PARLIAMENT ANALYSIS
‘Unadulterated claptrap’ — opposition derides SA Reserve Bank’s Phala Phala findings, and legal challenges loom
Opposition MPs described as ‘whitewash’ and ‘unadulterated claptrap’ the South African Reserve Bank finding that no exchange control laws were broken in the Phala Phala scandal. While bank Governor Lesetja Kganyago managed to keep his cool, the debacle signals a fractured state system.
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
Become an Insider
It’s official, we are now a banana republic.
We’ve been a Banana Republic since a fraud-accused, rapist-accused, innumerate ex cow-herder was made President in 2009. The only difference now is that the banana skin is dirty yellow, turning black, and not green like it was back then.
This will make good compost
That’s an insult to bananas.
Is there any such thing as a country rescue practitioner? And where can we get one!
I predicted the day the scandal was first published nothing will come of it
Some people are above teh law and are what was years ago considere” Royal game”
Today it is probably criminal proof
Just unbelievable that the SARB is now tainted as well – when does grey listing become black listed ??
Maybe we should stop beating about the bush and ask our grey listing masters Financial Action Task Force to give a position now as this event could keep us in the FATF dogbox and incur huge costs to the Country if we do not action accordingly. Cyril’s standing as President is not the issue it is the Country.
In the 2021 – 2022 Annual Report of FATF I see there are improved situations in Botswana, Mauritius and even Zimbabwe. In the still to be issued 2022 – 2023 Annual Report South Africa will prominently appear, warts and all and the Phala Phala scandal could appear prominently.
There are FATF standards for cross border transactions. I would comment from investigation by authorities and press so far that if I was in the FATF team would really consider a cover up has been made here considering the turmoil in Sudan and a direct payment to the South African President.
And we wonder why we are grey listed. If the money was legal why was it hidden in a couch and not in a proper secure safe… or was it ‘in die Bank’?
The opposition must keep up the pressure on the RB.. shake that tree until all the over ripe Bananas fall out.
I feel, that once it was established, that the $580,000 was not declared through SARS, by the buyer, there should be criminal cases against both the seller (Ramaphosa) and the buyer. It is ridiculous that so many committees and commissions is happening, at taxpayers expense, when from the start, it is the taxpayers who are wanting the truth, and it is spun differently each time the matter is raised. I hope that as many interested parties join the DA, and with sheer logic, weighed up against what current legislature is concerning foreign currency, and you are sure to find that our President is guilty
And what about the other millions that were received from the Saudi’s? and that were allegedly brought into the country by Ramaphosa’s close aide Bejani Chauke?
So this is our ethical and incorruptible President and Government. What a joke!!.The sooner they are removed from power, the better. The country would then be able to go forward and all these corrupt persons can be brought to trial.
One of the key questions that should be asked is: How did the money get into the country? Physically it will take up a fair amount of space and the person carrying it would have needed to go through customs. It would (or should) be unlikey that anyone would be able to bring that amount of money, in cash, into the country without authorities picking it up. If it was declared at customs, there would be a paper trail and the carrier would have been given a short period of time to bank and exchange it. Obviously there is no record of that. So, the only other way the cash came in was over the border illegally or in a diplomatic pouch. I’m thinking that this money was destined for ANC coffers. Any way you look at it there are still a lot of questions that need to be answered. This business has illegal written all over it!
I believe a huge volume of cash dollars flows across our borders in deals related to the ANC and their cadres.
Even though I have been a DA supporter (in its various guises) and office holder at time during the past 50 years I really cannot understand why the opposition and the media keep shaking this tree where nothing will fall out from . All they are doing is strengthening Julius’s position and letting him as a possible Deputy president of SA as his reward for an ANC and EWFF coalition with the ANC members being the Zuma supporters.
So opposition parties should just ignore and forget about criminal acts, corruption, fraud etc by the anc? Are you endorsing fraud, money laundering and racketeering by the president? Should we all just fold our arms, sit down and forget about having elections next year and just the let anc continue raping and plundering the country uncontested?
“Provisions of the FIC Act” prevent the FIC from reporting to the public ? Surely the FIC must be more specific and tell us which are these “provisions” that prohibit their transparency and, in effect, hugely dent their integrity?
What a transparent cover-up! It is so contrived and poor that an imbecile can see through the ruse. The hallowed and hitherto respected Reserve Bank’s credibility is shattered forever.
Apologists, stooges and cronies are CR’s bulwarks. This has brought shame to cANCer and may it reflect at the 2024 ballot boxes.
When will we make it more important to win the election an then deal with these outstanding issues?
Then what credibility would you have going into an election if you’ve done nothing to ensure the rule of law is upheld? Are you another one that would rather we just let the anc continue the rape and plunder of the country?
The wording that is used in the relevant law speaks, according to me, of the sale OF money, not the sale BY money – that, according to me, refers to when you buy one currency with another currency. This is clearly not what happened on the Phala Phala farm. On the other hand, maybe that is why no convictions are coming forward – maybe the wording of the law is inaccurate. It is time that these problems are decisively dealt with by the politicians.