In clearing President Cyril Ramaphosa of exchange control breaches in the Phala Phala scandal, the SA Reserve Bank said its approach was not premised “on the unquestioning acceptance of the versions placed before investigators and that all the truth has been told”.
Rather, it was premised on the “need to reach conclusions on the relevant facts before the [investigators]” and to “restrict the investigation to [its] scope and purpose”, which is whether there was a violation of exchange control regulations.
When the outcome was announced, it was met with dismay and confusion in some quarters, with some politicians describing it as a whitewash. The full report, previously confidential, has now been disclosed in court due to litigation by the DA, which wants the Pretoria high court to set aside the Bank’s decision to clear Ramaphosa.
The report details its investigation and explains how the Bank concluded that, in law, the sale of 20 buffalo to Sudanese business person Hazim Mustafa Mohamed Ibrahim was incomplete because it was subject to conditions. The legal duty that arose under regulation 6 of the exchange control regulations had not been triggered.
Ibrahim paid $580,000 (R10.6m) in cash in December 2019. The money was kept at Ramaphosa’s farm in Limpopo until it was stolen during a February 2020 break-in.
Regulation 6 applies to “every person resident in the republic who becomes entitled to sell or to procure the sale of any foreign currency”. It says that “within 30 days after becoming so entitled” a person must declare the foreign currency to the Treasury or “an authorised dealer” such as a commercial bank.
The Bank investigation into Phala Phala was a lengthy one, despite its limited scope.
It began in June 2022 and the report was completed in August 2023. Seeking only to determine whether there had been a breach of regulation 6, the financial surveillance department listed at least 63 statements, documents, and other evidence that it considered.
It included going back to the president twice for more clarity, including with specific questions pointing to possible contradictions in evidence it had obtained. In summarising the president’s evidence, the report concluded that “there are no material inconsistencies in the president’s account of events”.
Looking at the evidence overall, the report said it was apparent that there were “certain inconsistencies and non-alignment”. But what was “clear” was “that there were conditions precedent attached to the sale transaction”.
It said regulation 6(1) would be applicable in this matter only if “there existed a perfected transaction — that is, an unconditional contract for the purchase and sale of the buffaloes”.
Conditions
But here the transaction was subject to conditions: Hazim said he left money as a security deposit to demonstrate that he was a serious buyer or to secure the buffalo. “His intention was to identify end-buyers before actually concluding the transaction.”
From the president’s side, the sale was conditional on the examination of the animals by the state vet for health checks.
“On the basis of the core evidence, and having regard to the [Bank’s] narrow mandate in relation to this matter, it would appear to [the financial surveillance department] that the buyer (Mr Hazim) and seller (Ntaba Nyoni Estates), albeit for different reasons, intended that certain conditions precedent be fulfilled before there was a finalised sale of buffalo.”
But the money was stolen before the conditions were fulfilled, said the report.
The report said the seller’s version was not contradicted. It was corroborated by the description by farm GM Hendrik von Wielligh of “the actual process and how it worked in the industry”.
The report also reveals that the Bank tried, unsuccessfully, to secure an interview with Hazim. Though the correspondence is not included in the public portion of the court record, the report reflects that there were a number of emails from its legal adviser, Werksmans, to Hazim requesting an interview and to Ramaphosa’s attorneys, Harris Nupen Molebatsi, asking them to facilitate an interview. The report said: “Despite [the department’s] efforts, it was unable to secure an interview with Mr Hazim.”
However, the report points to an inconsistency between the affidavit he gave to the SA Police Service (SAPS) and the one he gave the Bank. The SAPS affidavit is not included in the public portion of the court record but it is quoted in the report, with the report saying that while he told the Bank that he agreed with former farm manager Sylvester Ndlovu that export permits would be prepared and kept at Phala Phala, his statement to the Bank said no arrangements were made regarding logistics for the transport of the animals because this would only be done once end buyers were secured.
Now that these documents have been filed in court, the DA may supplement its court papers. The Bank, the president and the minister of finance will then have an opportunity to respond to the DA’s case.
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