Illustrative image | Sources: President Cyril Ramaphosa. (Photo: Gallo Images / Jaco Marais) | South African Reserve Bank. (Photo: Flickr) | iStock 
Perhaps Parliament’s Standing Committee on Finances should have also called the SA Revenue Service (SARS), Hawks, SA Police Service and the Financial Intelligence Centre to Wednesday’s meeting. That way, each state entity could report back how they had remained in their lanes. Getting everyone in the same room has been done before.
Read more in Daily Maverick: Ramaphosa’s Farmgate scandal – a timeline of what we know (and don’t know) so far
On Wednesday, South African Reserve Bank (SARB) Governor Lesetja Kganyago reiterated how investigations by its Financial Surveillance Department — supported by “massive resources” and outside legal opinions — into the foreign currency stolen from President Cyril Ramaphosa’s Phala Phala game farm showed no contravention of Regulation 6(1), which requires the declaration of foreign currency within 30 days. That’s because the conditions of the contentious sale of buffalo at the farm to Sudanese businessman Hazim Mustafa — state veterinary examinations, transport and export permits and the like — remained outstanding.
Describing the $580,000 paid for the buffalo as a “security deposit” provided somewhat more detail to MPs than the initial SA Reserve Bank statement on its findings last week.
Read more in Daily Maverick: Reserve Bank’s buffalo-sized Phala Phala cop-out puts President Ramaphosa in the clear
“The mere possession of foreign currency is not what’s regulated in terms of the exchange control regulation,” Kganyago told MPs, adding this was dealt with by customs and excise legislation that fell under SARS. Money laundering investigations were carried out by the Financial Intelligence Centre.
He and his deputies stood by the report and findings.
“We sought outside legal counsel on the report. We asked questions and we got satisfied our team acted professionally ... and acted without fear, favour or prejudice,” Kganyago said.
But opposition MPs let rip.
“This is unadulterated claptrap,” said United Democratic Movement (UDM) chief whip Nqabayomzi Kwankwa, pointing out trade was done on guarantees, not cash.
“It’s insulting our intelligence [to say that] because no formal processes were done, it’s okay for money to be stuffed in sofas... When money is stuffed in sofas, it’s money laundering.”
EFF MP Floyd Shivambu also took a dim view. “Now the SARB is joining to try cover up what happened at Phala Phala... [They think] we are fools who must accept this rubbish,” Shivambu said.
The SA Reserve Bank did “malicious compliance so they can exonerate a sitting head of state,” he added.
DA MP Dion George asked about the wider repercussions.
“Did you consider the impact your reasoning would have on money laundering — and how persons can avoid declaring foreign currency by simply stipulating conditions in a contract?” George asked.
The governor was left to state his hope of not being misunderstood.
“If indeed the perception ends up, ‘Oh, it’s okay to launder money’, it would be a very unfortunate interpretation of what we have said,” Kganyago said. “Maybe one day the Financial Intelligence Centre (FIC) might be able to pronounce on this.”
To be fair, Kganyago is correct: the Reserve Bank doesn’t investigate money laundering. While the central bank’s Financial Surveillance Department can flag issues, as does the FIC on money laundering, these are referred to the SAPS and the Hawks.
But, since at least 2017, it’s no secret in parliamentary corridors that the system is fractured. That’s long before the global money laundering and terrorism financing watchdog, the Financial Action Task Force, put South Africa on greylisting notice in 2022 for failing to properly supervise, police and regulate cross-border cash transactions.
In late August 2017, the parliamentary finance committee was told that there were 58 illicit financial cases on the books of the Hawks, while the SA Reserve Bank’s Financial Surveillance Department said it had referred 110 such cases to the elite investigators. MPs questioned the effectiveness of investigations in the absence of convictions.
Read more in Daily Maverick: Parliament: MPs frustrated by lack of action on illicit financial flows
That meeting was called after the central bank told MPs that only one conviction had been obtained from the 41 cases it had logged with the Hawks over the past few years. That guilty verdict was for bribing a Reserve Bank official, not for illegally taking R2-billion out of South Africa.
Issues of a fractured state
Fundamental issues of a fractured state system arise.
The Phala Phala scandal brings together the political with flailing law enforcement agencies and a public institutional culture that regards staying in one’s lane as a form of accountability even in the face of the bigger-picture farce.
Ramaphosa has consistently denied wrongdoing, but Wednesday’s parliamentary committee meeting showed that key questions remain unanswered.
While the $580,000 brought into South Africa was declared, according to buffalo buyer Mustafa, the SA Reserve Bank said on 6 March “the record could not be found and/or may not be in existence” after a Promotion of Access to Information Act (Paia) request from DA leader John Steenhuisen.
It’s unclear whether there have been further investigations into this, or perhaps a referral to the police. Meanwhile, the SA Reserve Bank declined the Paia applications of the DA and UDM. Like the EFF, the DA is now heading to court.
Asked for comment on whether the SARB had made contact over the $580,000 as a suspicious transaction, the Financial Intelligence Centre replied in an email on Wednesday:
“Provisions in the FIC Act prohibit the FIC from disclosing whether or not it has received or not received specific regulatory reports and whether or not it is conducting analysis of any reports.”
The centre's mandate did not include conducting investigations, it added, but analysed reports to provide financial intelligence to law enforcement, prosecution services and other “competent authorities”.
Also on Wednesday, the SAPS referred queries on when the Phala Phala investigation might be completed to the Hawks, who didn’t respond.
With court action loading, the Phala Phala scandal is unlikely to disappear — even on the election campaign trail. DM