Justin Arenstein
A group of international investors is threatening to sue the National Intelligence Agency (NIA)and the South African Secret Service for $14-million after getting ripped off in a complex scam by spies using apartheid-era front companies.
The American investors were already granted a US district court judgment for $10,9-million in 1998, but are struggling to get the South African government to agree to either a settlement or arbitration.
Negotiations have taken so long that an additional $3-million interest has been slapped on to the original judgment.
The investors’ high-powered Washington attorney, Joe D’Erasmo, and his Kentucky co-counsel, Lawrence Pedley, both confirmed last week they were about to institute additional urgent legal proceedings in New York in an attempt to enforce judgments against the South African government.
“The government appears to believe that if it delays long enough, the problem will go away. It won’t. My clients have enforceable judgments from US courts and are serious about getting their money back,” said D’Erasmo. “We believe there may be as much as $100-million still hidden in secret Citibank accounts in New York and Greece.”
He added that Citibank has refused to officially comment or release details on either account, but junior bank officials have reportedly confirmed they belong to Intercol (Pty) Ltd chief executive officer and NIA agent Riaan Stander and his sometime business partner Roelof van Rooyen Rodine.
Intercol is one of a series of front companies, including Oceantec Syndicate, Cavos Shipping and Eastech Investments, that appear to have been set up by undercover South African police and intelligence units in the early 1990s to generate secret offshore funds for paramilitary operations such as Eugene de Kock’s C10 Vlakplaas death squad.
De Kock, who is currently serving two life sentences and an additional 212 years in jail for his role in 50 murders, is listed as operations director of Intercol, while Lieutenant Pieter Botha is listed as systems director and General Tai Minnaar as director.
Stander was a low-ranking security policeman at the time, but is now an NIA operative who was until recently attached to the agency’s shadowy strategic projects unit headed by Thabo Khubu.
The unit was meant to trace and recover secret offshore slush funds set up in the dying days of apartheid, but was instead itself dismantled shortly after Khubu was suspended 18 months ago on allegations of massive fraud, misuse of state resources and death threats against his critics.
Stander also worked for apartheid military intelligence front company Longreach (Pty) Ltd, and has featured prominently in investigations into the assassination of Swedish Prime Minister Olof Palme after claiming that Longreach director and ex-spy Craig Williamson planned the murder.
Williamson denies any involvement in the assassination but confirms hiring Stander a couple of months after Palme’s death as a security consultant. He said Stander was eventually fired a year later in connection with fraud charges.
Intercol’s letterhead boasts it supplies covert intelligence gathering, trade or labour union investigations, political risk analysis and military security training in addition to electronic surveillance, while signed letters indicate it tried to help Zairean dictator Mobutu Sese Seko stay in power by spying on rebels.
The spying included a series of misspelled and highly fanciful “security reports” detailing how rebels hired European mercenaries and bought arms, specially built military 4x4s and a troop transport ship in Greece.
D’Erasmo said three of his clients hired Intercol in 1990 to trace and seize $70- million in commissions they had been cheated out of in “Operation Hammer” – an unrelated sanctions-busting financial transaction involving letters of credit from large international banks and allegedly underwritten by the Central Intelligence Agency (CIA)and intelligence agencies in Britain and Germany.
Intercol told the group of US and Australian investors it had traced the stolen commissions to various European bank accounts and would be able to freeze and electronically confiscate the money for a price.
Stander and Van Rooyen were paid $185 000 in March 1990 and an additional $117 000 in October 1990 by three of the American investors to set up the operation.
Stander claimed in a sworn affidavit days afterwards that Intercol had successfully “taken title” of $100- million and would pay out the investors within 30 days.
The money has never been paid out and both Stander and Van Rooyen simply refused to co-operate until Van Rooyen was finally detained in Dusseldorf, Germany, in February 1995 and cross- questioned by both German police and Lieutenant Colonel Andre Botha from the South African police.
Van Rooyen confirmed at least $100- million was on account in New York, and indicated in the resulting sworn statement that Intercol and its linked companies fed funds and information to De Kock’s Vlakplaas unit, as well as to the police C1 unit.
He said Stander also tried to use Intercol to infiltrate far-right groups in the Pietersburg area to track weapon smuggling and repeatedly insisted that intelligence agencies in the US, Germany and Britain were aware of, and sometimes assisted, Intercol operations.
Stander was arrested on fraud and contraventions of the Bank Act charges in South Africa, but was released when investigators were unable to get an extradition order against Van Rooyen and he refused to return to the country voluntarily for trial.
D’Erasmo stressed that Operation Hammer was unrelated to Stander’s operations. He said the operation involved a complex financial scheme in which non-liquid assets obtained during a successful CIA operation were deposited with Citibank in order to convert them to currency. The assets were then allegedly used to launch a trading programme involving the purchase and resale of documentary letters of credit exceeding $100-million each.
D’Erasmo said last week evidence indicated that the funds and assets traded at the time were under the control of Citibank New York vice-president John Reed.
“Intelligence agencies from a number of Western countries appear to have become involved. It’s all very murky, but Operation Hammer itself seems to have funded military operations at a time when everyone was worried about communism in Africa,” he said.
D’Erasmo’s clients helped trade the letters of credit and earned commissions exceeding $70-million, but were never paid.
Stressing that his clients were unaware that the deals or Stander’s companies were intelligence fronts, D’Erasmo said they had since tracked a web of linked front companies dealing in everything from Glock pistols and aircraft to gold, oil and platinum in Uruguay, Peru, Argentina, Mexico, Italy, Germany, Switzerland, Japan and Canada.
“We’ve got over 2 000 pages of evidence detailing the financial manoeuvres of [these people] … and which might lead to the return to South Africa of assets rightfully belonging to it,” said D’Erasmo.
NIA director general Vusi Mavimbela was unavailable for comment. However, senior attorney in the state attorney’s office, Ben Minnar, confirmed that he had been instructed to look into the merits of the case.
“There are a lot of issues involved here … and I am extracting statements from a number of government departments. We are making progress and should be ready to deliver an opinion within a couple of weeks,” he said.