/ 12 June 2014

The mystery Gigaba bank account

Minister Malusi Gigaba says he has no knowledge of the account opened in his name
Minister Malusi Gigaba says he has no knowledge of the account opened in his name

State security agents once investigated a mysterious offshore bank account opened in Home Affairs Minister Malusi Gigaba’s name as succession battles in the ANC continue to bedevil it ahead of the ruling party’s next elective congress in 2017.

The Mail & Guardian was reliably informed that state security agents probed the account opened in Dubai, the United Arab Emirates, when Gigaba was still public enterprises minister.

State security spokesperson Brian Dube on Thursday denied that there was ever any investigation, but three highly reliable sources confirmed that there was such a probe. They are:

  • An intelligence agent with intimate knowledge of the issue, but not allowed to speak to the media;
  • A member of the country’s national executive, who refused to be named because of the sensitivity of the matter and described the probe as “an informal investigation”; and
  • A senior executive of a government entity who was briefed about the investigations. He also asked not to be named.

Gigaba’s spokesperson, Thabo Mokgola, on Thursday said the minister had no knowledge of such investigations and “denies any knowledge of the account”.

However, a source close to the minister said Gigaba had told those close to him that attacks on him were politically motivated, given his high profile and position in government.

Gigaba apparently told state security agents that the account was opened by one of his officials without his knowledge.

But banking and security insiders have indicated that it is difficult, if not impossible, for anyone to open an offshore account using a person’s name without their knowledge, and that this could amount to fraud.

Dubai and South Africa have stringent security and financial laws regulating inter-state money flow, partly to prevent the funding of terrorism and curb crime (see “Opening dud account doable, but risky”).

Surveillance authorisation|
Academic Laurie Nathan, who formed part of a team that conducted a hard-hitting review of intelligence structures and legislation released in 2008, said surveillance should be authorised by the minister of intelligence in terms of the Constitution, if not by law.

“If, for example, [the intelligence services] imagine a minister has been recruited by a foreign organisation, then they are entitled to investigate,” he said. “If it is just mischief it is illegal, but if there is a legitimate concern it would be legal.”

The member of the national executive told the M&G that the home affairs minister was first alerted to the investigation against him “some time last year” and that he is yet to see “any proof” that the account indeed exists.

But Gigaba apparently told the State Security Agency to make sure that whoever opened the offshore account in his name must “face the music”.

“How could anybody go to Dubai and open an account in his name?” asked the national executive member. “He has no offshore account and has never asked anybody to open it. What money is to be stashed outside the country?”

Agency responsibility
Gigaba is said to have told state security officials that it is the agency’s responsibility to investigate the matter and establish its veracity.

He apparently said he was willing to take responsibility should he be found to have done something wrong, but that he needs to be protected if someone has done wrong using his name.

“It would be easy for him to do something about a fake Facebook profile in his name,” said the highly placed source, who is close to Gigaba. “But he has no capacity to do anything if there is some account in Dubai.

“Any besmirching of [Gigaba] reflects badly on the government and the ANC. But to keep a rumour and not close it amounts to perpetuating the tarnishing of his name.”

Those sympathetic to Gigaba claim that the allegations and the investigations are part of a wider plot to smear the minister.

His rivals in the party, who are threatened by his meteoric rise in the past decade, are said to be behind this “conspiracy” because they want to stunt his elevation within the party’s senior structures.

Rising young star
Before 2007, Gigaba – a past ANC Youth League president – was seen as part of former president Thabo Mbeki’s rising young stars and inner circle. Mbeki appointed him deputy home affairs minister in 2004.

But after Mbeki was defeated as party leader by Zuma in 2007 and ousted as the country’s president in 2008, Gigaba – and a few of the so-called Mbeki sympathisers – survived and he became a minister of two crucial portfolios in the Zuma presidency.

Public enterprises is politically key as it is one of the departments that is central in awarding multibillion-rand state contracts, in effect attracting a plexus of business and political interests.

The contracts include power and, other public utility tenders and most recently, a controversial massive rail contract that has also triggered more allegations of wide-scale corruption.

Gigaba was appointed home affairs minister by Zuma last month, a move that was seen by his political opponents as a demotion and a less influential portfolio.

His sympathisers, however, regard home affairs as equally important and key to the country’s security.

“Gigaba has been there [home affairs] before,” said an ally. “Why would Zuma put him there to sideline him if it’s such an important ministry and part of the security cluster?”

Early jostling
Gigaba’s allies blame the situation on an early jostling for leadership positions ahead of the ANC’s national elective conference in 2017, where Gigaba is expected to contest for one of the top six leadership positions.

Gigaba scored the second highest votes during the election for the party’s national executive committee at the ANC’s elective conference in Mangaung in 2012.

He is punted as a possible successor to ANC secretary general Gwede Mantashe, while others say he has presidential ambitions, an aspiration that could trigger political archers to aim at him.

Prior to the ANC’s Mangaung elective conference, Gigaba’s name was lobbied for nomination by some branches in Gauteng for the position of deputy president, but the province eventually backed Tokyo Sexwale for the position.

Gigaba was also approached by some within the Zuma faction to stand for the deputy secretary general position, but in the end he did not stand for any post in the top six leadership.

As the party’s head of elections and campaigns, Gigaba this year led what was arguably the most difficult election campaign for the ANC since the party was rattled by the formation of the breakaway Congress of the People in 2009.

Opening a dud bank account is doable, but risky

Opening a bank account in the name of a South African in a territory such as Dubai without the knowledge of that person is theoretically possible. But it would be complicated, and carries the risk of criminal prosecution in these two countries. It would also be both harder and riskier to do so in the name of a well-connected politician.

Like most other countries with cordial relations with the United States, the United Arab Emirates (UAE) has significantly improved its systems to detect and combat money laundering since 2001.

And, like other countries in the Middle East, the UAE is particularly sensitive even to the accusation that funds passing through its territory could end up funding terrorism.

Banks in Dubai have customer due diligence requirements not unlike the know-your-customer provisions in South Africa: a new account requires positive identification, proof of address and proof of the source of income.

“Enhanced” due diligence is exercised if the account is opened by a foreigner. Greater care is required if the foreigner is not a UAE resident, and even greater diligence is expected if one person claims to be acting on behalf of another.

If anyone is a “foreign politically exposed person”, or FPEP, then the bureaucratic requirements are downright paranoid.

“Banks and other financial institutions are required to have systems and controls in place to determine whether a potential customer, an existing customer or the beneficial owners is an FPEP,” a 2008 directive from the UAE Central Bank reads.

“An FPEP may be defined as a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government, [their] immediate family members and close associates.”

In terms of the UAE’s regulations – which carry criminal sanctions that, in extreme cases, can even include the death penalty – a senior bank manager must approve in writing the opening of an account for an FPEP.

Bypassing those checks constitutes fraud in both the UAE and South Africa but legal co-operation between the two is murky, although extradition is possible either way given a determined prosecutor.

And doing things legally, through a legitimate power of attorney, makes it difficult for the account holder to claim ignorance.

“Power of attorney doesn’t just mean somebody can sign documents on your behalf; it means that agent is shielded from liability for contracts entered into on your behalf,” a prosecutor not authorised to speak to the media said.

“The agent can say: ‘I’m not responsible for the illegal things done with that account,’ but the principal can’t really say: ‘I signed this power of attorney to express my will behind this action but I didn’t want this or that done.'” – Phillip de Wet