South African Reserve Bank (SARB) governor Lesetja Kganyago could soon find himself having to defend the bank’s investigation into the foreign currency stolen from President Cyril Ramaphosa’s Phala Phala farm in February 2020 before the courts, after opposition parties accused him of being involved in a cover-up.
Kganyago, along with some of the SARB’s top brass, appeared before the standing committee on finance to face questions over their report, which cleared Ramaphosa of any breach of exchange control regulations over the $580 000 (about R10.8m at today’s rates) concealed in couches on the farm.
The EFF and UDM accused the SARB of narrowing the probe and excluding money laundering in order to clear Ramaphosa when it focused on contravention of exchange control regulations.
Despite facing mounting pressure, Kganyago defended their findings, saying they could not have extended the investigation as other aspects of the case, such as the money laundering, fell within the mandate of the Financial Intelligence Centre and the Hawks.
“There is no shortage of institutions that overstepped their mandate and tried to do things they are not empowered to do in terms of the law.
“The courts have dealt with them, and the Reserve Bank was not about to step out of its mandate because for some reason it was appealing to go and do these things,” he said.
His appearance came a week after the SARB found there was no perfected transaction and could not conclude that there was any contravention of the exchange control regulations by Ntaba Nyoni Estates CC (the entity involved) or Ramaphosa.
It concluded that the transaction in question was subject to conditions precedent which were not fulfilled, and therefore there was no legal entitlement, within the meaning of Regulation (6)(1), on the part of Ntaba Nyoni Estates CC, to the foreign currency.
Kganyago told the MPs that: “It appears from facts available, obligation with exchange control regulation was not triggered on the part of Ntaba Nyoni Estates upon receipt of the foreign currency from (Sudanese businessman) Mr Hazim.”
He said the foreign currency introduced into the country was dealt with in terms of customs and excise legislation and by the SA Revenue Service.
The evidence available to the central bank – an unconditional agreement for the sale of 20 buffalo to businessman Mustafa Hazim – was not concluded with Ntaba Nyoni Estates, also known as Phala Phala farm, in December 2019.
“There were conditions precedent that were attached to the sale transaction.”
These included that acting lodge manager Sylvester Ndlovu, who received money from Hazim, needed approval from the general manager of the farm, and further processes were required such as calling a state veterinarian to test the buffaloes, as well as applying for a transportation permit from the Agriculture Department.
“It appears both the buyer and seller, Ntaba Nyoni Estate, intended certain conditions precedent be fulfilled before there was a finalised sale of buffalo,” he said, adding that Hazim left the money to demonstrate seriousness about the sale.
“He also said the SARB Act prohibited him and other employees and directors of the central bank from disclosing the affairs of the bank, and that doing so was a criminal offence.
“If you are asking me to avail that report, you are asking me to commit a criminal offence, which I am not prepared to do,” he said.
While EFF MP Mzwanele Manyi expressed disappointment in the manner the SARB had dealt with the investigation, the DA said it would now turn to the court to review the bank’s decision to keep the report secret.
“Governor Kganyago’s responses were evasive, incomplete and unconvincing. The governor did, however, admit that the SARB had not seen any contract, other than an invoice, that outlined the conditions of the transaction in question, which raises doubts about the integrity of the investigation.
Moreover, he offered no insight into any precedents set by previous investigations.
“South Africa’s financial stability hinges on the transparency and integrity of its Central Bank. It is an institution that cannot be left to operate in a shroud of ambiguity.
Given that our attempts to extract transparency through other channels have been futile, the DA will now turn to the court to review the SARB’s decision.
“The DA will not let this matter rest. South Africans have a right to know what actually happened at Phala Phala, and that includes knowing whether the president broke any financial law he is entrusted to uphold,” he said.
Manyi accused the SARB of taking the narrowest of routes to deal with such an important matter, which had made South Africa an international embarrassment.
“We have a situation where hundreds of dollars have entered the country and there seems to be no accountability. They tell us about confidentiality, and that is not taking us anywhere,” Manyi said.
EFF deputy leader Floyd Shivambu said there had been a systematic cover-up on Phala Phala, from Sars to the acting public protector.
“Now the Reserve Bank is joining the band of cover-ups and producing a white wash report to try to cover up what happened in Phala Phala, and thinking we as MPs are fools that must accept this absolute rubbish,” Shivambu said.
UDM MP Nqabayomzi Kwankwa said: “It is insulting our intelligence to say ‘because there was no bank guarantee, no formal processes were followed’. You can’t hide money that is intended for legal transactions.”
Cape Times