Nats were in bed with Mafia boss

Patrick Smith

Former South African president FW de Klerk presided over a Cabinet meeting in March 1993 that gave Cape businessman Vito Palazzolo a residence permit, although at the time he was the subject of an Italian extradition warrant.

The respected magazine Africa Confidential will report this week that in September 1993, De Klerk’s government issued a passport to Palazzolo, despite continued reports from the Italian police about his alleged criminal activities.

The magazine will also reveal that Jan d’Oliveira, now attorney general for Gauteng, objected to the withdrawal of Palazzolo’s residence permit in July 1991, although it had been established that Palazzolo had entered South Africa illegally in 1986, using a false passport after absconding from a Swiss jail.

The revelations appear to come from sources close to the police investigators, who are closing in on the convicted money launderer and suspected Mafia man. The investigation has uncovered more about Palazzolo’s business network and his activities in South Africa.

After the representations in 1991 by D’Oliveira, then attorney general for the Eastern Cape, Palazzolo requested a personal interview with the home affairs minister to draw attention to “important issues that I do not wish to put on paper because of the confidentiality thereof, other than to say it directly concerns the government”.

D’Oliveira has since been consulted on successive occasions about the validity of Italian extradition warrants for Palazzolo, and has each time recommended that the warrants be dismissed.

D’Oliveira is currently in charge of all cases of organised crime reaching the office of the director of national prosecutions.

It is also alleged that in January 1993, Palazzolo wrote to then law and order minister Hernus Kriel, asking him to tell the then minister of home affairs, Eugene Louw, that there were no objections to his requests for a residence permit. Palazzolo claims that Kriel had already written a similar letter for his use in Switzerland.

A link with murdered Namibian activist Anton Lubowski in the 1980s is also described. Palazzolo apparently struck up a relationship with him in 1989.

In June 1989, Palazzolo’s son, Christian, and his lawyer, Cyril Prisman (who is now an acting judge), visited Lubowski in Windhoek. In the same month, three payments totalling R100 000 were mysteriously made into Lubowski’s bank account by Global Capital Investments, a front company for South Africa’s military intelligence.

In August 1989, Palazzolo invited Lubowski to a meeting in Switzerland. Lubowski returned to Namibia on August 25 and on September 12 was murdered by military intelligence agents.

On September 25, the director general of the Ministry of Home Affairs issued Palazzolo a visa to re-enter South Africa to testify for the prosecution in a fraud case against Peet de Pontes, a National Party MP who helped Palazzolo obtain a South African residence permit. De Pontes was convicted in January 1991.

Palazzolo helped the prosecutors prove that De Pontes had assisted in the illegal immigration of an Italian financier (himself).

Palazzolo was a generous contributor to NP funds, and knew the deputy minister for constitutional and provincial affairs, Tertius Delport, who advocated the lifting of the Reserve Bank’s freeze on Palazzolo’s assets in South Africa. Delport’s relative PJ “Dup” de Bruyn was Palazzolo’s legal adviser.

Palazzolo changed his names by deed poll to Robert von Palace Kolbatschenko, claiming aristocratic German lineage, and applied for South African citizenship without disclosing his real name.

After inviting a home affairs official, Johan Scheffer, to his farm at Franschhoek, Palazzolo was granted a South African residence permit in December 1987. The following month he was arrested on a Swiss extradition warrant by Major Andre Fouche, who found some R500 000 of diamonds and several unlicensed weapons, together with documents indicating that Palazzolo had invested more than R25-million in businesses in South Africa and Namibia.

These findings were submitted to the Harms commission’s inquiry into cross- border irregularities.

Palazzolo and his family began building a formidable network of businesses.

He is directly involved in the Barrydale Ostrich Company; elsewhere his interests are represented either through his sons Christian and Pietro, or through the Von Palace Kolbatschenko Trust.

The trust, with offices in Cape Town, is affiliated to Palazzolo’s Cape International Holdings, registered in the British Virgin Islands. Among the 20-plus companies linked to him are Anglo-Cape Diamonds, Von Palace Cutting Works and La Vie Mineral Waters. One big foreign deal involved taking a 15% stake in a valuable Angolan diamond concession.

Since a tax audit on him started in September 1997, he has argued that his only business enterprise in South Africa is the Franschhoek farm, and that he has no other tax liabilities in the country.

Disagreeing with this and much else, the Italian police in February 1998 asked for Palazzolo’s immediate detention prior to extradition, submitting detailed indictments to Pretoria. Their case was supported by the legal attach of the FBI in Rome, Bob Wright.

The report from the investigating Judge, Alfredo Montalto, alleges that Palazzolo, born in Terrasini, Sicily, in 1947, has been involved with the Sicilian branch of the Cosa Nostra (Mafia) for more than 20 years, and links him to other alleged mafiosi sheltering in South Africa. These are Giovanni Bonomo, Giuseppe Gelardi and Mariano Troia, charged with the assassination of the mafioso Christian Democrat Euro MP, Salvatore Lima.

The indictment says that Palazzolo’s skills in financial engineering have secured him a leading role in the direction and international investment of the Sicilian Mafia’s funds, and in managing the property and investment portfolio of Salvatore “Toto” Riina, who won control of the cupola (governing commission) of the Sicilian Mafia in the early 1980s.

Around that time Palazzolo is said to have managed funds routed through Switzerland in the so-called Pizza Connection, in which millions of dollars’ worth of heroin were transported from Turkey to the United States. Italian and US intelligence officers estimate that Palazzolo laundered more than $1,5-billion through offshore companies and fronts from 1979 until his arrest in Switzerland in 1984.

Lately, South African investigators have reported that he frequents Hemingways, a nightclub owned by Palazzolo’s wife, Tsirtsa Grunfeldt, and a favourite haunt of Cyril Beeka, a former military intelligence operative, and Rashied Staggie of the Hard Livings gang.

Also part of the circle are the Bracale brothers of Avenue Watch security, Edward Beeka of Pro Security, former death squad operative Dirk Coetzee and another former military intelligence man, Gert Nel.

In 1989 Coetzee repudiated his apartheid past and pledged loyalty to the African National Congress; he now works for the National Intelligence Agency, monitoring People against Gangsterism and Drugs. Coetzee’s son, Dirkie, works for Palazzolo.

Whatever the outcome of the latest investigations, they point to long- lasting ties between security operatives of the apartheid state and organised crime - ties that survived the demise of the NP government.

This helps explain why organised criminals, and the Mafia, have targeted Southern Africa for drug trafficking, money laundering and car theft since the late 1980s.

The Italian police say that the Mafia’s international operators like South Africa, with its infrastructure (better telephones than Italy’s) but well away from prying policemen.

Unless these sinister links are broken, South Africa’s shaky reputation as a place to live and do business in will sink further.

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