Swiss Banks Face New Scrutiny Over S. Africa
ZURICH — Once again it appears it's confession time for Swiss banks.
As Switzerland investigates its past dealings with Nazi Germany, some here say it's time to explore another chapter of history - the involvement of Swiss banks in apartheid South Africa during the 1983-1992 international embargo.
"Switzerland played a major role in financing the apartheid state and its enterprises," says Mascha Madorin, a Basel-based economist. "The banks say they were just continuing business as usual ... that just isn't true. They became more important for South Africa as a way to keep contact with the outside world."
While Germany and Luxembourg also maintained banking and business contacts with South Africa during the embargo, by far the bulk of the business went to Switzerland.
Ms. Madorin says Switzerland extended credit to the apartheid government and acted as a stable investment center for South Africa. Private South African long-term investments in Switzerland increased from $27.5 million in 1988 to $3.5 billion in 1993.
In 1985, banks extended about $515 million to South African state-owned corporations. After apartheid's end in 1993, that dropped to $1.2 million. ESKOM, South Africa's state-controlled electricity supplier, received much of this credit, says Madorin.
South Africa's gateway
"Basically, Switzerland was South Africa's bank," says Jean Ziegler, historian and member of Swiss parliament. "South African gold was sold on the world market by Swiss Banks all during apartheid. Switzerland was the lifeline for South African exports."
In 1990, Swiss imports from South Africa totaled nearly $119 million, according to figures from Swiss Customs and Excise. That figure dropped to about $78.5 million in 1994.
Switzerland also acted as a base of business and financial operations. The apartheid government opened a financial consulate in Zurich in 1987. And many South African companies transferred their foreign assets here, giving South Africa a gateway to the rest of the world, says Mr. Ziegler. For example, in 1990, De Beers, which controls 80 percent of the world's trade in uncut diamonds, put its foreign assets in a holding company in Lucerne.
In 1987, the Rembrandt Corporation of South Africa established Compagnie Financiere Richemont in Zug, Switzerland, to concentrate its foreign holdings. And having Nikolaus Senn, Union Bank of Switzerland's former chairman of the board, on Richemont's board of directors further cemented Switzerland's ties to South Africa, says historian Hans Ulrich Jost.
"Switzerland's economic role and neutral image often don't square, and as a result Switzerland has suffered from a lack of credibility concerning its foreign policy," says Mr. Jost.
So far, the Swiss government disagrees. "Our position has always been that Switzerland doesn't mix political policy with economic policy," says Contestabile Elvezio, of the South Africa desk in the Swiss Department of Economic Affairs. "And many people in South Africa were happy Swiss businesses stayed. It meant 20,000 jobs that didn't go away."
'It was just business as usual'
For now, the banks aren't saying much, and they don't have to. Without an order from the federal government to lift bank secrecy laws, archives pertaining to this period will remain sealed.
Despite a strong anti-apartheid movement in Switzerland, the federal government never supported sanctions. Although the Swiss government contributed more than $340,000 to South Africa's Truth and Reconciliation Commission, the Rev. Alain Perrot, a leader in the Swiss anti-apartheid movement, wants more.
As for reparations, there aren't any takers so far. In a May 1995 shareholders meeting of the German Dresdner Bank, a motion called for partial remission of South Africa's debt as an act of reparation, says Madorin. But the bank found no cause, saying its involvement during the embargo simply kept the status quo.
Swiss banks share a similar point of view. "It's pure nonsense to say we profited from doing business during those years," says Michael Willy, a spokesperson for the Swiss Bank Corporation. "We had partners there that we couldn't leave. It was just business as usual for us. It's not up to a bank to engage in politics."