Part 1 – Bad engagement and bad journalism

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By: Yamkela F Spengane

Please take time and read this…

This is a long piece but worth reading….

ON THE TOKYO SEXWALE PRESSER

Tokyo Sexwale has been the trending topic of the day after calling a presser to explain allegations he made a few days ago in an interview with JJ Tabane, that there exists a “Heritage Fund” whose billions were meant to be distributed to projects that would ultimately benefit the ordinary citizens of this country but got looted while the existence of this fund was never acknowledged.

In his almost 2 and a half hour presser, he tried to detail where the fund comes from, how he has tried to verify its authenticity using measures of the state, and how there exists a master account holding the money that belongs to the fund – whose account number he shared.

For this particular piece, I am not even worried about whether or not there is any truth to what Tokyo Sexwale said; rather, I want us to do an introspection as a country on how much we really know about the financial system that runs our daily lives and we depend on for everything. We really are wanting on the most important things.

1. WHERE ARE FINANCIAL CRIMES INVESTIGATIVE JOURNALISTS?

There was an opportunity to ask a lot of very direct questions to Tokyo Sexwale, but nothing of much weight came through.

The first thing to ask was how on earth was there even an account holding a quadrillion rands in the Reserve Bank? That is almost US$ 70 trillion, and $13 trillion dollars shy of the global GDP for 2020 ($83 trillion).

It’s preposterous how such money can come from an individual or a family. Even a superpower government can’t have such money for philanthropy, so the figures really need to be worked down for us to start getting to where the truth is regarding this fund.

Why I would say this is because the estimates on how much actual money (M0) is in circulation around the world put figures at approximately $30-40 trillion, with broad money probably north of $200 trillion (not encompassing derivatives and such). So to have one fund hosting a bulk of this money makes it difficult to wrap one’s head around.

The key here is that it was mportant to ask questions that educate on money and the global financial system.

Another one would be why would there be interest in such an investment to South Africa and Africa by these friends from the East. We know from decades of interaction with philanthropy from the west that there is nothing benevolent about it for the most part. We know NGOs have played a major role in advancing political agendas to not question why large sums of money would just come from hidden donors who want to do good.

Our financial journalism continues to not be on the pulse of things that really matter.

2. WE, THE PUBLIC, ARE ILLITERATES IN THE WORKINGS OF THE GLOBAL FINANCIAL SYSTEM.

This point is really why we cannot engage Tokyo’s assertions meaningfully as well. It is also why we have the level of financial journalism we have in the country. We really don’t delve into the meat of things and ask the important questions.

For a country that struggles with issues like Illicit Financial Flows, we should know a whole lot about how money moves in the financial system and where the Reserve Bank and SARS are either failing us by not having systems in place or are complicit.

Global Financial Integrity – a Washington DC based think tank that focuses on Illicit Financial Flows and global financial justice – did an investigative report in 2015, led by former International Monetary Fund economist, Dev Kar; and they reported that Illicit Financial Flows bled South Africa an average of about R300 billion per annum from 2004 – 2013; which was cumulatively about R3 trillion over that 10 year period. We were leading Africa, and sitting at number 7 in the world, which for an economy like ours is no small thing.

Global Financial Integrity followed that report with another one in 2018, that focused on one element of Illicit Financial Flows – this is potential revenue loss due to Trade Misinvoicing. In this report, they analysed data from SARS on imports and exports against trade data and found that annual revenue to the amount of $7.4 billion was lost to the government between 2010 and 2014, that is R111 billion per annum. Over the 5 year period, the loss was $37 billion or R555 billion in revenue to the government.

The data was able to break the $7.4 billion per annum into the difference revenue streams of SARS that were cheated through this misinvoicing.

Imports:

1. Uncollected VAT – $2.1 billion
2. Custom Duties – $596 million
3. Corporate Tax – $2.1 billion

The total amount lost from imports sat at $4.8 billion

Exports: cumulative $2.6 billion that related to lower than expected corporate income and royalties.

This information has never made it as headline news, no one bothers to discuss it; but hundreds of billions of rands are being stolen from the country by the private sector, and they make public sector corruption look like petty, amateur work. We are partly responsible because we are as informed as what we receive as the day’s dose of headline news but we ourselves don’t inform what we want headline news to look like. We don’t put substance out there, more so in this area.

How then do we expect to comprehend what goes on at the Reserve Bank and SARS if we don’t go out of our way to understand the happenings inside?

How will we even begin speak out that Treasury begin ordering its structures to work out a serious plan to harness Illicit Financial Flows that are costing the country, per annum, 30% of the current fiscal revenue by conservative estimates; enough to fund all fiscal deficits and other ambitions we have as a state?

We really need to do better for our own sakes.

Only when we get a grip of how the scaffolding holds everything up, will we start to see other things with different eyes

We cannot resort to calling Tokyo someone who is mad when we ourselves cannot even understand the details of things that are possible, and are not possible within our financial system; because then, we could also be mad from the same bug of ignorance.