Zuma faces court action if he sits on banks bill

Cape Town - President Jacob Zuma is caught between two fires - face court action if he doesn’t sign a bill that would among others fight money-laundering, or stiff opposition from a black business body if the bill isn’t constitutionally tested. 

READ: Zuma asked not to sign bill that will scrutinise bank deals - report

The Council for the Advancement of the South African Constitution (Casac) this week addressed a letter to Zuma, reminding him that Section 79(1) of the constitution requires him to either sign the Financial Intelligence Centre (FIC) Amendment Bill or, if he has reservations about its constitutionality, refer it back to the National Assembly. 

“You have thus far chosen neither option,” Casac executive secretary Lawson Naidoo said in a letter to Zuma. “We therefore request that you exercise your obligation in terms of section 79(1) within 30 days of this letter, falling which we will approach the courts for appropriate redress.” 

The bill was passed by Parliament in May this year, but Zuma is yet to sign it into law as he is considering objections raised by Jimmy Manyi on behalf of the Progressive Professionals Forum (PPF). 

The draft legislation will require a senior bank official to approve the accounts of prominent influential persons and oblige banks to to establish the source of funds, as well as monitor these accounts on a regular basis. 

Prominent influential persons would include top government officials from the president down to municipal managers, as well as company chairs, CEOs and chief financial officers and individuals who do business with the state, including their immediate family, partners and business associates.

Naidoo told Fin24 by phone on Thusday that the organisation is concerned about the fact that the bill was already passed in May this year, yet no action has been taken. 

The implications for South Africa is that the country will be placed on a watch list if it does not comply with with international legislation that stops illicit flows of money, such as money-laundering and money appropriated to finance terrorism. 

“South Africa is a member of the Financial Action Task Force, and our membership may be ultimately suspended if we don’t conform to international standards to combat money-laundering among other things,” said Naidoo. 

Manyi, on the other hand, argues on behalf of the PPF that the FIC Amendment Bill violates the constitutional rights of affected South African citizens – “the so-called domestic prominent influential persons and their families and associates”, Manyi said in his objection letter to Zuma. 

The PPF is concerned that the draft legislation would transfer the judicial authority from law enforcement agencies into the hands of banking and financial institutions. 

Why Manyi objects

“Other intended consequences,” Manyi said, “is the infringement upon individuals’ choice of career. How can it be that merely by virtue of being a CEO or CFO that has dealings with government, one becomes a suspect?” 

Manyi also argues that individuals’ freedom of association would be in jeopardy if the bill is signed into law, as the listed occupations may discourage individuals from “aspiring to play their roles”. 

Casac’s Naidoo said the reality is that banks are required to practise due diligence. “In the existing regime we are all required to Fica our bank accounts, to provide proof of address.” 

The FIC Amendment Bill will no longer have a one-size-fits-all approach, so that when banks are involved in large-scale transactions that raise suspicions they are duty-bound to provide greater diligence and understand the transactional details, Naidoo said. 

“It will require banks to look behind the veil of corporate entities and it places a much greater responsibility on them.” 

It is exactly this provision that irks the PFP. “Banks should not be allowed to be prosecutors, judges and executioners at the same time,” Manyi said. 

“They do not have the moral authority to be entrusted with this responsibility.” 

Presidency spokesperson Bongani Ngqulunga told Fin24 by phone that as the president is away on business in New York, there hasn't been any movement on the bill.

In a previous statement he however said it was nothing unusual for the president not to sign bills into law immediately. “A number of bills have not been signed into law as yet, such as the expropriation bill, the private security industry regulation amendment bill and the protection of sate information bill for the exact reason that parties petitioned the president about their constitutionality."