Time magazine's cover story for the week ending July 23 ( Barclays is just the beginning: why London breeds financial scandals - and why this one could be the biggest yet) highlights why the City of London has been described as "the most corrupt square mile anywhere on the planet Earth".

British banking and financial regulation is so lax that banks such as Barclays have degenerated into little more than casinos. Apart from Barclays, another major British bank, HSBC has been identified as laundering Mexican drug money.

I was astounded to learn in 1999 that it was then not illegal under British law for British arms dealers or other companies to bribe foreigners to promote export contracts. The British s ecretary for t rade and i ndustry finally admitted in 2003 that BAE had paid bribes to secure its arms deal contracts with SA but they were, she pleaded, "within reasonable limits."

Among the documents that I submitted to the Constitutional Court are 160 pages of affidavits that detail why and how BAE paid bribes of £115m (R1,5bn), to whom the bribes were paid, and in which bank accounts they were credited. Reasonable limits? The Hawks inherited from the Scorpions 460 boxes and 4,7-million computer pages of evidence of BAE corruption in the arms deal.

Four strands interlink the arms deal scandal with my call to President Jacob Zuma to appoint a commission of inquiry into the Barclays Bank takeover of Absa.

n British prime ministers John Major and Tony Blair exerted great pressure on SA for the sale of BAE Hawk and BAE/Saab Gripen fighter aircraft. The South African Air Force rejected the aircraft in 1997 as unsuited and too expensive, and the s ecretary for d efence resigned rather than be held responsible for the debacle. The then defence minister, Joe Modise, overrode all objections, even price. The consequence is SA now has BAE fighter aircraft, but no pilots to fly them, no mechanics to maintain them and even no money to fuel them.

n Under British lobbying, the post-apartheid Reconstruction and Development Programme (RDP) was abandoned. Growth, Employment and Redistribution (GEAR) and offsets were trumpeted as SA's recipe for an economic miracle of 8% growth by 2000, and job creation.

Former president Thabo Mbeki overrode all objections to GEAR by the Congress of South African Trade Unions and others. Alec Erwin and Mr Modise insisted that R30bn spent on armaments would generate R110bn in offsets and create over 65000 jobs. Trade and Industry Minister Rob Davies finally conceded in May that the offset programme was a complete fiasco. In fact, offsets were simply vehicles to pay bribes.

n The 1999 arms deal affordability study warned all Cabinet ministers that the arms deal was a reckless proposition that could lead the government into mounting fiscal, economic and financial difficulties. It also noted foreign exchange risks. Those warnings were ignored.

n The Barclays Bank/Export Credits Guarantee Department loan agreements signed by then finance minister Trevor Manuel funding the BAE acquisitions until 2019 are a textbook example of third world debt entrapment. Even Mr Manuel's own legal counsel described the agreement in 2003 as "potentially catastrophic for SA."

Barclays was then permitted to take over Absa, and African National Congress cadres with no prior banking experience - first Gill Marcus and then Maria Ramos - became CEOs. Not surprisingly, Absa managers are now abandoning a sinking ship.

The implications are dire. Banking is the lifeblood of any economy, and a meltdown in SA's largest banking group looms when prudent banking practices are subordinated to political ideology. That was also SA's experience during the apartheid era, with disastrous consequences. Urgent remedial action is necessary before SA becomes "collateral damage" from the Barclays Bank Libor fiasco.

Terry Crawford-Browne

Cape Town