PHALA PHALA
Reserve Bank’s buffalo-sized Phala Phala cop-out puts President Ramaphosa in the clear
Central Bank gives Ramaphosa the final get-out of jail free card on the buffalo sale and dollar theft at his farm.
The SA Reserve Bank (Sarb) has found that because Sudanese businessman Hazim Mustafa did not take receipt of the animals he bought from President Cyril Ramaphosa, the head of state is cleared of holding and not declaring forex. In December 2019, Mustafa bought a range of game from Ramaphosa’s Phala Phala farm and paid $580-000, he confirmed. He didn’t ever arrange to have his haul fetched.
Some of the money was stolen from couches into which it had been sewn in February 2020. Ramaphosa’s head of VIP Protection, Wally Rhoode, then undertook an off-books investigation to find the culprits. Former spy boss Arthur Fraser laid a criminal complaint in June 2020, which is still being investigated by the Hawks.
“On the facts available to it, the Sarb finds that there was no perfected transaction, and thus the Sarb cannot conclude there was any contravention of the Exchange Control Regulations,” the Central Bank said in a two-page statement on Monday, August 21. It also found that Ramaphosa was not entitled to the funds as “conditions precedent” to the transaction had not been met. All South Africans must declare forex to the Treasury within 30 days of receiving it.
“It’s a convenient and neat way of coming to a conclusion,” said lawyer Peter Leon of Herbert Smith Freehills. He says that the finding is likely to be taken on review. When asked if the Reserve Bank was more lenient on capital controls now than when South Africa’s forex regulations were inked in 1961, he said: “They are strict, onerous and pretty Messianic about enforcing them.” (See relevant forex law in the graphic).
Leon says the term “no perfected transaction” meant Sars found the transaction was incomplete and that he was not entitled to the Phala Phala dollars. Therefore, he had not violated any forex regulations, it found.
But in an interview with Annika Larsen, Mustafa acknowledged a sale. (See Victoria O’Regan’s report here) and said he still wanted his livestock.
“The public interest has been compromised by Sarb,” said analyst Khaya Sithole. “The onus is upon them to take citizens into their confidence.” The Bank only briefly summarised its finding and said it could not, by law, make the report public. “They have created a knowledge vacuum.”
Ramaphosa was also cleared by the acting Public Protector, Kholeka Gcaleka, in July. In this article, Professor Pierre de Vos said she lacked curiosity about her finding.
Read more in Daily Maverick: Ramaphosa cleared of wrongdoing in Phala Phala scandal by Public Protector, Wally Rhoode now in firing line
The Sarb took a year to complete its two-phase investigation. Ramaphosa was also cleared by the revenue service Sars which found in March that he had declared the income as tax. The President waived his right to confidentiality to allow Sars to make the report public. When asked if he would do the same for the Sarb report, the Presidency spokesperson Vincent Magwenya said: “The President did not choose to keep the report confidential: the Sarb made his decision based on the applicable legislation. The President has not had sight of the report and has no authority over it.”
Fraser claimed $4-million had been stolen from the farm, but the most often quoted is between $580,000 to $600,000.
Daily Maverick put additional questions to the Sarb but the institution said it would not comment further. DM
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where is Fraser in this mess or is he in orange overalls as he was not authorised to free Zuma and a whole lot of other things!
That is exactly what I said is a legal argument when this blew up. No sale, the dollars belong to the buyer, no income tax or VAT if applicable. The dollars were not stolen from squirrel because they also were not his dollars.
Anyway, this is all a confusion lost in translation. The manager was told “sit die geld in die bank”. He took that to mean the “sitbank” instead of FNB.
End of the day, the amount is in CR’s scheme of things immaterial. If he was doing fraud he would do it at beyond Zupta scale!
Mr Buys, you’re ability to make a joke out of a dreadful situation is a true testament to your South African-ness. Please accept this ‘Humoris Crux’ from a grateful nation, and may your tribe increase.
Also: Good to know that as long as I *stream* movies from pirate sites, and just ‘hold’ them in my brain (on my couch) – without downloading them – I am guilty of no offense!
But the joke is actually more on those regularly shooting themselves and our country in the foot in the comments section here with their rabid criticism of people like Ramaphosa. Who is undoubtably under performing but is clearly not a Malema or anything like the evil corrupted politicians like Zuma or Magashule who he has successfully expelled from power.
This simply doesn’t pass the smell test.
Incidentally, DM, the abbreviation for the South African Reserve Bank is SARB, not Sarb. Similarly, the abbreviatiion for the South African Revenue Service is SARS, not Sars.
This man has no shame. Oh, I forgot – he doesn’t know what that is.
A legal conundrum for SARB and/or SARS – Ramaphosa declared the income for tax purposes, so he considered the transaction as being completed in the sense that he has an obligation to his client to deliver the goods. But SARB now find the transaction is not completed? I don’t even want to speculate what possible legal problems & headaches will this interpretation of trade credit cause the SARB with the billions of Rand in forex dealings taking place every week.
Sarel, SARS has a different view of income than IFRS. If you are landlord and tenants pay you deposits, SARS tries to tax that as revenue …. Dot your i’s and double cross your t’s
This must be great news for anyone with illegal US dollars sitting on their home safe or stuffed in the sofa. Just say you sold your house to a foreigner who pitched up and paid a deposit in cash and then didn’t follow through with the transfer. So they forfeited the deposit. Pretty cool actually. There must be a market then to create bogus sales agreements. Use Santa Claus as the buyer. Apparently he too arrives in SA for an annual visit without ever going through a passport control. Just write an affidavit and poof … everything is ok.
Remember everyone is equal before the law.
This is a fascinating legal argument. No tax is payable, and no forex needs to be declared, if the service paid for has not been delivered. In my ignorance of this simple law I have always invoiced my clients after performing a service. But this ruling makes it clear that if I now invoice my clients and get paid before delivering any service, there is no tax due. I need to change my invoicing strategy!
Good one!
indeed – if no service has been delivered, then no taxable, or reportable event has occurred. So, given that, and given the certainty that tax-payers receive no value for rates and taxes PAID, then on the same basis, SARS and our relevant municipalities are just holding our money – as the President is holding Mustapha’s money – and in both instances the event requires unwinding and all monies returned.
QED.
Very funny. The contortions demonstrated by SARB to clear the prez eclipse Cirque de Soleil’s best efforts
Zuma damaged many of our independent institutions to the point where they became dysfunctional and were no longer trusted by citizens with his Nkandla shenanigans. Today Cyril is doing the same with his Phala Phala shenanigans. This is a very sad development for SARB as it has clearly failed to act without fear, favour and prejudice in its coverup for Cyril!
So if my drug politician “friend” buys $1mill worth of widgets from me but never collects them, the sale hasn’t happened…. So I don’t have to declare, and I cannot be busy for this…. I can see every drug dealer and skelem now demanding payment in USD and all lawyers using this defence.
What a joke, we are really now a failed state.
YAY! So the murky waters of the Phala Phala drink trough open the doors for us South Africans to transact and trade in cash currencies as we wish!!
If I am not mistaken, the deadline of 30 days to declare the transaction to SARS was past before this saga came to light.. I forget the detail but that clearly didn’t matter in this case anyway..
Surely there are more important matters demanding attention than $580000 paid cash for a range of game purchased on a farm?
Firstly the deal was never completed.
Second, the reporter has a history of selective integrity, which was designed to embarrass and
Third, if the whole system is that corrupt as to clear the “offender” any further comment is frivolous.
Let it go and slide into history. It is an irrelevant aside
Where is the point of delivery. Ex Works or FOB or Delivered Sudan.
Copy of Contract needed. If delivery is not made by a specified period of time what is default.
Copy of correspondence.
Enough experts around.
What are state of goods now after 3 years in storage. Storage costs, food and maintenance.
Where to now to get transaction completed. Another 3 years and merchandise will still not be delivered and Cyril still sits on the money and the goods become damaged.
And if calves were born in the meantime, to whom do they belong?
If you or I had $500 000.00 in cash in our home…. we would be in Jail!
This sounds more like a plot for a Cohen Brothers movie.