The Hawks and NPA have had their heads stuck firmly in the sand for years now, since Sars initiated a series of search and seizure operations that unravelled Simon Rudland’s alleged gold and tobacco smuggling network. The reluctance by these entities to act is bad news for South Africa’s attempts to exit the FATF greylisting by June 2025.
Since 2020, north of 100 suspects and entities involved in a sprawling gold and tobacco transnational smuggling network have been referred for investigation and prosecution to the Hawks and National Prosecuting Authority (NPA).
The investigation was initially kept secret, but by 2022 the SA Revenue Service (Sars) laid out the details in a series of court proceedings: Zimbabwean tobacco baron Simon Rudland and a handful of close allies allegedly set up a transnational tobacco and gold smuggling business which aimed to launder billions in illegal cash, run a series of VAT scams, sneak money offshore and cheat the taxman.
Sars, the SA Reserve Bank and the Financial Intelligence Centre (FIC) identified the Rudland scheme as a serious threat to South Africa’s financial system and each registered an investigative project, code-named Foxtrot, Gravity and Novac, respectively.
Daily Maverick, amaBhungane and Al Jazeera launched their own probes and confirmed the scam involved refineries, cash-in-transit companies, professional money launderers, forgers, clearing agents, pastors, diplomats and banks.
The alleged involvement of at least 11 Sasfin Bank employees turned out to be a particularly nasty development. Sars found at least R8.2-billion in untaxed funds linked to Rudland’s racket was sneaked out of the country in the past decade. On the back of fake invoices, cash was moved to mainly Dubai, Switzerland and Mauritius.
To hide the crimes, Sasfin employees allegedly conspired to wipe the payments off the Sasfin system and the relevant companies’ bank statements. Cross-border money movement BoPCUS reports to the Reserve Bank were also deleted. The fallout is immense. The bank now faces a R4.8-billion damages claim from Sars (more than half the bank’s balance sheet), a R160.64-million fine from the Prudential Authority, aims to delist from the JSE and announced the company would sell its banking business.
Over the past four years Sasfin, the Zondo State Capture Commission, Sars, the SA Reserve Bank and the FIC referred more than 100 players in the smuggling network for investigation and prosecution to the Hawks and the NPA.
Despite the Hawks having raided some suspects’ premises, to date, neither the Hawks nor the NPA have made any arrests in the case.
Neither the Hawks nor the NPA reacted to questions over investigations and prosecutions in this case.
South Africa’s greylisting
South Africa is pretty bad at investigating and prosecuting complex money laundering and terrorism financing, the global financial watchdog Financial Action Task Force (FATF) announced in 2023. Because it is a risk to the world’s financial system, South Africa was greylisted, along with Algeria, Haiti, Croatia, South Sudan, Monaco and Yemen. The consequences include restrictions on cross-border transactions, difficulties for South Africa to obtain credit, limited inward foreign investment and severe reputational damage.
This month, FATF released an update. South Africa had made some positive progress. The main message, however, was that to exit the greylist, authorities should demonstrate a “sustained” increase in investigations and prosecutions of serious and complex money laundering cases, in particular those involving professional money laundering networks, their enablers and third-party money launderers, in line with the country’s risk profile.
Investigating and prosecuting the complex Rudland scheme falls squarely in the framework of the FATF’s requirements. The Hawks and NPA’s unwillingness to take serious steps in the case has baffled bureaucrats and investigators in the Treasury cluster.
It is not in line with President Cyril Ramaphosa and the National Treasury’s commitment to put a lid on financial crimes. The lack of action also goes against a 2021 decision by Sars Commissioner Edward Kieswetter and NPA boss Shamila Batohi to prioritise and “further enhance collaboration and deal with key challenges of tax crime and non-compliance…”
A reminder of what happened
On 26 August 2022, Sars took control of bank accounts, premises and other assets owned by Gold Leaf Tobacco Corporation (GLTC) and its directors Rudland and Ebrahim Adamjee. Sasfin Bank agreed to a voluntary search and seizure, too, releasing employee digital devices and banking documents. The action came after ominous tip-offs in 2019, some to Daily Maverick, about Krugerrands being smelted in a VAT scam as one leg in a vast money laundering network.
By then Sars had been circling some of the players for close to a decade. In a series of court skirmishes over unpaid VAT, some of which Sars lost, Paarl-based businessman Andries Greyvensteyn, a director of Gold Kid Trading, was no stranger to being called into tax inquiries.
Gold Kid operated as a refinery in the second-hand gold industry. Greyvensteyn claimed to have purchased old gold jewellery and legitimate semi-pure gold bars. Gold Kid’s story is that the business refined and smelted these into gold bars and sold them to local and foreign clients.
Sars had a different understanding of Gold Kid’s operations, including that VAT-exempt Krugerrands illegally found their way into Gold Kid’s melting pot. However, investigators struggled to prove their case and the tax court at least once ruled in favour of Gold Kid.
That is, until Sars uncovered “new information” which pulled the blanket from the additional legs of an eye-popping transnational gold and tobacco smuggling network.
An important principle to understand before we continue is that in the 1970s, when physical bank robberies were en vogue, the challenge that kept scoundrels busy was how to get cash out of the bank. After that, leaps in technology, increasingly stringent banking policies, ace investigative units at banks, central banks and revenue services, as well as a move to cashless societies, changed the emphasis of how scoundrels could get clean-looking cash into the bank.
Piles of illegal cash
The whole Gold Kid/GLTC scheme is aimed at cleaning dirty cash to introduce into the bank, explains Sars.
A high-level version of Sars’ findings arguably starts with piles of what investigators claim is illegal cash from illicit cigarette sales stashed at GLTC premises around South Africa. Mainly three cash-in-transit (CIT) companies (AMFS, AMFS Solutions and HSE Investments) picked up the cash at GLTC and transported what Sars claims are billions of rands in cash between around 2016 to 2019.
We pause here to explain that Gold Kid used faked invoices to claim the money was mostly paid to its suppliers of “old gold jewellery and semi-pure gold bars”.
Sars holds a different view. Investigators say that between 2016 and 2019, more than R10.3-billion washed out of Gold Kid’s Absa and Standard Bank accounts. Despite what the fake invoices pretend, Gold Kid’s suppliers testified in the tax inquiry that they received a fraction of the money in the invoices, about 1%.
The companies were simply used and remunerated with pocket change for abusing their existence to hoodwink the authorities. Sars claims that only 9% of Gold Kid’s outflows, about R920.4-million, was paid to its suppliers. The balance was paid to the three CIT companies.
To pick up where we interrupted the tale — the CIT companies picked up the piles of cash from GLTC premises and transported them to Gold Kid. We understand that the justification for these transactions in some instances was characterised as cash “bought” from the CIT companies. To make the “sale” seem legitimate, Gold Kid then electronically paid the money right back to the CITs, as mentioned above. To the unsuspecting eye, by this stage the money seemed to be “clean”.
The CITs then electronically sent the same amounts to GLTC’s account at Sasfin Bank. Kalandra Viljoen, AMFS manager, was a key player in the scheme.
In an unrelated investigation involving a small amount of cash, the Zondo commission pertinently referred investigations and prosecutions into AMFS, which may have been “operating as a bank without any lawful licence to do so.
“The question that needs to be answered is whether AMFS was providing general money laundering facilities to those who wished to have their proceeds converted to cash without the necessary checks required from the formal banking system. It is also recommended that the Asset Forfeiture Unit of the NPA takes steps to recover … any amounts that constitute the proceeds of unlawful activities or the instrumentality of an offence.”
Wearing blinkers
To our knowledge, the Hawks and NPA are wearing blinkers here.
After Viljoen’s AMFS and other linked CITs electronically sent the money to GLTC’s Sasfin account, at least 11 Sasfin employees allegedly conspired to move the cash offshore on the back of faked invoices. SARS counted at least R8.2-billion spirited out of the county.
The money ended up in accounts, mainly held by Aulion Global Trading DMCC and Premium Tobacco International DMCC in Dubai. Some of the cash found its way to Switzerland and Mauritius. Aulion is a company ultimately run by a Rudland acolyte, the polo-playing Howard Baker. Sars revealed Greyvensteyn had a hand in registering the company.
The unrelated Premium Tobacco claims “that all the invoices utilised by Gold Leaf Tobacco Corporation and/or Gold Kid for their illicit activities were forged without [Premium Tobacco’s] knowledge”.
Sars has found this type of thing to be a typical ruse GLTC used on multiple occasions in an attempt to wipe away its own finger prints.
According to Premium Tobacco, the company further did not actually receive the money reflected in the allegedly faked invoices. Where it actually ended up, is uncertain.
Premium Tobacco says it was unaware of the company being mentioned in Sars’ court battle with Greyvensteyn, but is “assessing legal options” against GLTC and Gold Kid to protect company interests.
We again pause here to explain that the whole thing had to happen surreptitiously. Sars found that money launderer Mohamed Khan cultivated a network inside Sasfin. A key person was IT guru Lulama Kene, who questionably seemed to have held the master key to Sasfin’s banking system.
After he sent the money abroad on the instructions of Rudland and Baker, he deleted all traces of the transactions on the Sasfin system. Colleagues helped to remove the BoPCUS reports of foreign money movements to the Reserve Bank, too. At that point, it was a novel move that dumbfounded investigators in the Treasury cluster and completely floored Sasfin CEO Michael Sassoon.
In 2022, Sassoon strenuously denied that his employees could have sneaked R3-billion out of the country without Sasfin knowing. Two years later, after Sars initiated a highly contested case for almost three times more than that amount washing through the bank unnoticed, Sasfin’s board and management “deeply regret that this fraudulent activity took place in our organisation” in its belated Annual Financial Statements.
Back to polo aficionado Baker. It turned out his Dubai company Aulion in turn sent the bulk of its cash in a circular movement back to South Africa-based Gold Kid, ostensibly as payment for the exporting of refined gold. It is this last leg, claims Sars, that involves one of the alleged VAT scams.
Where are the Hawks and NPA?
This article is a high-level overview of six court cases contained in about 8,000 pages of documents as well as a section of the State Capture Commission reports. One of these is a constitutional challenge launched by Greyvensteyn to explain that Sars has developed a nasty habit of infringing on his rights. Judgment in this and other cases is still outstanding.
If Sars, the Reserve Bank, the FIC, Sasfin and the Zondo commission can back up only half of their claims in these cases, it is clear that the authorities uncovered a serious threat to South Africa’s financial system.
The role players are numerous and involved in all spheres of society.
It leaves the public with an uncomfortable question: Why are the Hawks and NPA wearing blinkers?
This article was first published in the Daily Maverick
