JOHANNESBURG—The South African government is rushing through legislation in a desperate attempt to avoid being “gray-listed” by the Financial Action Task Force, a global intergovernmental watchdog of money laundering and terrorist financing.
In a report in October 2021, the FATF said the country had “failed to demonstrate that it is effectively identifying, investigating or prosecuting terrorist financiers or addressing terrorism finance through alternate measures.”
The task force said recently South Africa had made little progress in implementing the report’s recommendations, which included the establishment of a “beneficial ownership registry.”
These registries require public disclosure of the identity of individuals who benefit financially from companies, even if they’re not legal owners.
Lakshmi Kumar, policy director at Global Financial Integrity, an organization in Washington that’s helped more than 100 countries set up beneficial ownership registries, told Epoch Times: “The ability to identify who actually owns a company, who’s the person behind a company, is critical when you’re trying to find people who manage to smuggle away ill-gotten gains because it’s always through a company structure of some sort.
“The ability to move money outside South Africa to the rest of the world is facilitated primarily through anonymous companies.”
The World Bank said “anonymous companies” were used in the majority of corruption cases it reviewed, with beneficial owners hiding behind “fictitious” firms to move billions of dollars.
“Corruption and other criminal assets, complex money trails, strings of shell companies and other legal persons and legal arrangements, such as foundations, trusts, and trust-like arrangements … form the complex web of subterfuge in financial crimes cases, behind which hides the beneficial owner—the puppet master and beneficiary of it all,” said Emile van der Does de Willebois, senior financial sector specialist at the World Bank and its Stolen Asset Recovery Initiative, in a recorded statement on the bank’s website.
“Linking the beneficial owner to the proceeds of corruption and other crimes is notoriously hard. With sizeable wealth and resources on their side, they exploit transnational constructions that are hard to penetrate and stay aggressively ahead of the game and to conceal ownership and control of tainted assets.
“Transparency of beneficial ownership will help ensure that the puppet masters and their associates and facilitators are not able to operate in secrecy.”
Funding Terrorist Organizations
Under pressure from the financial task force, President Cyril Ramaphosa’s administration began moves late last week to establish a beneficial ownership registry, just as South Africa’s Financial Intelligence Centre said it was investigating information that money emanating from the country had been used to fund terrorist operations in Kenya and Mozambique.Johannesburg-based economist Dawie Roodt told The Epoch Times a FATF gray-listing would likely result in a ratings downgrade, which in turn would spark decreased investment and trade.
South Africa is the second-largest economy on the continent, after Nigeria, but is Africa’s most developed and most industrialized. The World Bank expects its GDP to be worth $445 billion by the end of 2022.
“Nigeria’s main economic drivers are oil and gas. South Africa has a massive manufacturing sector, financial services used by virtually the whole of Africa and beyond, gold and platinum and mining of other minerals on a huge scale, wholesale, retail.
“A lot of money from diverse streams is in South Africa, and business regulations are weak, so it makes sense that extremists want to exploit this,” said Roodt.
Efforts by the African National Congress (ANC) government to close loopholes that allow almost unfettered financial outflows intensified after the Biden administration designated five South Africans as “global terrorists.”
It said the five had used front and/or fictitious companies to provide “technical, financial or material support” to the Islamic “State” of Iraq and Syria, or ISIS, terror network.
In a statement, U.S. under-secretary of the treasury for terrorism and financial intelligence, Brian Nelson, said “key” ISIS members and their businesses being targeted in South Africa had played “pivotal roles in enabling terrorism.”
It named “businessman” Farhad Hoomer (45) as leader of an ISIS cell in the east coast city of Durban, and said he continued to express the “will and intent to attack the interests of the U.S. and its allies.”
Tycoon in Spotlight
In reaction, Hoomer told a local Islamic radio station “only Allah knows” where America’s getting its information.“You need to ask the United States who put out this statement that people from South Africa are funding Islamic State. We actually want to sue the United States for wrong information and bad-mouthing. I don’t know the other brothers the Americans are talking about.”
Nelson’s statement identified two brothers, Nufael Akbar (50) and Yunus Akbar (43), as members of the cell it said was operating from Hoomer’s upmarket home.
It said Nufael was a “central commanding figure” and Yunus an “enforcer and logistical coordinator.”
The Epoch Times has established that Nufael is linked with a gold trading firm and a construction company, while Yunus is connected to a waterproofing business.
A source in South African intelligence told The Epoch Times agents had been “watching” Hoomer and his “associates” for a “long time,” describing him as a “tycoon with fingers in many pies.”
The owner of several companies, including a jewelry trader, construction firm and shoe importer, Hoomer first appeared on the radar of local law enforcement agencies on March 3, 2016. He and a companion, Kanwal Irshad, were detained at King Shaka International Airport in Durban when they tried to leave the country with $50,000 in cash, in contravention of South Africa’s currency and exchanges act.
The couple were forced to forfeit the cash to the state, but were not charged.
Poor Police Investigation
In 2018, Hoomer and 11 others were arrested for allegedly attacking a Shia mosque in Durban. The imam was murdered, his throat cut; several worshippers were stabbed.The alleged perpetrators included Mohamad Akbar (25) and Umar Akbar (24), who the United States have also sanctioned.
Hoomer and the other men were charged with several crimes connected to the mosque attack, including murder, attempted murder and arson. The charge sheet was expanded to include terrorism and planting “incendiary devices” around Durban.
The group was also charged for illegal possession of an IED remote control and extortion of three Durban businessmen. Hoomer allegedly demanded they each pay 10 million rands, about $560,000, into an account in Dubai.
But, in 2020, the judge dismissed all charges, citing failure by state prosecutors to present a case timeously and a poor police investigation.
Months later, police arrested Hoomer at a warehouse in Durban, after seizing an “arsenal” of firearms, including an AK-47 assault rifle and 5,000 rounds of ammunition.
In an affidavit, the “tycoon” said the firearms were for “protection” and “hunting purposes.”
Hoomer again walked free, when the judge dismissed the charges as police had entered the warehouse without a search warrant.
The Epoch Times reached Hoomer in Rabat, Morocco, where he said he was now “forced” to “do business” because of U.S. “persecution.”
US ‘Couldn’t Prove’ Allegations
“The U.S. first sanctioned me in March this year. All my bank accounts in South Africa were then closed. I was forced to shut all my businesses, so I don’t know why the latest U.S. sanctions are targeting my businesses. I don’t have any businesses in my home country anymore.”Hoomer continued: “The South African legal system couldn’t prove one of the allegations they put on me. Now the U.S. gets involved, which is worse, because the U.S. are just a big bunch of bullies; they go around threatening the world. They’re a bunch of liars.”
But a source at South Africa’s National Prosecuting Authority told Epoch Times Hoomer was an “emir” (senior Islamic authority or military leader) in ISIS and had been “instrumental” in establishing the organization in Southern Africa, even funding ISIS-allied extremists in northern Mozambique.
Hoomer’s lawyer, Yusuf Cassim, denied his client had ever channeled money to ISIS.
“We’ve never seen any proof of those transactions. We believe they’ve been investigating my client for a long time now, and they’ve come up with nothing. So we’re very interested to see what particular financial transactions he partook in, in terms of ISIS funding.”
Hoomer added: “Police took away all my computers and cellphones. State prosecutors have all my bank records. So, if they have proof that I am a money launderer funding terrorism, why don’t they charge me?”
Cassim described the U.S. sanctions against Hoomer as “draconian.”
“My client doesn’t have assets or investments in the United States so that’s not a concern. What is concerning is that he can’t travel outside Africa because he’s now red-listed, cited as a threat to a lot of countries, because of the U.S. sanctions.”
Hoomer said South African and U.S. authorities were targeting him and others as part of global “persecution” of Muslims.
“Just because we hold certain beliefs and views does not make us terrorists,” he said.
In March, in an interview with the Global Initiative Against Transnational Organised Crime, Hoomer again denied being a terrorist, but said he would be willing to “fight” to establish an “Islamic caliphate.”
He described democracy as “evil,” saying Sharia law was the “best thing” to “free Muslims from slavery.”
When asked to comment on the latest sanctions against him and Washington designating him a global terrorist, Hoomer told South Africa’s News24 agency: “When you put a person in a corner, and you keep tramping on their toes, you are going to get a reaction that might not be too good. And then later on, they will say this person is a terrorist because look how they are reacting.”
He added that “people” were following him wherever he went in North Africa.
“I don’t know who they are; draw your own conclusions. They’ve interrogated my family in Morocco and Tunisia. They are behaving like gangsters.”
