Former British spy's investigation 'revealed South African bank corruption'

A long-hidden, secret report by a former senior MI6 officer has triggered a financial scandal after allegedly uncovering evidence South African banks “looted the state” during the apartheid regime.

Banks in the country face calls to repay billions after the report allegedly found widespread corruption in the financial system and ties with a secretive white nationalist group.

The findings of Michael Oatley’s year-long investigation have only been revealed nearly 20 years later, after his work was leaked last month as part of a South African government watchdog’s report.

Following a successful career in MI6, including a key role in the Northern Ireland peace process organising meetings with IRA chief Martin McGuinness, Mr Oatley set up an asset recovery agency called Ciex.

Paul Hoffman, anti-corruption campaigner

He approached Nelson Mandela’s post-apartheid administration in 1997 after a tip off that the white-only government had allegedly participated in a substantial bank fraud.

Ciex was given a contract to investigate and help recover public funds worth up to £1.5bn and allegedly discovered that the central Reserve Bank had during the 1980s made illegal and improper loans which were then reinvested at huge profit.

It also found alleged connections within the white banking community to the Broederbond, the secret Afrikaner organisation set up in 1918 to maintain white dominance. White-minority rule ended in 1994.

Despite the ANC being in power, the MI6 officer’s findings remained dormant for two decades until the Public Protector’s office was pressured to investigate. The findings have now been leaked to a South African newspaper.

The report alleged up to R2.25 billion (£134m) could be recoverable from Absa bank, owned by Barclays, because it received loans from Reserve Bank which were disguised a bailout.

Jeff Koorbanally, a forensic financial investigator, said: “Thanks to this MI6 officer we now know the depths the apartheid government sank to. This is huge as it has the potential to strike South Africa out as a trading platform as there has been a serious violation of world’s markets.”

Anti-corruption campaigner Paul Hoffman added: “The reality is that somebody owes South Africa taxpayers a huge amount of money.”

The report also said that the government could also seek international restitution from European banks where funds were moved.

The bank said it will give a full response to the report potentially offering confidential evidence.

In a statement Absa said: “This report contains several factual and legal inaccuracies. It has also perpetuated an incorrect view that Absa benefited from the bank bailout in question.”

The report comes after an Oxfam survey found that the three richest South Africans have the same wealth as 50 per cent of the bottom half of the population.