Parliament has been left divided over the recent report by Business Unity South Africa (Busa) which warned that the odds of South Africa being greylisted were extremely high.
Busa last week published a research report which found that South Africa had an 85% probability of being greylisted by the Financial Action Task Force (FATF) early next year, if does not strengthen required mechanisms against money laundering and terrorist financing.
Chairperson of the Standing Committee on Finance (ScoF) Joe Maswanganyi today (TUES) slammed the Busa report as “scoring an own goal”.
ScoF was deliberating on a presentation by the National Treasury’s response to 43 submissions on the General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Bill ahead of the greylisting outcome.
Without mentioning Busa by name, Maswangayi said he was disappointed that whilst Parliament was busy processing this Bill, certain sections of business had published such a “negative report”.
He said that the report - which was compiled by consulting firm Intellidex - did not mention the methodology applied to arrive at these percentages and why.
“This is a matter of national interest. It is very important that all of us - business, our social partners, labour, us as parliamentarians and everybody - to work together to avoid greylisting because it will have very dire consequences for the economy of this country, and even for the image of South Africa internationally,” Maswanganyi said.
“If there is something that we will not like to happen to this country, it is for South Africa to be greylisted.
“So it's very disappointing that people don't come to this platform, to parliament and say, parliament and government in general, can you do the following so that the country should not be greylisted?
“Because if you publish such a report as business, it's like scoring an own goal for the country. So you are telling the world that greylist us.
“It is very disappointing for such a constituency to do that, and I don't know why they do that. But I, for one, I am very disappointed with their conduct.
“We understand there are serious challenges, but there are not insurmountable to an extent that we can't deal with those challenges,” he said.
However, Democratic Alliance’s Dr Dion George objected to Maswanganyi’s summation of the report, saying that it did not encourage greylisting but had merely set out the consequences of greylisting.
“It was not advocating for it, and I welcome that report because what that report did was alert us to the possible consequences of greylisting,” George said.
“The way that I read it, it certainly never pointed fingers, although it could have but did not. But anyway, I won't belabour the points, but I just want to say I do not support your view on that report. I think it's very important for stakeholders, especially business and the banking sector, who will be heavily affected obviously.
“I completely agree with you, chair. The last thing we want is greylisting. But the fact of the matter is that there's a big chance we will be greylisted. And then if we are, we've got to get off as fast as possible because the economy will be impacted.
“ I think that that report needs to be seen in context and I think that it was extremely useful, especially to me, and I would highly recommend that every member of this committee reads it and in fact the authors [must] come to Parliament and talk (us) through it because it was very valuable in my opinion.”
If South Africa is greylisted, this would have a detrimental effect on the country’s financial institutions as the world’s lenders will be required to apply enhanced due diligence to any South African client, an invasive and extensive, to assess the source of funds and probity of clients.
As a result, international companies may elect not to do business with any South African company or individual to reduce costs and compliance risks, which would drive the required foreign direct investment away.
BUSINESS REPORT