Jacob Zuma. Picture: SIMON MATHEBULA

Jacob Zuma. Picture: SIMON MATHEBULA

Related Articles

Picture: ISTOCK

In Good Faith: Keeping his own counsel

Pravin Gordhan. Picture: TREVOR SAMSON

Day that will live in infamy

Guns out for Gordhan
Shaun Abrahams. Picture: ALON SKUY

Setting the stage

Setting the stage

Bad news arrives too late

Who would have thought that it would be UK political risk would wreak destruction on our investors?

Mentioned in this Article

FM Edition:

However busy President Jacob Zuma may be (and there’s certainly lots he should be doing — like supporting his finance minister, and showing leadership on the university crisis), you’d think he’d be able to find a few seconds to affix his signature to a document passed by parliament in May.

And yet, the Financial Intelligence Centre Amendment Bill has sat on his desk for four long months, gathering dust.

This may seem like an everyday piece of legislation of the sort which loses nothing by a few extra days’ contemplation. Not so. In fact, Zuma’s delinquency in signing the bill endangers the fluid operations of our banking system, which in turn allows it to fit seamlessly into a global banking network.

South Africans are able to make payments to overseas institutions, and accept them only because all the parties to these transactions have agreed to process these payments. But unless Zuma gets with the global programme designed to thwart money-laundering and the illicit financing of terrorism and signs the legislation, these overseas banks will wash their hands of our institutions. Without the reassurance that SA banks are implementing the same tough rules they are following, these overseas institutions will have little compunction in turfing our institutions out into the equivalent of global banking’s Siberia.

This bill has attracted all sorts of criticism, not least from Mzwanele Manyi, who heads the Progressive Professionals Forum. Manyi claims the bill is "unconstitutional", and has lobbied Zuma not to sign it. His arguments include the claim that the legislation undermines "freedom of association" and the right to "free economic activity". That is, of course, frivolous poppycock.

But faced with any form of dispute, Zuma has done what he does best: nothing.

Let’s be clear: all the new legislation does is to demand that our banks take extra steps to scrutinise the transactions of "politically exposed" people. It requires bankers to dig deeper into who the actual beneficial owner behind a transaction really is. It is legislation that is entirely in line with what other countries are already doing. If anything, SA would just be catching up.

And yet, even though the bill has been approved by parliament, Zuma is apparently still "applying his mind" to Manyi’s objection. It is quite a remarkable position, given that the constitution requires him to either sign a bill, or refer it back to parliament. Still, Zuma has shown numerous times that he considers his constitutional obligations as little more than a "wish list".

Of course, you can see why Zuma would want to sit on it, if only for reasons of naked self-interest. If the legislation is passed, the banks will have an even greater responsibility to vet the accounts of people like the Guptas — a family that isn’t just friendly with the president, but which is also in business with Zuma’s son.

Banks will be mandated to probe deeper into the rivers of money flowing out of SA’s chaotic and unaccountable state-owned companies, like Prasa. As you can imagine, there are many people with a vested interest in ensuring that doesn’t happen.

Yet the entire country is being held to ransom while Zuma dithers. SA’s trade partners could ditch dealing with local institutions, overseas regulators could consign SA to the "exceptionally risky" category, and global banks like Wells Fargo and BNP Paribas could refuse to deal with us.

No less a respected figure than FirstRand’s co-founder, Laurie Dippenaar, has pointed out that failing to sign the law will make SA’s relationship with other countries "very, very difficult".

Everyone, bar Manyi and Zuma, seems to want it signed. It’s a list that includes the ANC, parliament, and just about every company that uses a bank.

Globally, the new rules are not controversial. It’s patently a good thing for SA’s money-laundering laws to be synched with those of other countries. It closes the window for corruption and rent-seekers (of which this country already has far too many).

If political leaders should be judged not by what they say, but by what they do, the delay in signing these new money-laundering rules provides the truth behind Zuma’s rhetoric about "tackling corruption".