Editorial: State capture could not have existed without banks

When reading the first of the Zondo commission’s state capture reports, one cannot help but think of the British historian Lord Acton’s famous observation, in 1887, that “absolute power corrupts absolutely”. And there are perhaps no more powerful institutions than our banks, which — tasked with keeping our money safe — reach across oceans to protect the source of that power.

One of South Africa’s so-called “big four” banks now faces a serious allegation of wrongdoing arising from Zondo’s report. But that allegation is likely the very tip of the iceberg, considering the depth of the seedy network of illicit financial flows.

It may very well be true that the scale of state capture-corruption we know now would not exist without the banks. 

Without them, corrupt public officials and the private actors who colluded with them would not have got their hands on their ill-gotten gains. 

That money had to be put into the global financial system in a way that obscured its illicit origin and make it appear legitimate. The banks, which are meant to flag suspicious payments, instead make themselves available to be used to facilitate those transactions.

The financial sector’s ongoing flirtation with corruption is not news. 

For this very reason, South Africa has a robust anti-money laundering framework aimed at identifying illicit profits before they are washed clean and land in dirty hands. Banks are required by law to report these transactions, but history tells us that they often don’t. 

And why would they, when large sums of money, a healthy portion of which will end up in the pockets of bankers, are on the line?

When the banks faced the Zondo commission more than three years ago, they gave the impression that they had done their duty: they clocked that the Gupta brothers were panning out to be the main characters of the state-capture saga and responded by closing their business accounts. 

But they only did so when the weight of the reputational damage proved far heavier than the stacks of money they stood to earn from Gupta Inc. 

They were far too late.

Last week, one of the key figures of organised business in South Africa, Business Leadership South Africa’s chief executive Busisiwe Mavuso, stated her belief that the architecture and system of business is not inherently corrupt. This might very well be true. 

But what the story of state capture should finally drill into us is that — when faced with the choice between protecting the interests of people and making a profit — even the most benign corporations will choose the latter.

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