If the Gaddafi-cash allegations are true, Zuma could face US sanctions – and much worse

Business Insider SA
TRIPOLI, LIBYA - APRIL 10: President of South Afr
Then SA president Jacob Zuma arrives in Tripoli to negotiate with Muammar Gaddafi in 2011. According to a Sunday Times report, Zuma may have negotiated moving Libyan money to South Africa during this time. (Photo by XINHUA/Gamma-Rapho via Getty Images )
  • According to a Sunday Times report, former President Jacob Zuma may have been involved in moving millions of US dollars from Libya to South Africa.
  • Given the seriousness of the allegations, and the involvement of dollars, US authorities could end up being "very aggressive" in pursuing the allegations, a leading legal expert says.
  • If the report is true, Zuma could potentially also end up with a life sentence in South Africa under the South African Prevention and Combating of Corrupt Activities Act.

If allegations about his involvement in stolen Libyan assets are true, Jacob Zuma could be added to the US sanctions list – and potentially spend the rest of his life in a South African jail, according to a leading legal expert.

Zuma is reportedly considering legal action against the Sunday Times, which first alleged that he received $30 million from the deceased Libyan dictator Muammar Gaddafi, but it was not immediately clear if such legal action was really in the works.

US authorities operate on the assumption that whenever a suspect transaction is denominated in US dollars, it falls under their jurisdiction. This has resulted in the aggressive pursuit of matters that, at face value, appear remote to the US.

Given the seriousness of the alleged transgressions – particularly because Gaddafi was on the US sanctions list, and the possible transfer of ill-gotten dollars across borders – the US authorities’ approach might well  be “very aggressive” in pursuing this case, says forensic investigator and legal expert David Loxton, CEO of investigations firm Africa Forensics and Cyber.

Loxton, who was previously a director at both ENSafrica and Denton, has assisted national and international law enforcement agencies in various investigations over the years.

“If the allegations are true, it means that a former President of our country helped a dictator, whose assets were frozen by global authorities, to steal money belonging to people from Libya,” he says.

At the very least, Zuma himself will be added to the US sanctions list, Loxton believes. This means Zuma won’t be able to travel to America or its close allies, and that any business associated with him will come under US scrutiny.

The former President could still do business in South Africa and maintain a local bank account if he is on the US sanctions list – but not if he is included on the UN sanctions list too.

In South Africa, no financial institution may deal with you if you are on the UN sanctions list, says the head of investigation and enforcement at the Financial Sector Conduct Authority (FSCA), Brandon Topham. 

“In addition due to reputation management I am sure that many financial institutions will use the US list unofficially when deciding whether to accept or continue doing business with a person or entity on the list,” Topham says.

There may be other service providers, including auditors and attorneys, who also may choose to not do business with someone on the US list, says Topham.

Jail in South Africa? 

But landing on the US sanctions list may be the least of Zuma's concerns, if the allegations are proven true and prosecuted.

Zuma's problems would include that he helped move the money, and that the money was stolen in Libya, Loxton says.

Various media reports have alleged that Zuma, who was the last world leader to meet with Gaddafi before his death in 2011, conspired with the Libyan dictator to move some of his money out of that country.

Under South African law, if the allegations were proved, Zuma could land in jail for life.

According to the South African Prevention and Combating of Corrupt Activities Act, a life sentence could be meted out for serious violations. Bringing a large amount of foreign currency to South Africa, without declaring it, is also a serious transgression.

Topham says that to his knowledge, the FSCA is not investigating the allegations.

Business Insider SA has submitted queries to the Financial Intelligence Centre (FIC) and the SA Reserve Bank, which police foreign-exchange transactions.

On Tuesday, Minister of International Relations and Cooperation Lindiwe Sisulu says her department will probe the allegations – if the Libyan government wants it to do so.

Libya is currently in the midst of a civil war, as a rebel group tries to seize control of Tripoli from Libya's UN-backed government last week. 

Read: Gaddafi’s stolen loot may have been hidden in Nkandla - here's what you need to know about the origins of the money

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