South Africa probes ‘Gold Mafia’: Another wild goose chase?

“It’s laughable to think South Africa’s Hawks (police investigators) can prosecute sophisticated money launderers that have tentacles stretching from Johannesburg to Mauritius to Switzerland to Dubai,” analyst Yasin Kakande, who has lived in the United Arab Emirates and has had brushes with its courts, tells The Africa Report.

‘Sensitive’ probe

South African President Cyril Ramaphosa allayed concerns this week when he told parliament that authorities are launching an investigation into claims that the so-called Gold Mafia bribed key employees in South Africa’s major banks in order to turn a blind eye as they exported illicit money out of South Africa.

“We are committed to preserving the integrity of our financial system in the interests of the broader economy and ordinary citizens,” Ramaphosa told lawmakers on Thursday, adding that the sensitive probe is at “inquiry stage”.

The Al Jazeera ‘Gold Mafia’ documentary debuted in March. It centred on neighbouring Zimbabwe where a motley crew of connected businesspersons, influential politicians and a diplomat/cleric were said to directing an elaborate scheme where gold is smuggled from Zimbabwe to Dubai, and cash is brought back informally via the same illegal routes.

However, the spotlight soon veered towards South Africa where suspected Gold Mafia key players Mohamed Khan, aka Mo Dollars, and tobacco tycoon Simon Rudland were said to be using high-level contacts inside South Africa’s banks to launder illicit profits out of the country.

According to the Al Jazeera Investigative Unit, illustrious South African banks like Absa, Standard Bank and Sasfin were allegedly infiltrated by the Gold Mafia. High-ranking officials in these banks were alleged to be receiving lavish payments to make sure money from the Gold Mafia, running into hundreds of millions of dollars, was accompanied by fake clean paperwork before being transferred to accounts overseas.

In one damning allegation, an IT specialist at Sasfin Bank received bribes to make sure dodgy money transactions by the Gold Mafia were wiped from the bank’s servers.

The two key players at the heart of allegedly capturing South Africa’s banks, Mo Dollars and Rudland, are not new to controversy. Rudland, a wealthy Zimbabwean millionaire owns Gold Leaf Tobacco, one of Southern Africa’s biggest cigarette companies.

Over the years, the South Africa Revenue Services has prosecuted Rudland over allegations of diverting his cigarettes into South Africa’s lucrative informal market and thus committing massive tax evasion in the process, but the courts have not found Rudland guilty.

Mo Dollars’ activities and name has featured prominently in the South Africa State Capture Commission report over claims that he was one of the masterminds that helped the notorious Gupta family launder corruptly acquired state funds out of South Africa. Mo Dollars is “held up as a sort of shadowy figure that controls money laundering in South Africa”, Paul Holden, a prominent money laundering investigator, told Al Jazeera.

High bar

Observers say that South Africa’s ambitious probe into the sophisticated Gold Mafia suspects is hot air due to the apparent incapacity of South Africa’s Hawks and National Prosecuting Authority.

South Africa’s police and prosecutors are at a deficit in terms of funding, skills set and political will after Jacob Zuma, the former president, allegedly dismantled prosecutors from within the prosecutor unit to pave the way to loot the state unchallenged from 2009 to 2017.

Chief prosecutors sympathetic to Zuma were installed as a ploy to make sure corruption cases that he and his allies faced were quashed even before being submitted to court. The diminished capacity of South Africa’s prosecutors was in the spotlight in April when they failed to extradite brothers Atul and Rajesh Gupta to South Africa.

South Africa’s prosecutors even submitted extradition papers containing a cancelled arrest warrant.

The major problem of going after the Gold Mafia “lies with the Hawks and (police) commercial crimes unit which has low capacity and minimum expertise to fight such a crime”, says Wayne Duvenage, the chief executive of the Organisation to Undo Tax Abuse (OUTA).

“The so-called Gold Mafia is fearsome, even for South Africa’s police to investigate,” Kakande argues. “It’s plausible that the Gold Mafia enjoys connections in high offices. No one can launder such obscene amounts of money via formal banks without buying up key politicians. It’s dangerous and personally risky for police detectives to go after this mafia.”

In March The Africa Report reported on the grisly assassination of Cloete Murray, a senior liquidator and investigator leading efforts to recover public money from State Capture actors.

Violent threats to investigators can come from multiple but connected figures, including politicians and private criminals posing as businesspeople, Karam Singh, chief executive of Corruption Watch South Africa, told The Africa Report in November.

Conniving banks?

The alleged involvement of South Africa’s prime banks in helping the Gold Mafia funnel money out of the country appears to have jolted Ramaphosa’s attention. The three banks mentioned in the Al Jazeera documentary are the heartbeat of South Africa’s financial economy.

Absa is the country’s third-biggest bank. Standard Bank is the country’s largest and carries an asset base of $170bn. Sasfin, fingered in the report, is a specialty bank that lends to small-sector entrepreneurs and has solid roots in South Africa.

“The claim that Absa, Sasfin and Standard Bank got captured by the so-called Gold Mafia, illicit bribes and exporting money out of the country is poisonous,” says independent economist Carter Mavhiza.

It is not the first time that South Africa’s prime banks have been accused of helping corruption actors hide or export ill-gotten money. In 2022, it was revealed that Nedbank, one of South Africa’s Big 4 banks was implicated in aiding State Capture during the Zuma years.

Nedbank was named in allegations that they organised dodgy interest-swap transactions where state companies in South Africa were fleeced by Gupta-linked entities. South African banks’ misadventures helped to get the country grey listed in February 2023 by the Financial Action Taskforce over charges that the banks were not doing enough to combat illicit money transactions.

“This is quite scary; claims that the Gold Mafia bribed high-ranking bankers. President Ramaphosa must be sweating over fears of another grey listing,” says economist Mavhiza.

Silver lining?

However, OUTA’s Duvenage sees a silver lining in terms of banks becoming more alert to alleged malfeasance.

“The fact that some banks are penetrated to this extent is also a concern,” says Duvenage.

But South Africa’s banks have been known to have excellent controls and are relatively robust to prevent such laundering conduct, he says. “I have no doubt the banks will tighten up and flag these transactions and stay on top of this crime.”

The key Gold Mafia players, Mo Dollars and Rudland, flatly deny claims of capturing South Africa’s banks and using them as a conduit for money laundering.

Standard Bank says it has zero tolerance towards any insider criminality. Absa says it has escalated the claims to its internal investigating unit, while Sasfin says it has suspended named employees and will deal harshly with lawbreakers within its ranks.

“If there’s any faint hope of unearthing the extent to which the Gold Mafia’s infiltrated South Africa’s banks, it’s the banks that can really probe this meaningfully,” says analyst Kakande.

“Ramaphosa’s probe will be just another expensive futility.”