Johannesburg - The Currency and Exchanges Act gives the president too much power, having been passed prior to the advent of the Constitution, the Constitutional Court in Johannesburg heard on Tuesday.
Gilbert Marcus SC, for billionaire entrepreneur Mark Shuttleworth, told the court that section 9.1 of the act conferred powers on the president so broad it was “offensive to the rule of law”.
“We are dealing with the wielding of the power post April 27, 1994,” he said.
“Section 9.1 is unconstitutional now because it vests powers with the president that the Constitution vests with Parliament.”
The SA Reserve Bank is arguing that it should not repay Shuttleworth the R250 million exit levy it charged him when he transferred his assets out of South Africa to the Isle of Man in 2009. The levy was 10 percent of the value of the assets he wanted to export.
He paid the levy under protest and took the matter to court. He lost in the High Court in Pretoria. However, the Supreme Court of Appeal ruled last year that the bank should not have imposed the levy and ordered it to repay Shuttleworth.
The SCA found the exit levy amounted to a tax, which required a law passed by Parliament and which, in that case, was absent.
Marcus said currently exchange controls were regulated not by law, but by a “vast set of circulars and rulings” that were not promulgated or gazetted, and lacked guidance and public participation.
“The way the system is administered, those circulars and rulings are administered as law,” he said.
Marcus said the case was a textbook application of a rigid and inflexible application of policy, and accordingly unlawful.
The SA Reserve Bank failed to make an exception in Shuttleworth's case of taking capital out the country. It treated Finance Minister Pravin Gordhan's 2003 budget announcement, when exchange controls were adjusted, as legislation.
“What our solution is, it was ultra vires (beyond the powers) to treat the minister's speech as a piece of legislation,” he said.
Deputy Chief Justice Dikgang Moseneke raised the fact that Shuttleworth had spoken to the SARB governor about the matter.
“We know your client had a call with the governor and made several points,” Moseneke said.
Marcus said a conversation took place in February 2010, but they were not aware of what was discussed. By that stage all the critical decisions had already been taken.
Chief Justice Mogoeng Mogoeng suggested that, given Shuttleworth had a conversation with the SARB governor, he could have had it before February 2010 if he had wanted to.
Sapa