/ 10 March 2016

SA History Archive seeks apartheid financial records in court

Vito Palazzolo was useful to apartheid-era politicians. He was arrested in Thailand in 2012.
Vito Palazzolo was useful to apartheid-era politicians. He was arrested in Thailand in 2012.

Locked up at Italy’s Opera Prison is Mafia money man Vito Palazzolo, the 68-year-old former banker of the Cosa Nostra.

He is serving nine years in terms of that country’s most punitive penal codes, 41-bis, loosely referred to as “hard time” because of its highly restrictive conditions.

How ironic it is that Palazzolo is one of a handful of people who could help shed light on apartheid-era financial crimes amounting to an estimated R650-billion.

But first someone at the South African Reserve Bank would have to make a courtesy call to the Milan jail to inform Palazzolo of a legal bid to get access to his financial records.

Those records stem from his days as a politically connected middleman for apartheid-era politicians.

The Promotion of Access to Information Act (Paia), which has been in existence for 15 years this week, was born out of the need to counteract the secretive culture that led to human rights abuses under apartheid. Although it is supposed to reign supreme over other laws, the likes of Palazzolo or their companies enjoy a strange level of protection from the very same law that requires public bodies to notify those under scrutiny of Paia applications for details of their affairs.

Now the South African History Archive has taken its battle for access to Reserve Bank records to the high court in Johannesburg. This was after several requests for apartheid-era financial records were refused by the bank. The history archive’s initial request was deemed too broad and “vexatious”.

It then narrowed the search down to Palazzolo and seven others – among them apartheid-era chemical warfare specialist Dr Wouter Basson, apartheid spy Craig Williamson and a string of associated companies.

Although this court case is not about these individuals, it is believed that an analysis of their records would serve as a starting point for precisely how the previous regime pulled off economic crimes.

This court bid relates primarily to suspicion of abuses of the rand, corruption and foreign exchange transactions under apartheid, including loans, transfers of offshore funds and gold smuggling.

The Reserve Bank turned down the Paia request on a number of grounds including:

  • The Reserve Bank Act prohibits the disclosure of client information;
  • The search would amount to an unreasonable diversion of its resources; and
  • The history archive had failed to provide sufficient information about the documents it seeks so the bank is unable to trace precise records.

A 45-page affidavit submitted by the history archive’s director, Catherine Kennedy, challenges the Reserve Bank’s refusal to comply.

The organisation is adamant that the bank has no legal basis for refusing access to the records. It also argues that disclosure is of public interest, which by far outweighs the bank’s concerns of client confidentiality.

Last Monday, the Reserve Bank filed a notice of its intention to oppose the history archive’s application.

Court papers state that Palazzolo and the other named individuals either worked for the apartheid state or provided services such as facilitating the circumvention of United Nations sanctions.

It was in 1986 that Palazzolo fled a Swiss jail during a 36-hour weekend pass and made his way to South Africa. He used his expertise as a banker to help set up the Bank of Bisho in the former homeland of Ciskei, to move the illegal flow of money and facilitate the embargoed trade in arms.

Palazzolo lived in South Africa for more than 25 years, despite attempts by the Italians to extradite him. In 2012 he was eventually arrested in Thailand and was handed over to the Italians.

The history archive is collaborating with the Open Secrets research project. The two organisations want records of any evidence the Reserve Bank may have gathered in its investigation into illegal conduct covering the period January 1980 to 1995.

“One estimate of the total value of the financial rand market has it as between R141-billion and R204-billion, and R650-billion in modern rand values,” court papers state.

The history archive wants the high court to set aside the Reserve Bank’s refusal to comply with its Paia request on the basis of it being unlawful and unconstitutional.

Should this bid be successful, the Reserve Bank may have to hand over some of the documents within five days – and it would have to find a way of getting a message through to Palazzolo. Exactly how that would be done is not clear.

International journalists Cecilia Anesi and Giulio Rubino summed up the way 41-bis prisoners do time like this: “There is nobody to talk to. Nobody to write to. Correspondence with the outside world is forbidden. No email, no Facebook. Not even hand-written letters.”

Unless Palazzolo has had the terms of his sentence softened somewhat by singing.

Free up information on our past, painful though it may be


A final, calculated act of vandalism by the apartheid state was the destruction of more than six-million pages of documents that had been generated by the state security agencies. Although an important part of our history went up in smoke above the steel furnaces outside Pretoria, a far greater volume of records remains largely untouched in dark storage facilities across the highveld.

These are the records of our nation’s past and its pain. Far too much of this remains secret.

The South African History Archive has supported the research of the Open Secrets project at the Institute for Justice and Reconciliation by trying to use freedom of information legislation to access such records. This forms part of an ongoing research focus on the effect of sanctions-busting as well as economic crime on South Africa’s present.

Our archives could provide a rich record of the hyper-secretive final years of white minority rule – a rare glimpse into an aspect of our past that not even the Truth and Reconciliation Commission (TRC) was able to fully expose.

The biggest challenge to truth-telling appears to be, inexplicably, key government departments that continue to deny the public access to apartheid-era material.

The South African Reserve Bank and the justice department are two key institutions of state that have recently denied the Open Secrets project access to information it deems critical to its research. Though the history archive, with the assistance of Lawyers for Human Rights, has been forced to challenge those cases in court, the relevant departments have yet to provide a convincing reason why they have become gatekeepers for the secrets of a discredited regime.

A reason for denying access to information is often hinged on a mix of political conservatism and bureaucratic inefficiency that sees government departments acting in a manner that is errant and contrary to the rule of law.

The reasons for denying access are baffling, such as the Reserve Bank’s claim that the freedom of information law does not apply to it. The justice department claims it does not have the material that formed the basis of the TRC report – and of which it alone is the custodian. Surely the justice minister and the Reserve Bank governor cannot agree with a legal argument that is contrary to the public interest and that challenges the constitutional right to know?

The court papers argue that hidden histories serve the interests of the powerful and undermine democratic consolidation.

Greater transparency and access to information enables informed research to take place to help the public make informed opinions. This helps us to better understand our present and ensure that criminal practices such as corruption do not continue to shape our future. A nation that has a full understanding of its past is better placed to avoid repeating the same mistakes. – Hennie van Vuuren

Hennie van Vuuren is a senior research associate at the Open Secrets project, based at the Institute for Justice and Reconciliation.