EDITORIAL: Haste sparks capture fears at Financial Intelligence Centre
FIC head Murray Michell is leaving, and the short window for applications to succeed him has set alarm bells ringing
The news that the head of the Financial Intelligence Centre (FIC), Murray Michell, will be leaving his post at the end of 2017 will undoubtedly have set alarm bells ringing.
Michell, who has been at the helm of this critical institution of the Treasury for the past 14 years, has been an exemplary public servant.
Among other things, the Financial Intelligence Centre monitors all financial transactions above a certain size, shares financial intelligence internationally and reports suspicious transactions to law enforcement agencies.
The key rationale behind the legislation internationally is to monitor transactions that may be the proceeds of crime or money laundering or are being used to finance terrorism.
In 2016, Michell guided the Financial Intelligence Centre Amendment Bill through Parliament, the focus of the bill being to compel financial institutions to conduct enhanced due diligence on politically exposed people. Despite objections from President Jacob Zuma, it was signed into law earlier in 2017.
The signing came just in time, as the International Financial Action Task Force was poised to issue a public statement warning SA about the failure to promulgate the regulations regarding politically exposed people. Had the task force done so, it would have had serious consequences for South African banks and their correspondent banking relationships.
The alarm over Michell’s departure is that when finance minister Pravin Gordhan was sacked in March 2017, it was believed the move presaged the capture of the Treasury for the benefit of private interests close to the president, most notably the infamous Gupta family.
It was on Michell’s watch that the Financial Intelligence Centre flagged 72 suspicious transactions by Gupta-owned companies involving R6.8bn for investigation by the criminal justice authorities.
Given that the Hawks and the National Prosecuting Authority had been captured for some time, it was no surprise that nothing was done.
In fact, the then head of the Hawks, Berning Ntlemeza, wrote a letter to the Guptas, informing them that the 72 transactions would not be investigated. Nonetheless, the incident highlighted the strategic importance of the Financial Intelligence Centre.
Gordhan’s replacement, Malusi Gigaba, is known to have been close to the Gupta family while he was public enterprises minister and minister of home affairs. Several Gupta-sympathetic appointments to posts in state-owned companies such as Transnet were made. When he was home affairs minister, Gigaba fast-tracked the citizenship process for the Guptas. Now Gigaba will appoint Michell’s successor.
The request for applications to succeed Michell is open for the next two weeks. The short time indicates either that it is being regarded with urgency or that a successor has already been identified.
When Gordhan was finance minister, there was much agitation in government circles that the Financial Intelligence Centre should be relocated to the security cluster, an indication of the importance with which it has come to be regarded.
Should the Financial Intelligence Centre now be captured by the appointment of someone aligned to the Zuma/Gupta axis and its integrity undermined, the damage would be immense. It would be equally damaging if Gigaba appoints an unknown or underexperienced individual who owes their elevation not to their skills and experience, but to the person making the appointment.
Gigaba’s choice will be closely scrutinised.
Michell must be thanked for his service. Some time ago, he indicated a desire to retire but was persuaded to serve another term by Gordhan. We wish him well after a selfless career in the public service.