#Declassified: Apartheid Profits - nuclear bunkers and swiss bankers
In this instalment of Open Secrets’ series ‘Declassified: Apartheid Profits’, we take a closer look at the role played by the Swiss banks in propping up the Apartheid regime.
It is no secret that Swiss banks have a particularly bleak history of putting profit over people. Their role in selling apartheid gold, and providing extensive loans to the regime in times of crisis, is well documented. Yet newly declassified Swiss archival documents speak to a far deeper complicity between the Swiss banks, their executives, and the apartheid state and private sector. Was their relationship so cosy in fact, that in the case of a nuclear war, the Swiss had their eye on the Highveld for a fresh start?
At the turn of the 21st century, Swiss banks faced multiple lawsuits for their role in accepting and laundering the assets of victims of the Nazi-orchestrated Holocaust. At the time, the Swiss Banking Association declared in adverts: “Secrecy is as vital as the air we breathe”. It also lobbied hard to ensure the Swiss government put a blanket ban on access to any documents which spoke to Swiss corporations’ links with apartheid South Africa.
Housing apartheid profits
Despite its policy of neutrality, Switzerland clearly chooses to side with profit. This behaviour requires secrecy to thrive. So it should come as no surprise that in addition to Nazi gold, Swiss bank vaults also housed apartheid profits.
After decades of blocking access, the Swiss government finally released documents detailing its corporations’ economic ties with apartheid South Africa in June 2014. Cynically, it was the dismissal, in late 2013 by the New York Appeals Court, of a class action lawsuit against corporations involved in aiding and abetting gross human rights violations during apartheid that was no doubt central to the eventual release. The case, brought by an organisation of apartheid victims, Khulumani Support Group, originally included the Swiss banks, the Unition Bank of Switzerland (UBS) and Credit Suisse. Assured that the risk of being held to account had diminished considerably, Swiss authorities finally agreed to open up the archive.
Open Secrets researchers visited the Swiss Federal Archives in Bern shortly after the apartheid documents were made publicly accessible. One of the most intriguing finds was a 1960 government letter addressed to the Swiss Mission in Pretoria, which identified South Africa as a possible refuge in the event of a third world war.
‘Head office relocation’
A file called ‘Sitzenverlegung’ (head office relocation) identified South Africa, Canada and New Zealand as possible safe havens for Swiss companies and politicans in the event of a nuclear war. Reasons in favour of South Africa, the Swiss secretary of foreign affairs wrote, are “that it is relatively liberal, welcoming of investment by foreign corporations, and geographically located far away from the likely main theatre of war”. Evidently “relatively liberal” is a matter of interpretation.
- See the HQ letter
On the 21st of March 1960, the South African police shot and killed 69 protesters in the Sharpeville Massacre. In its wake, the apartheid government declared a state of emergency, banned the ANC and PAC and imprisoned 18 000 people, many of whom were kept in solitary confinement.
Against this violent crackdown and militarisation of the state, a Swiss official based in Cape Town was at pains to reassure the Swiss Department of Foreign Affairs that South Africa was still a good option for refuge.
In a letter dated the 5th of May 1960 - less than two months after the massacre - the official wrote: “There is no doubt that the South African government is committed to ensuring peace and order and security under all circumstances. We can also expect positive efforts to be made to maintain good relations between the races. Under these circumstances, it appears justified to continue the discussions with South African officials.”
- See the post-Sharpeville letter
By the early 1980s, with the fear of nuclear war undiminished, key apartheid ally UBS still had its eye on a safe haven in the Highveld. A confidential memo dated the 30th of November 1982 contains details of a meeting between the Swiss Ministry of Foreign Affairs, the head of UBS – Dr FG Gygax, and representatives from UBS’s fund management company – Intrag AG.
The memo reveals that in the meeting, an “emergency agreement” for the UBS-controlled South African Trust Fund (SAFIT) was finalised. The fund was set up in 1948 and was central to the sale of South African gold facilitated by Switzerland. The agreement, which would come into effect through a telex communicated codeword, would see the Swiss Union Trust for South Africa take over management of UBS.
All these plans were in place to safeguard Swiss corporate wealth in the event of an escalation of the Cold War. An agreement, wrote the manager of the UBS office in Johannesburg to the Swiss embassy in Pretoria, that we hope “will never be put into force”.
- See the memorandum here
Apartheid survived as long as it did because it was never truly isolated. An international network of economic and diplomatic allies played a substantial role in keeping it afloat.
Of the international banks, the Swiss commercial banks were among the most significant and long-standing supporters of the apartheid regime. Not only did they do business with apartheid South Africa, but they also protected the regime by lobbying the Swiss government.
The Zurich Gold Pool
In turn, they profited handsomely through the Zurich Gold Pool, which became a central node for the sale of apartheid gold. This relationship was worth protecting. South Africa borrowed money at a premium and its debt was backed up by gold – gold whose extraction over time has relied on the exploitation of poorly paid black mineworkers working in hazardous conditions to grow the fortunes of a few.
When we quizzed former minister of finance Barend du Plessis on the plan for Swiss banks to relocate to the Highveld, he was surprised but ‘delighted’ – saying that it was a reminder of the great ‘century long’ relationship between Swiss banks and South Africa.
In an aside, reflecting on the ability of the apartheid government to call in favours from their powerful Swiss allies, Du Plessis recalled a moment during the debt crisis of the mid-1980s: “One of our South African Airways Boeings landed in Switzerland with gold. A very small bank that was a creditor wanted to confiscate the airplane with the bullion on board. During the course of that day Dr Senn of UBS, who was a great friend of SA, bought the bank. He never told me the name of the bank as it was confidential at the time – and he fired the very brave CEO.”
In 1994, democratic South Africa inherited the mountainous debt owed to the financial institutions that bankrolled apartheid. The Swiss banks were among the debt collectors that came knocking. For decades, these banks knowingly propped up the regime that they saw as creating enough order for them to use the country as back-up for their corporations in times of war. When that regime was dismantled, they demanded repayment from all South Africans. These banks have never been forced to account for their role in funding oppression.
Without a hint of irony, the right-leaning Swiss People’s Party (SVP), run in part by private bankers, announced in August 2017 that it will seek support in Swiss parliament to stop the sharing of tax information with countries like South Africa because of ‘corruption’ in those countries. This data sharing commitment was designed to help countries like ours tackle money laundering and tax evasion by the super wealthy and corrupt. This dubious business brings profit to the Swiss commercial banks, and the push-back against cutting out this lucrative source has begun. Once again, profit trumps all.
** Open Secrets is an independent non-profit with a mission to promote private sector accountability for economic crime and related human rights violations in Southern Africa. Open Secrets welcomes the submission of material or information that could shed further light on the issues we have investigated.
** Apartheid Guns and Money: A Tale of Profit by Hennie van Vuuren is published by Jacana Media.