`Sanctions busting': schemes to skirt South Africa embargoes. Firm's default uncovers illegal operations in nearby Swaziland
Matsapha Industrial Park, Swaziland
Happiness Dhlamini was mystified by the strange task awaiting her when she began working for Garment Industries of Swaziland in 1986. ``The bosses would bring shirts already made and tell us to put the labels on,'' the young woman remembers. ``Sometimes they already had a label from Zululand [the South African homeland of KwaZulu], and we had to take it off, and sew one on that said `Made in Swaziland.'''Skip to next paragraph
Subscribe Today to the Monitor
Critics charge that Garment Industries, the Swaziland branch of a South African subsidiary of Taiwan's Chia Ho Business Group, used Ms. Dhlamini and hundreds of other Swazis to help save its American export market after South African textiles were banned from the United States by the Comprehensive Anti-Apartheid Act of 1986 (CAAA). The scheme was described by Michael Warman, whose Eastbrook merchant bank took over the factory after Chia Ho defaulted on several million dollars in loans, and has been confirmed by Taiwanese and South African officials.
The scheme was one small part of a worldwide explosion of ``sanctions busting'' - secret corporate-trading tactics designed to defeat embargoes imposed by foreign nations in an effort to force South Africa to dismantle apartheid, its segregationist system.
Sanctions advocates say countless companies and billions of dollars are involved.
US Congressman Robert Wise (D) of West Virginia charged in congressional testimony earlier this summer that South Africa spends $2.3 billion a year evading just one anti-apartheid measure: an oil embargo nominally backed by every major petroleum-producing nation. A US bill that would virtually end US-South African trade - and includes a measure by Mr. Wise to punish oil firms that aid South Africa economically - was working its way through the House last week. A companion measure is in the Senate.
There are many small-scale schemes for evading sanctions active in Swaziland, a tiny kingdom of 800,000 people surrounded on three sides by South Africa. Officials wonder if they can stop the sanctions busters before they wreck the country's relations with European and North American trading partners.
False labeling ``takes away markets our genuine goods would have,'' says Chris Mkhonta, Swaziland's commerce and industry secretary. It also led European countries to threaten to include Swaziland in anti-South Africa sanctions.
Falsely labeled Swazi avocados have appeared in the Middle East, apples in Europe, and wine in Canada, Mr. Mkhonta says. The problem, he says, is that most such schemes attach forged ``certificates of origin,'' internationally recognized documents that say where a product was made, to goods that never touched Swaziland.
Garment Industries, however, used genuine documents from Mkhonta's ministry to export falsely labeled goods, according to Mr. Warman and workers employed by the former management. A study of the Swazi investment climate by a Washington consulting firm, Dimpex, says that US customs officials have been investigating the possibility that shirts shipped by Garment to the US as Swazi products were manufactured in South Africa.