DR ALLAN Boesak’s embattled Foundation for Peace and Justice (FPJ) suffered huge losses in a sanctions-busting $40-million bungled bank loan that leads to the doorstep of Indonesia’s President Suharto.
The FPJ, a handful of other local non-government organisations and a London business associate lost millions of rands in expenses and advances, still unrecouped, when the deal collapsed in 1992, bogged down in fraud.
Nelson Mandela, then ANC president, intervened personally with Suharto in a 1993 rescue attempt when two years of negotiations by Boesak and others to secure the multi- million-dollar loan from Indonesia — via an elaborate trail of middlemen and con men in France, Spain and elsewhere — collapsed.
The loan, the value of which varied during the course of the negotiations, but went as high as $40-million (about R150-million), was to have been invested mainly in two business projects: the ambitious King’s Hotel development in East London and a mostly upmarket residential community development at Noordhoek Beach on the Cape Peninsula. The developments were meant to provide spin-offs for disadvantaged communities.
Family members and others close to Suharto were directors and shareholders of an Indonesian bank, Bank Putera Sukapura, which the NGOs say must share the blame for the fraud that scuttled the transaction. The bank allegedly gave false assurances that an Indonesian company, PT Kadomas, had sufficient funds to issue the loan.
A meeting between Boesak and Suharto resulted after Mandela wrote to Suharto in the second half of 1993, but despite repeated assurances by the Indonesians the losses have not been recovered yet.
Boesak’s FPJ and other “progressive” NGOs involved in the loan transaction are understood to have felt vulnerable to criticism for seeking the foreign loan in contravention of the financial sanctions their political counterparts in the ANC were advocating at the time.
But they justified it by maintaining that the ultimate benefits would go to the disenfranchised through economic empowerment, and because reforms were already happening in 1990, about the time they got involved.
The failed transaction may give clues to the precarious position in which Boesak and his FPJ find themselves. It was brought to a head earlier this year when the FPJ’s Scandinavian donors, suspecting that funds were not reaching their intended charitable goals, charged, after an inquiry by local lawyers, that Boesak had misappropriated
The Office for Serious Economic Offences (OSEO) subsequently launched an investigation into Boesak’s affairs and he had to withdraw from the ambassadorship to the United Nations in Geneva, which he had been promised by the government. Mandela’s office announced this week that no decision would be taken on Boesak’s future in government service until the OSEO gave a positive indication of the course of their investigations.
Boesak and the FPJ’s involvement in the Indonesia loan attempt, and the projects the loan would have financed, should be seen against a background of NGOs in the early 1990s becaming increasingly apprehensive about the prospect of foreign funding drying up. Many NGOs, and Boesak’s was no exception, embarked on business deals and investments to generate their own funding.
A question the OSEO investigators may look at is whether, in the Indonesian or similar deals, the FPJ gambled donor funding earmarked for charitable projects on “business” deals in the hope that greater returns would soon cover the losses and more.
The FPJ’s share in the immediate losses that resulted from the crashed loan transaction is estimated to be in the region of R300 000. By contrast, had they pulled it off, the FPJ would have been paid R930 000 — its costs and a commission — and would have been entitled to a $2-million slice of the Indonesian loan for a housing development project of its own at Arniston on the southern Cape coast.
What remains baffling is how Boesak, his foundation and other NGOs could have been so patently misled by people who, in retrospect, should not have been accorded any trust in the world of high-stakes financial dealings.
The main conduit for the proposed loan was a Jordanian citizen, Ahmad Almasri, who headquartered a small banking and investment empire at his hotel room in Paris. He was president of the finance company Europe Investment and International Trade Corporation and a vice-president of the Seychelles-registered First International Securities Bank and Trust Ltd (FISBT).
FISBT was involved in oil dealings in the Seychelles which, during the 1980s was a nominally Marxist state which nevertheless became a tax haven and attracted a number of shady companies. Among these were some which actively assailed sanctions on behalf of the National Party government in South Africa, including breaking the oil
At a stage during 1991, Almasri was structuring the deal to channel part of it through the Bank of Credit and Commerce International (BCCI) in Spain. The BCCI later collapsed amid evidence of gross corruption, laundering of mafia drug money and CIA dirty deals.
When Boesak and the Cross Times Trust — a Christian charity involved in progressive publications, mediation and conflict resolution, and the driving force behind the planned East London and Noordhoek developments — realised in mid-1992 that Almasri was not going to deliver the Indonesian money in spite of $880 000 worth of taxes and insurances that had been paid over to him, French police had already arrested Almasri on a separate charge of fraud instituted by a Canadian company. Almasri eventually received a three-year French jail sentence for the Indonesia-South Africa fraud.
Cross Times Trust trustee Hannes Siebert acknowledged this week that the two projects “were not our normal line”, but said they thought they could plough the “profits” accruing to the trust back into the alternative press — in addition to direct benefits to disadvantaged communities.
While acknowledging that the FPJ was also to have benefited from the transaction, he said: “Boesak did not get involved of his own choice. We asked him to help us out of the
The “mess”, indeed, should have been apparent in early 1991, by which time Boesak was already involved.
A prominent South African banker, approached by Siebert in 1990 to help facilitate the transaction, said this week of Siebert: “He is a very decent man. But he did not seem to understand at all that the people he was dealing with did not have any money … It was abundantly clear at an early stage that Almasri was not going to deliver the money. I as a banker advised Siebert not to go ahead.”
The banker said his bank had pulled out of the transaction in 1990. “What amazes me is that two-and-a-half years later they were still trying.”
Siebert countered that to him everything had seemed kosher at the time: ABSA Merchant Bank had become involved, there had been assurances from Bank Putera Sukapura in Indonesia of the creditworthiness of PT Kadomas, the company which would have advanced the loan, and the Reserve Bank had finally approved the deal.
Siebert, whose Cross Times Trust’s immediate loss was about R200 000, said of Boesak’s involvement: “I don’t know about all the other things (said against him), but in this matter he was a hero. He definitely helped.”
Others involved were the NGO Comrades for Christ, which lost about R120 000, and the East London Nederduitse Gereformeerde Sendingkerk, which lost about R60 000.
The bulk of the losses were born by Paul Main, a British business associate of the FPJ and the Cross Times Trust. Main’s company Brailes House, which would have acted as another intermediary in the transfer of the loan, had advanced about $880 000 in taxes and insurance payments to