Fundi Tshazibana, deputy governor of the Reserve Bank and CEO of the Prudential Authority, which regulates the financial sector on its behalf, says the central bank is doing as much as it can to bring perpetrators of corporate fraud to book but would like stronger support.
“We could do with strengthening of what our colleagues in law enforcement do.”
Following an investigation it began in early 2018 into exchange control fraud by Steinhoff, under then CEO Markus Jooste, the Reserve Bank seized his financial and property assets, said to be worth R1.4bn, in October last year after being granted an attachment order by the Western Cape High Court.
Exchange control violations are generally considered low-hanging fruit. What took it so long?
“We probably took as short a period as we could. There’s a lot of accounting detail one has to look at requiring forensic expertise to follow the money. That’s why it takes so long to get to a point where you can prosecute.”
Except South Africa’s premier financial regulator can’t. It’s gone as far as its mandate allows.
“We’re sticking to our lane, to our mandate,” she says.
“What can be disappointing is that when you as a financial regulator have done everything you can and you think you have a case that can be prosecuted, and you’ve shared your information, it takes so long for cases to be prosecuted.
What can be disappointing is that when you as a financial regulator have done everything you can, it takes so long for cases to be prosecuted
“We don’t have prosecuting powers as the SARB, so that’s unfortunately as far as we can go.”
The rest is up to the Hawks and the National Prosecuting Authority (NPA), and her frustration at the lack of prosecutions is clear. Not only in the case of Steinhoff.
Four years after a report commissioned by the Prudential Authority (PA) into the VBS Bank looting scandal named and shamed the culprits there hasn’t been a single conviction.
“We have provided all the information we can to the relevant authorities. There have been a few arrests and a trial is under way, but it has been very slow moving. Very slow moving.”
As for Steinhoff, while there has been nothing from the NPA, their counterparts in Germany will be bringing Jooste to trial early this year, after focusing on a single case of accounting fraud.
Is this what she’d like to have seen from the NPA?
“I would assume the NPA would go on the basis of evidence that is available to them. On our side we have been sharing all relevant information with the NPA and Hawks. It is up to them how they want to take the case forward.”
She believes “investigations in terms of prosecutions have to be strengthened, systems have to be strengthened”.
She says she can’t comment on whether South Africa needs an independent, multi-agency anti-corruption entity to do what the Scorpions were doing so effectively before being disbanded by the government in 2009.
“That’s way out of our jurisdiction. What I will say is that we would like to see more prosecutions. Please.
“In a way this is what the Financial Action Task Force (FATF) is saying to us: we don’t have enough prosecutions.”
The PA has been involved in reporting to the FATF on steps South Africa has taken to correct gaps they’ve identified around potential money laundering and terrorism financing in order to avoid being greylisted.
Among many other things, they want to know exactly what South Africa is doing to comply with their requirements around the findings of the Zondo commission in terms of prosecutions and ensuring state capture doesn’t happen again, she says.
“We’ve worked flat out through the Christmas period to try to comply but it’s not easy. The FATF requires not just that we have the right laws; they want us to demonstrate that we’ve utilised them and that we’ve had a number of cases.
“We have the laws in place but we’re not yet able to demonstrate that we’re able to do those things.”
Have we left it too late to avoid greylisting?
“There have been things on the law enforcement side that we might have expedited but it doesn’t help us to be crying over spilt milk at this point.
“We’re going to a FATF meeting on January 13 and will have to demonstrate that we practise what we say. It doesn’t help to say this is what you’re doing but when you get probed it turns out you’re not actually doing it.”
She admits that a recent report by the Global Initiative Against Transnational Organised Crime that international crime syndicates are finding a home in South Africa because of its “governance void” doesn’t enhance the country’s cause.
We need to continue to strengthen our institutional capacity. We have to strengthen our institutions of governance. They shouldn’t be about who’s in power tomorrow. They need to be running and fully effective every day, all the time, regardless of who the perpetrator is
“We need to continue to strengthen our institutional capacity. We have to strengthen our institutions of governance. They shouldn’t be about who’s in power tomorrow. They need to be running and fully effective every day, all the time, regardless of who the perpetrator is.
“That is when we’re going to get the country going; that is when we’re going to address the crime. We shouldn’t have any fear or favour, we shouldn’t have any favourites.”
The Reserve Bank is widely regarded as the shining light of regulatory enforcement in South Africa.
It’s a compliment Tshazibana — the holder of a Master of Commerce degree from the University of KwaZulu-Natal who arrived at the central bank in 2018 after 12 years at the National Treasury and three years at the International Monetary Fund in Washington, DC — is a bit ambivalent about.
“We don’t want to be the only shining light, because countries are built through multiple institutions that all work equally.
“It is important to ensure that we build institutions that function regardless of individuals. That’s how constitutional democracies are built. On the back of strong institutional capabilities, strong agency capabilities and the rule of law.
“We’re getting there but we have to work at it.”
Would it take much to regress to a state capture environment?
“Please, please not. I don’t want to imagine a world in which we return to that.”
It’s something that keeps the Reserve Bank awake at night, she says.
“As the SARB we’re an institution that believes in following our mandate, following the law and implementing it as it should be without fear or favour. We’re not always liked for that.”
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