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Scrap foreign debt used by apartheid to prop up the public sector

SAMWU Press Statement
2 March 1999

The South African Municipal Workers Union fully supports the call made today by the Jubilee 2000 campaign to scrap the internal and foreign apartheid debt, in the light of the research report released today in Cape Town detailing the illegal role of Swiss and German banks into funding apartheid.

The disclosure that specific Swiss and German banks broke sanctions to directly finance the apartheid state itself through massive loans to public corporations, lends greater impetus to the call to government to implement the doctrine of odious debt.

"It is inconceivable that the very money borrowed directly to fund corporations such as Eskom which propped up the apartheid state by providing high quality services to white South Africa now has to be paid back with the result that services cannot be extended to the disadvantaged," said SAMWU General Secretary Roger Ronnie.

The research report also discloses that after the Botha regime had declared a moratorium on debt repayments, much of the debt was transferred into bonds held by public corporations. This happened during the debt rescheduling negotiations between 1986 and 1994.

This raises the very serious question of what guarantees were offered to the banks to repay the amounts owed by the public bonds. It is possible that the privatisation of public corporations was promised to the international banks in the eighties. SAMWU demands full disclosure of the promises made in these negotiations.

Finally, the union rejects the glib approach of the Department of Finance in it's dismissal of the pre-94 foreign debt as small and therefore insignificant. The report into the role of Swiss and German banks shows conclusively that the foreign debt extends beyond direct state debt into the parastatals. Therefore the R200 million claimed by the Department is a misleading figure as it only reflects direct state debt. There must also be recognition that about three billion dollars every year was transferred to overseas banks in profits and dividends between 1985 and 1993!

"This debt is owed to a few specific banks, and to cancel it would not therefore lead to capital flight and the collapse of the economy as claimed by the Department. To use the doctrine of odious debt is, in any event, a matter of applying international law and not simply a matter of defaulting," said Ronnie.