Central bank takes fight to Shuttleworth

2015-02-08 18:00

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The SA Reserve Bank can’t be forced to pay back expat billionaire Mark Shuttleworth his R250?million “exit charge” – because, the central bank claims, it never took it.

The bank has filed arguments in the Constitutional Court in its bid to overturn Shuttleworth’s Supreme Court of Appeal victory against it last year.

The case relates to the 10% “exit charge” Shuttleworth had to pay to move the last R2.5?billion of his fortune offshore in 2009.

The bank says the Supreme Court of Appeal made the order against the wrong part of government and it was actually National Treasury that took Shuttleworth’s money.

The bank argues in its papers, which City Press has in its possession, that it just “mechanically” implemented a decision already made by the minister of finance in 2003 under “delegated authority”.

That was when the 10% exit charge was introduced on people moving more than R750?000 offshore.

Its second argument is that the Supreme Court of Appeal had confused the exit charge for a tax, which would have had to go through Parliament. On that basis, Shuttleworth could claim to have been unfairly “taxed without representation”, it says in its papers.

Treasury and the central bank say the real purpose of the 10% charge was to stop capital flight, which incidentally brought in cash.

The bank and Treasury filed their court papers last week. The presidency will be filing papers soon.

They are not only appealing the Supreme Court of Appeal’s order that the bank repay Shuttleworth, but also the “public interest” part of Shuttleworth’s original case.

Apart from defending the R250?million payback he won, Shuttleworth is still pursuing his wider crusade against South Africa’s exchange-control system.

According toShuttleworth, his case was really a fight on behalf of struggling South African small businesses and migrant workers who pay too much when they send money across the border.

The bank’s court papers veer close to sarcasm in reply.

“Mr Shuttleworth is a South African who, having amassed great wealth, decided to emigrate to a tax haven in 2001,” reads the introduction of the bank’s heads of argument.

“The persons ordinarily affected by exchange-control regulations tend to have sufficient financial means to assert their rights?...?certainly not a vulnerable class of people,” it says.

The “primary purpose” of Shuttleworth’s attacks were to get his money back, claims the bank in its heads of argument.

Shuttleworth promised last year that the R250?million would be donated to a “trust run by veteran and retired constitutional scholars, judges and lawyers” to fund other cases against the state.

The case was actually these unnamed lawyers’ idea, he said in a statement. He just “played the role of model plaintiff” – and funded the legal work.

Among his arguments are that exchange controls on large imports infringe on people’s freedom of expression, while controls on moving money out infringe on the right to free movement.

He also attacks the “authorised dealer” system, whereby banks act as intermediaries when people seek approval from the central bankto move capital offshore.

He calls this a “cartel of banks” that fleeces a captive market and inflates the cost of moving money. The bank calls it the only practical way to deal with millions of annual approvals.

Shuttleworth lives in the Isle of Man and moved R4?billion from South Africa in two tranches in 2008 and 2009, paying the 10% exit charge each time.

The total R400?million he paid was about 14% of the total R2.9?billion in exit charges that was collected from money movers like him between 2003 and 2010.

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