Reserve Bank governor stresses Phala Phala money was stolen before sale was finalised

South African Reserve Bank (SARB) governor Lesetja Kganyago says the central bank will not release its report on the Phala Phala farm scandal as it would be a criminal offence.

On Wednesday, Kganyago briefed Parliament’s Standing Committee on Finance about the Reserve Bank’s Phala Phala investigation, which exonerated President Cyril Ramaphosa.

The SARB announced last week that Ramaphosa’s Ntaba Nyoni Estate, which owns the Phala Phala game farm, was not “legally entitled” to the $580 000 it received from Sudanese businessman Hazim Mustafa for 20 buffalo.

According to the Reserve Bank, the transaction was not “perfected” and therefore Ramaphosa or Ntaba Nyoni had no legal obligation to have declared the foreign currency under exchange control regulations.

The money, which was stored in sofa, was stolen from the president’s farm in Limpopo during a burglary on 9 February 2020.

‘It’s a customs matter’

Kganyago insisted that the SARB’s investigation was limited to whether there was an exchange control violation.

“Other matters which may relate to a breach of any other law are to be addressed by the relevant authorities and the Reserve Bank,” he said.

The governor explained that the exchange control regulations requires any South African residents to declare foreign currency within 30 days once they were “entitled” to the cash, but this did not apply to non-residents.

He said the “mere possession” of foreign currency was not what was regulated in terms of the exchange control regulations.

Kganyago highlighted that any cash upon entry into the country needed to be declared to the South African Revenue Service (Sars).

“It’s a customs matter, not a exchange control matter,” he said.

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Kganyago said the foreign currency would be considered as payment only once the sale was finalised, adding that the purchase of the buffalo could not be completed until necessary approvals were obtained.

“Mr Hazim gave the money to Mr [Sylvester] Ndlovu [Phala Phala farm manager] to secure the buffalos.

“However, the sale transaction was subject to conditions, including the final total price had to be confirmed and that several administrative steps needed to be completed in order to arrange for export and delivery,” the governor told the committee.

He also said that the sale was subject to various tests and veterinary procedures, including getting permits.

“The whole process could take between three to 18 months depending on the destination.”

Watch the briefing below:

No binding contract

Kganyago also said the evidence suggested that Hazim had left the money with Ndlovu as a “security deposit”.

“The president’s account of events was that there could not be a binding contract of sale until all matters were concluded, including the completion of testing and this was consistent with the description of standard industry practice.”

READ MORE: Reserve Bank blasted: Phala Phala outcome sparks public trust controversy

The governor stressed that the foreign currency was stolen before “the conditions precedent to the sale transaction could be fulfilled”.

“The investigation and approach was not premised on the unquestioning acceptance of the versions placed before the investigations and that truth has been told.

“It is premised on the need to reach conclusions on the relevant evidential facts which restrict the investigation to the scope and purpose of the SARB’s mandate,” Kganyago added.

Private report

Kganyago also told the committee that the SARB was “constrained” in releasing the report.

“Transgression of the restrictions of section 33 of the South African Reserve Bank is a criminal offence so if you are asking me to avail the report, you are asking me to commit a criminal offence which I am not prepared to do.”

He said the report would remain private unless a court ruled otherwise.

“In the past 10 years, we have had investigations of just over 6 000 transgression of the exchange control regulations and in none of all those cases have we had to release the report, neither did we have to even pronounce whether the regulations have been broken or not,” Kganyago said.

Meanwhile, Economic Freedom Fighters (EFF) leader Julius Malema has confirmed that his party will take the SARB’s report on judicial review.

Malema accused Kganyago of destroying “his good legacy for the protection of one man” for “career opportunism”.

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