly tortured to reveal where they had stashed the stolen money.
And that after some of the stolen money was retrieved, the robbers, including Ramaphosa’s domestic worker were paid R150 000 each to buy their silence and not to reveal any information about the theft.
Ramaphosa is currently under pressure to answer questions such as:
– How he obtained the money?
– Why was it kept in his house?
– Whether or not it was declared to the relevant financial authorities such as the South African Reserve Bank (SARB) and the South Africa Revenue Services (Sars).
– Why the break-in and theft were not officially reported to the police?
Responding to questions in Parliament on August 30, Ramaphosa declined to entertain questions about the Phala Phala saga saying that it was being investigated by law enforcement agencies.
The economist, who said he was not an expert on the subject of greylisting, said to convince FATF not to continue to grey list the country, South Africa should pass certain legislation and put in place the required mechanisms.
The National Treasury announced on August 29 that Finance Minister Enoch Godongwana has approved the Anti-Money Laundering and Combating Terrorism Financing Amendment Bill, which was tabled in Parliament on August 17.
This was seen as demonstrating the government’s commitment to the fight against corruption, money laundering and terror financing to strengthen the country’s AML/CFT laws, and makes significant changes to many relevant laws related to fighting against financial crimes.
The FATF placed South Africa in a one-year observation period, which was between October 2021 and October 2022, to see if the country would be able to apply the required laws.
“South Africa received a very poor rating assessment in its mutual evaluation, and as a result has been placed in an enhanced follow-up process, which involves more frequent reporting to the FATF until South Africa has addressed all the deficiencies that were identified,” National Treasury said.
The country was required to submit its first follow-up report to FATF at the end of August and the second report in October 2022, in preparation for the February 2023 FATF Plenary.
Jammine said there were no clear consequences of the country being grey-listed.
“There are some who paint an absolute disaster story and others saying it would just be targeted at a few individuals and companies.
“But it would have a more negative impact on the financial sector than on other areas of the economy.”
Although he was not sure of how the country would be greylisted, he commended National Treasury for going out of its way to pass legislation that would prevent this.