Government’s lax enforcement of laws to curb illicit financial flows slammed
|Published
KZN Provincial Commissioner Lieutenant General Khombinkosi Jula inspects a counterfeit designer brand shoe, inset right, during a police raid on clothing shop near Durban’s beachfront yesterday. Sibusiso Ndlovu
Johannesburg - The leader of the African Transformation Movement (ATM), Vuyo Zungula, says South Africa has the laws to prevent illicit economic flows, but the government fails to implement them.
Zungula, who was addressing Parliament on Thursday, said the impact of the unregulated informal sector has given rise to the circulation of counterfeit products, illicit cash flows, and other security vulnerabilities in the country.
Counterfeit food, clothing, and cigarette smuggling were at the centre of this problem, he said.
"It is a painful disappointment that we have to introduce such debates as the country has laws to prevent the circulation of counterfeit products, illicit financial flows, and security vulnerabilities.
“The poor enforcement of such laws has turned our country into the world’s playground, where people come from anywhere and everywhere to play with the health of citizens, drain the economy, and pose serious security risks," he said.
Zungula’s speech coincided with the recent Illicit Auto Parts Conference, which reported that South Africa is losing more than $62 billion (R1.17trillion) a year because of illicit financial flows (IFFs), which could be used to fund the building of schools, hospitals, and safer roads.
Tyre Import Association of South Africa (Tiasa) chairperson and MD of Treadzone, Charl de Villiers, said a pilot study by the UN Convention on Trade and Development (Unctad) focused on measuring tax and commercial IFFs revealed that South Africa is losing out on $21.9 billion per year in inward flows and $40.9 billion in outward flows.
Zungula said the unregulated informal economy has made South Africa even poorer, adding that stricter border controls and visible policing should be used to curb the scourge.
"Our porous borders enable this criminality. Gun and drug trafficking, goods smuggling, and human trafficking are more common in our country.
“The lack of action from the government is allowing possible criminals and terrorists to settle freely in our communities, and it is the poor and the vulnerable that bear the brunt of the government’s carelessness," he said.
The government has made it easier for illegal foreigners to operate businesses when they are in the country illegally, he said.
"The laws are clear. If one is a non-South African citizen and wants to operate a business, they must be legal in the country. They must invest a minimum of R5 million, and 80% of the staff must be South African and use South African bank accounts.
“However, the reality of the situation paints a different picture. People come and go and do as they please while doing their utmost best to displace locals from the economy," he said.
On counterfeit food products, Zungula described them as biological warfare.
"We need to call it what it is. It is poisoning. It is biological warfare, and the state is turning a blind eye to our citizens being killed with fake and expired foods," he said.
The Star