Special Hearings — Business Hearings — 1997-11-12

MR BROWNE: Thank you, Mr Chair.  During the banking sanctions campaign in the 1980's Swiss bankers would solemnly declare that we are Swiss, we are neutral.
 Now the neutrality reputations of Swiss bankers have been severely discredited.  Their collaboration with Nazi Germany during World War Two has finally, but still only partially been revealed.
 The lesson is that money is not neutral.  It can be used for both good and for evil.  (indistinct) have been forced to obey orders, is valid neither for a soldier who commits an atrocity or a businessmen who commits fraud.
 Dr Johan Rupert's statement on behalf of Rembrandt was a breath of fresh air.  He's also documented the embarrassment of his father, the founding chairman, in being associated with the economic (indistinct) of successive Apartheid era administrations.
 His was the vision in keeping with other Afrikaners such as Dr Beyers-Naude.  At Volkskas, more recently controlled by Rembrandt, was the bank most closely connected with the Apartheid state.  On that he was silent.
 The Afrikaanse Handelsinstituut has quote accepted moral responsibility and apologises to South Africans negatively effected by the collaboration of the business sector with the Apartheid state.  It is recommended that the SASRIA fund of about 9 billion should be used for reparations.  
 The Council of South African Banks, COSAB, concedes that banking is to any economy what the cardiovascular system is to the body.  It continues that measurable damages have been suffered by people to whom reparations will hopefully be paid.
 We learn that banks today hold 11 billions rands worth of home loans to Blacks, but no mention is made of the interest rates of about 20 percent which makes home loans unaffordable.
 The South African Reserve Bank reveals that are many more depositors with South African banks than borrowers.  This is a phenomena known internationally as red lining.  
 The Islamic Chamber notes that financial institutions mobilised billions rands from the Black population and lend them to the White population.  There was little or not investments in Black townships.  The rational was it was good to accept moneys from the Black community, but it was too risky to invest or lend to them.
 But by far the most comprehensive of today's submission is that of the national campaign on the Apartheid debt.  It declares, (1) that financial support of the Apartheid system provided the means and opportunities for gross violations of human rights.  
(2)  That that democratic government has inherited a debt burden of 300 billion rand and that interest payments alone adversely affected ability for socio-economic investments such as education, housing and health services.
(3)  The submission raises the issue and doctrine of odious debt.  That the Apartheid Government was internationally judged be illegitimate and consequently professional financiers who funded have no claim on its democratic successor.
 The great bulk of the national debt relates to pension fund packages the Apartheid era bureaucrats and operatives who rewarded themselves (indistinct).  It is internationally accepted that debt incurred under (indistinct) or for immoral reasons, are unforceable.  If professional financiers (indistinct) themselves by funding Apartheid, surely it is they and not Apartheid's victims who should now suffer the consequences.
 Thanks to the national debt South Africa is now facing bankruptcy.  The country (indistinct) on the brink of a debt trap, accept that countries unlike individuals or corporations do not go bankrupt.  They go into a debt spiral, the consequence of which is usually revolution when the gap between rich and poor become intangible.
 South Africa has undergone a political miracle, desperately needed now is an economic miracle.
 Yesterday we heard ESKOM's apology for its role in the Apartheid system.  Thirdly, no comparable apology was forthcoming from BARLOW RAND, SANCOB or OLD MUTUAL.  What is the point, may I ask, in the financial sector in pushing democratic South Africa over the brink into bankruptcy?
 A genuine apology is an imperative and that includes the payment of substantial reparations by the beneficiaries of Apartheid rather than the tax payers.
 There is no merit to an apology that I'm sorry that I stole your bicycle, but I'm now not going to give it back.  Or alternatively that someone else should bear the cost.  
 Unlike the rest of Africa there is no shortage of capital in South Africa.  It is however held by a handful institutions, the insurance and mining houses.  Southern South Africa has been left responsible for the foreign loans which financed the massive capital flight of over 25 billion dollars during 1990 - 1994 alone by the same companies (indistinct) assets now worth hundreds of billions of rand.
 Rembrandt tells us that its fine assets produces very substantial dividends, but perhaps the capital itself should not be repatriated to finance social investment in South Africa.
 Thanks to the national debt, the state has no money for socio-economic upliftment.  It is obscene that in a country with 50 percent illiteracy, teachers are being retrenched or that nurses are being retrenched or that seven million South Africans live in shacks.
 The Black Management Forum rightly indicts the White business sector to right the legacy of Apartheid.  What hope is there in improving productivity when kids study by candle light in the most shameful environment.  Of ten thousand children who begin school only one matriculates with maths or a science subject.
 Such is the over abundance of capital in only a few hands that addressing the crisis could be achieved with little more than petty cash.
 A million houses at R50 000,00 each would cost 50 billion rand.  Old Mutual, a 235 billion rand institution is so cash flush that it proposes to pay its policy holders at 29.3 billion ...(indistinct) bonus and to transfer 50 billion out of South Africa.
 We heard (indistinct) has made one billion rand available to encourage small entrepreneurs in the townships and a further one billion rand for infra-structure.
 Surely massive investments in education, housing and health services would have dramatic economic benefits for the victims of Apartheid, for the economy generally and for the financial institutions in particular.  They would be the prime beneficiaries of the subsequent growth in South Africa's appallingly poor productivity, a consequence of lousy labour or of lousy management.
 Financial institutions, unlike manufacturing companies, have forgotten that they're partly public organisations.  They are corporate citizens, but they're publicly charted to go under the common wealth to the benefit of society.  They were never intended to be profit driven licences to (indistinct) money.
 Even George Sars voices his alarm about the consequences of capitalism run (indistinct).  Should democracy flounder in South Africa, because of the (indistinct) between rich and poor, the casualties will include the financial institutions and their policy holders.
 Ethical investment is almost unheard of.  No, money is not neutral.  It confers responsibilities and a social contract in self interest to uplift, rather than oppress the poor.
 Thank you, Mr Chair.

CHAIRPERSON: Mr Cassim.