Was the South African Reserve Bank’s Financial Surveillance investigation into the $580 000 (R10m) stolen from President Cyril Ramaphosa’s Phala Phala game farm thoroughly investigated or a sham meant to let South Africa’s first citizen off the hook on a major scandal that could cost him the presidency?
That is the question the Western Cape High Court will have to decide after a High Court application by the Democratic Alliance (DA) to have the central bank’s Phala Phala report reviewed.
And that is not the only legal battle on the horizon. ActionSA told IOL that it, too, was weighing up its legal options to hold Ramaphosa to account.
The reserve bank report was recently made public and unmasks for the first time why the central bank did not find against the president in an investigation into alleged exchange control violations that centres around the sale of buffalo at the his farm.
The Financial Surveillance (FinSurv) investigation finds the president did no wrong, despite finding "inconsistencies and non-alignment of certain of the evidence".
The investigation was initiated following allegations by former spy boss, Arthur Fraser in June 2022 that $4 million had been stolen from President Ramaphosa’s farm.
The heart of the investigation revolved around potential violations of the Exchange Control Regulations of 1961, specifically concerning foreign currency purportedly stolen from the Phala Phala farm.
Ramaphosa has admitted to the burglary taking place, but insists that a criminal complaint by Fraser that he had tried to cover up the burglary, was false.
A crucial aspect of the SARB investigation centred on a transaction involving the sale of buffaloes at the Phala Phala farm to Sudanese businessman Hazim Mustafa.
According to the President’s attorneys, this transaction amounted to $580,000 in cash, a detail that raised eyebrows and necessitated further scrutiny.
FinSurv’s investigation required the president to provide a detailed account of the transaction, including the amounts of foreign currency involved, the recovery status, the underlying reasons for holding such currency on the farm, and the ownership structure of the Phala Phala Wildlife farm.
In response, Ramaphosa outlined the operational aspects of Ntaba Nyoni Estates CC, the entity managing Phala Phala Wildlife, and its involvement in animal breeding and sales.
As the investigation progressed, FinSurv sought additional clarifications and affidavits from various parties, including Hazim, to ascertain the legality of the transaction under South Africa’s exchange control regulations.
The responses detailed the sale process, highlighting the conditions precedent for the transaction and the veterinary procedures required for exporting buffaloes.
The legal framework underpinning the investigation included the Currency and Exchanges Act, 1933, and the Exchange Control Regulations.
These regulations are crucial in understanding the responsibilities and powers of the Treasury and FinSurv in monitoring and enforcing exchange control matters in South Africa.
After extensive analysis of the evidence, including interviews and affidavits, FinSurv noted several inconsistencies in the accounts provided.
However, it became evident that conditions precedent were attached to the sale of the buffaloes, which were not fulfilled before the foreign currency was stolen.
This core evidence, according to the investigation, suggested that Ntaba Nyoni Estates CC, the president's business entity, did not become legally entitled to the foreign currency received from Hazim.
FinSurv concluded that the transaction at the heart of the allegations was not a perfected transaction.
Consequently, it did not trigger obligations under Exchange Control Regulation 6(1), and, therefore, there was no breach of this regulation by either the President or his business entity.
Dion George, the DA Shadow Minister of Finance said the DA’s court action was over the concern that the Reserve Bank might not have applied its mind effectively, without fear, favour, or prejudice, in its assessment.
The DA questions the thoroughness of the Reserve Bank's investigation, citing a "very limited scope" in the report.
The main contention revolves around the Reserve Bank's classification of a large cash deposit found in the president's residence. The Bank deemed the transaction as unperfected, thus not requiring declaration.
George, however, challenged this view, arguing that such logic could set a problematic precedent and might not align with the law.
The DA's legal action aims to ensure the Reserve Bank's actions are consistent and fair, especially given its critical role in South Africa's financial system.
George also highlighted the problematic nature of the president using public resources for personal matters.
He referenced the incident where the president's security detail, funded by South African taxpayers, was allegedly used to track down the individuals involved in the theft of the cash deposit all the way to Namibia.
“We have laws in South Africa that everybody needs to comply with. You cannot be treated differently if you are the president. Authorities must act without fear or favour or prejudice,” he said.
George said he had received numerous complaints from members of the public who faced the same scenario as President Ramaphosa, but were heavily sanctioned by the reserve bank.
Herman Mashaba, ActionSA president, in response to questions from IOL, said they have always maintained that the SARB report into the Phala Phala burglary was a whitewash which attempted to clear the president of any wrongdoing.
“How is it possible that $580,000 (or $4 million as Arthur Fraser has alleged) can be hidden away in a couch without our financial agencies being aware of it?” asked Mashaba.
“We remain concerned that government entities are being used in an attempt to clear President Ramaphosa, despite his very own VIP unit embarking on an off-the-books and possibly illegal investigation into the burglary,” he said.
Mashaba said all South Africans need to be treated equally by law enforcement agencies and need to be held accountable for their actions.
“Ramaphosa cannot receive special treatment simply because he is the president of the country, and we will, therefore, keep working to ensure he is held accountable. We are, therefore, consulting our legal representatives about which steps can be taken.”