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AMABHUNGANE

Money-washing machine: The hunt for Howie Baker’s billions

Money-washing machine: The hunt for Howie Baker’s billions
Illustrative image | Sources: A general view of SARS Building. (Photo: Gallo Images / Luba Lesolle) | SA banknotes. (Photo: Unpslash )

The walls are closing in on the man allegedly at the centre of South Africa’s massive gold and tobacco money laundering machine. Howard ‘Howie’ Baker is scrambling to settle after SARS slapped him with an astronomical R3bn claim and set its eyes on all his local and foreign assets.

Howard “Howie” Baker is seemingly on the ropes. 

SARS is pursuing the notorious alleged money launderer for an astronomical R3-billion tax debt, more than half of which consists of penalties incurred after he – according to SARS – expatriated billions of rands from South Africa without declaring any income.

More than a year ago, the taxman had already quietly launched a successful application to provisionally preserve all known and unknown assets Baker might have in South Africa and abroad, as well as a number of properties he allegedly bought in the name of third parties to disguise their true ownership.

Originally launched on an ex parte basis back in November 2022 (with Baker not being notified due to fears he might dissipate assets), the finalisation of the case has been delayed time and again as SARS tries to pin down additional respondents and negotiate settlements with those it has found.

As for Baker, he has asked for an extension to April this year to try to negotiate his own settlement before opposing SARS in court. This means his assets are frozen but not yet forfeited.

In a strange twist, Baker seemingly nonetheless succeeded in selling assets abroad even though one major deal was scuppered when the UK imposed sanctions on him in November for his alleged dealings in Russia. 

More on this later.

SARS is not only pursuing Baker for his alleged tax debt but also wants to hold him personally liable for the debt of one of his companies, Inracom, which seemingly served as a conduit for spiriting money abroad undeclared and untaxed.

The case forms part of a wider SARS offensive against, among others, Baker and the man he is alleged to be the frontman for, Zimbabwean Simon Rudland and his Gold Leaf Tobacco Corporation, as well as figures in the illicit gold sector.

Simon Rudland in relation to foreign nationals

Zimbabwean businessman and director of cigarette manufacturer Gold Leaf Tobacco Corporation, Simon Rudland. (Photo: Supplied)

Most recently it was revealed that SARS is suing Sasfin for R5-billion – in part in relation to the bank facilitating parts of a larger operation involving Baker – and in part concerning completely unrelated money laundering groups.

Read more in Daily Maverick: Gold Leaf Tobacco: SARS claims billions from Sasfin in Rudland money laundering debacle

Money laundering

Even though SARS repeatedly implicates Baker in money laundering, it has stressed that it “is not concerned with the crime of money laundering. SARS’ only interest is the under-declaration of income” irrespective of where the money came from.

It nonetheless points out how Baker’s affairs came to its attention during investigations into “financial flows arising” from the illicit gold and tobacco trade. 

“SARS has reason to believe that these illicit financial flows involve money laundering activities and that Mr Baker is implicated in these activities.

“According to the relevant material SARS has, to date, uncovered, it has reason to believe that through Mr Baker’s involvement in, inter alia, the money laundering activities, he has generated vast amounts of income ranging into billions of rands.

“The income was not declared to SARS and no taxes were paid thereon.”

The Baker case is based in large part on money laundering operations already documented by amaBhungane in past reporting, and the taxman’s court papers spectacularly corroborate and expand on a number of our reports on Baker and the characters surrounding him.

Read more in Daily Maverick: R3bn ‘fraudulent, intentional tax evasion’: An in-depth account of how Sars busted tobacco & gold plunder network

Half of the case against Baker relates to Inracom, a company that has never paid tax but which managed to receive over R2-billion in its bank account from a variety of known role-players in the underground financial world and then pay it forward to yet more known operators.

The second part of the case, against Baker himself, is rooted in funds received by his offshore companies from South African companies that make up part of the local money laundering machinery amaBhungane has previously reported on.

And, opening another front, SARS is gunning for 10 properties and one luxury vehicle worth a collective R53,274,394 and ostensibly owned by a number of third parties, suspiciously bought for them by Inracom for no apparent reason.

Where the money came from

The SARS application provides details of where Baker’s mysterious untaxed income came from – or at least who was employed to get it to him.

In the case of Inracom, the vast majority of cash, just over R2-billion, came from a company called Metal Enhancors.

Its director at the relevant time, Gysbert Kriel, recently died but his widow told us that she has no idea what the company did. We have however encountered Metal Enhancors before, in our investigation into a colossal VAT fraud scheme revolving around gold refiner Rappa Resource, also owned by Baker.

Although not named in the story, Metal Enhancors was one of several smaller gold suppliers to Rappa in a scheme that involved disguising illicit gold as gold purchased as scrap, exporting it and then fraudulently claiming VAT refunds running into the billions.

At the very least, this means there is a possibility that the funds from Metal Enhancors paid to Baker’s Inracom came from Baker himself – the money Rappa paid Metal Enhancors for its gold.

Inracom would rapidly pay out the funds it received from Metal Enhancors and smaller creditors to a dizzying array of roughly 500 other companies.

As for the money tied to Baker directly, SARS is zooming in on payments made from various local bank accounts to three of his offshore companies: Aulion Global Trading and Premier Trading Group in Dubai, as well as Prodigy Trading in Hong Kong.

These companies, and many of the money flows, have all also featured in previous amaBhungane reporting.

The payments to Aulion that SARS is concerned with involve accounts held by well-known cogs in the alleged laundry machine: PKSA Finance, Ovenbird and Johannesburg lawyer Saleem Ebrahim.

In its court papers, SARS states, “Mr Saleem Ebrahim… being an admitted attorney, denies any wrongdoing. He contends that he was merely acting on the instructions of his clients. For present purposes, SARS is not in a position to dispute this.”

With PKSA and Ovenbird, a total of about R1.7-billion was paid to Aulion and Premier from accounts at the now-liquidated Habib Overseas Bank.

Concerning Ebrahim, numerous payments making up the balance flowed from several accounts at Habib and elsewhere.

Assets frozen?

Even though SARS is laying claim to both Baker’s “known and unknown” assets, its preservation application listed a number of specific entities.

Locally, the big one is Rappa, the gold refinery which is nominally worth R1-billion, as that is what Baker paid for it.

The offshore assets include the companies that received funds, but also a gold company in Dubai called Paloma Precious DMCC.

This could prove controversial because, despite being a frozen asset in terms of the provisional preservation order, Baker has seemingly effortlessly transacted with it.

Paloma was until recently the major shareholder of a publicly listed company in the UK called Rockfire Resources. In September last year, this company announced that it would be buying two operating subsidiaries from Paloma – assets subject to the preservation order.

This $20-million deal was scuppered in November when the UK added both Baker and Paloma to its sanctions list due to their alleged dealings in gold with Russian interests.

Meanwhile, however, Paloma also sold its 21% shareholding in Rockfire for £2-million – again trading in an asset that should seemingly be frozen.

SARS declined to comment on this, citing taxpayer confidentiality, and Baker’s attorneys ignored our questions.

The third-party freebies

Another front in SARS’ assault on Baker is a set of properties and one vehicle Inracom seems to have gifted to other people. The taxman claims this is a scheme to disguise the ownership of assets.

“Based on SARS’ investigation, there appears to be no commercial rationale for the transactions in question. In particular, according to SARS’ investigations, there appears to be no quid pro quo received by Inracom for paying out the funds used by the third-party respondents to acquire these assets.”

The 10 properties and one Mercedes were worth R53-million collectively and, in SARS’ view, only nominally belonged to a coterie of seemingly unrelated companies and individuals.

SARS has entered into negotiations with a number of these, although a few have not been traced.

Baker’s gambit

SARS is also seemingly at the negotiating table with Baker, at least according to a letter from his attorney Raees Saint, which is part of the court record.

Saint had requested that SARS allow the final hearing of the preservation application to be extended to April this year.

“Given that the discussions between our respective clients are still ongoing, our client requests the interim order to be extended until 1 April 2024, at the earliest, to establish if settlement can be achieved. If settlement cannot be achieved, this will provide our client with an opportunity to oppose the order,” reads Saint’s letter to SARS’ lawyers.

SARS did not object.

Until a final hearing takes place, the preservation order remains provisional, which means that SARS has, at least in principle, frozen Baker’s assets but not seized them.

While Baker’s assets might be valuable to the fiscus, his knowledge of the expansive money laundering industry in South Africa and abroad may ultimately prove more valuable.

This is where we will be focusing our attention, so watch this space. DM

Gallery

Comments - Please in order to comment.

  • Nick Griffon says:

    Finally SARS going after criminals instead of harassing law abiding citizens putting in a home office claim.

    • Kevin Venter says:

      As the tax base erodes by skilled people leaving, so SARS will not have choice but to harass any and everybody because there won’t be enough cookies in the jar to support all the hands.

      • Zamani Kutta says:

        All I know is that we’re not equal. I’ve never heard, atleast in Africa’s case, an individual worth more than 1M USD – end up behind bars. The higher up you go in monetary status, the closer to “GOD” value you become. This is Africa.

        • Renn Moore says:

          SARS will multitask. Many “agents” are very busy harassing taxpayers!

          • Donald bemax says:

            I agree. Has anyone worked out the cost to the Taxpayers of this overhead of “many agents..” ? a very basic calculation of over head vs return on expenditure..

  • D'Esprit Dan says:

    Nail all of them, fast and hard. Smash these criminal cartels and their Dubai havens (no surprises there, with Dubai being the global centre of money laundering for the Global South). Then, I would hope, that they are all criminally charged and thrown in prison for decades. Too much to hope?

    • A Green says:

      Probably too much hope, they have enough money to pay lawyers to find the loopholes they need or to befriend the right people to make documents disappear.

  • NICK GREENE says:

    Who are the SA banks and auditors of the SA-based companies in this? Maybe some criminal charges for disregarding relevant fiduciary duties will have a few canaries singing to avoid jail time.

  • Tony Reilly says:

    Too much info and no real context ?

  • Middle aged Mike says:

    “Funny” how they never seem to go after the improbably rich cadres of the glorious liberation movement. Just as unfunny is that it’s SARS and not the SAPS going after the proprietor of a wholesale money laundry. What’s their job again? While we’re about it what’s the FIC for?

  • Ernest Lintnaar says:

    This is how our country will disintegrate to nothingness,with an attitude like this “Even though SARS repeatedly implicates Baker in money laundering, it has stressed that it “is not concerned with the crime of money laundering. SARS’ only interest is the under-declaration of income” irrespective of where the money came from”
    In other words, money laundering is fine, as long as you pay your taxes on the money you laundered? I’m firmly of the opinion, with this statement, that SARS is wholly captured, time for a regime change on May 2024

  • James Fulton Fulton says:

    Unfortunately the rich crooks never wind up in jail
    The multiple companies they have will result in years of investigation which will cost millions and the big fish will get far away
    Markus Jooste is still a free man!!

    • Middle aged Mike says:

      I very strongly suspect that will relate to ‘donations’ that he may or may not have made and may or may not continue to make.

    • Ernest Lintnaar says:

      This is how our country will disintegrate to nothingness,with an attitude like this “Even though SARS repeatedly implicates Baker in money laundering, it has stressed that it “is not concerned with the crime of money laundering. SARS’ only interest is the under-declaration of income” irrespective of where the money came from” In other words, money laundering is fine, as long as you pay your taxes on the money you laundered? I’m firmly of the opinion, with this statement, that SARS is wholly captured, time for a regime change on May 2024

  • Fanie Rajesh Ngabiso says:

    There is only one thing that the intelligent person will be focusing on now:

    How to get into the shortest queue to cast your vote for the DA.

  • Jane Crankshaw says:

    This case is mind boggling – well done DM and colleagues to have investigated so thoroughly. Hopefully SARS and the Judicial system will play their part in seeing this through to the end and unravelling all the players and beneficiaries.

  • Beyond Fedup says:

    SARS- another pathetic and morally bankrupt government entity. We don’t care about the crime of money laundering as long as the taxes due are paid. Sounds exactly the same as in anc “integrity” commission. Just appear before us and all will be forgotten and you are free to carry on in your thieving and corrupt ways. As we have recently witnessed for the Mkize, Mantashe etc.

  • Richard Robinson says:

    Well done SARS; now what about our corrupt politicians?

  • Richard Robinson says:

    “The bourgeoisie are today evading taxation by bribery and through their connections; we must close all loopholes.”
    Vladimir Lenin

  • Lesiba Langa says:

    These smoking crooks must go to jail. SARS is doing the Lord’s work.

  • William Kelly says:

    What is interesting is that the ground troops, the accountants, auditors, bankers and lawyers that set all this up aren’t mentioned. SARS is selective. The law is not. It’s why SARS has no credibility left, it’s a henchman of the government using those cases as a veneer for legitimacy when the real truth is that SARS is after millions of smaller fish who together represent many more tons than a single shark.

  • Citizen X says:

    Good work SARS, now for FIC or whichever other entity to follow suit and attach the illicit funds. Its astounding how easy it is to launder money. Its time that government institutions work together for the benefit of our country and rid this country of economic criminals, drug kingpins, warlords, gangs, mafia state capturers… who seem to thrive in this country at the cost of everyone else.

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