‘What’s the purpose of the law?’ – Kganyago accused of insulting MPs’ intelligence over Phala Phala
The EFF slammed the SARB for narrowing its investigation.
South African Reserve Bank (SARB) governor Lesetja Kganyago. Picture: Gallo Images/Business Day/Freddy Mavunda
Parliament’s Standing Committee on Finance grilled officials from the Reserve Bank following its findings on the Phala Phala investigation, which cleared President Cyril Ramaphosa of any wrongdoing after over the $580,000 that was stolen from his farm in 2020.
Money laundering concern
SARB governor Lesetja Kganyago told the members of the committee on Wednesday the evidence before the central bank could not prove that Ramaphosa and Ntaba Nyoni Estate, which owns the Phala Phala game farm, violated exchange controls by keeping the foreign currency.
Kganyago indicated that the cash was stolen before the sale of 20 buffalo between Ntaba Nyoni and Sudanese businessman Hazim Mustafa “could be fulfilled”.
But MPs were unhappy with Kganyago’s explanation, with Mzwanele Manyi of the Economic Freedom Fighters (EFF) labelling the SARB’s findings as “wishy-washy”.
“We have a situation where thousands of US dollars have entered into the country and there seems to be no accountability anywhere,” Manyi said.
Manyi said it was alarming that the Reserve Bank did not seem to be concerned that the money was kept at the farm beyond the 30 days required for its declaration.
“Why is the Reserve Bank condoning that? I am not interested in the Reserve Bank telling us all kinds of things about the perfection of sales. The Reserve Bank doesn’t seem to be worried about the money laundering issue here.”
African National Congress (ANC) MP Gijimani Skosana, however, defended the scope of SARB’s investigation, saying that there were other authorities investigating the Phala Phala saga.
“A criminal case was opened in relation to this matter so you would have obviously law enforcement agencies who are investigating and I think on their part they would have a broader scope to look at other things if there are criminal activities,” Skosana said.
United Democratic Movement (UDM) MP Nqabayomzi Kwankwa said he believed that the SARB was “insulting our intelligence”.
“We are anything but stupid…. this is unadulterated clap-trap if you asked me,” he said.
Kwankwa emphasised that there was no bank guarantee nor were any formal processes followed when the cash was handed over by Hazim.
“The governor is basically saying it’s ok for the money to be stuffed in the mattresses.”
The UDM MP questioned why the Reserve Bank was insisting on not releasing the “white-washed” report so the committee members can apply their mind.
Kwankwa said the SARB’s basis for its findings would set a precedent on ordinary citizens keeping foreign cash in their possession for “as long as they want” because they could argue that a transaction had certain conditions.
“Then what is the purpose of the law? It renders the whole legal framework and regulations that we have useless,” he continued, adding that the Reserve Bank’s handling of its investigation has dented its reputation and credibility.
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EFF deputy president Floyd Shivambu accused the SARB of deliberately narrowing its investigation in order to clear Ramaphosa.
He said the fact that a case was not opened immediately after the money was stolen, as found by the public protector, pointed to a cover-up.
“Now the Reserve Bank is joining the bandwagon of trying to cover up what happened on Phala Phala. We as members of Parliament are just fools that must accept this absolute rubbish.”
Shivambu suggested that the committee push for the removal of Kganyago from office for “trying to subvert the laws” of the country.
Kganyago backs investigation
But Kganyago stuck to his guns, saying any other alleged violations by Ramaphosa or his farm were not part of the Reserve Bank’s mandate and investigating powers.
He insisted that the declaration of foreign currency was not the responsibility of the central bank.
“We do not administer the Customs Act,” Kganyago said.
The governor told the committee that the South African Revenue Service (Sars) had already pronounced that the cash was not declared when it arrived in the country.
He also rejected the suggestion that the Phala Phala saga contributed to South Africa’s greylisting by the Financial Action Task Force (FATF).
“The FATF report is public… it has spelt out the areas where there are deficiencies in our system and that they must be remediated. That is what is official, that is what FATF has pronounced on.”
Kganyago further highlighted that the SARB’s report was not given to any person, including the finance minister or Ramaphosa himself.
“They do not have access to this report,” he added.
When asked if the SARB had considered if its findings would lead to more people not declaring foreign currency, hence increasing money laundering, Kganyago again referred to the exchange control regulations, which states that there has to be legal entitlement to the cash for it to be declared.