Blow for ANC-backing, Russian oligarch-linked mining firm in R350m SARS battle

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 Viktor Vekselberg
Viktor Vekselberg
Photo by Artyom GeodakyanTASS via Getty Images

ANC donor United Manganese of the Kalahari (UMK), which is linked to sanctioned Russian oligarch Viktor Vekselberg, has been dealt a blow by the Supreme Court of Appeal in its battle with the SA Revenue Service (SARS) over a R351 million tax assessment.

On Friday, the court dismissed an application for leave to appeal a high court ruling referring the UMK's bid to overturn the assessment to the tax court.

The miner, which was once partly owned by Vekselberg's Renova Group before he sold down his stake, donated over R15 million to the ANC in November 2022 ahead of its elective conference. It donated R10 million earlier that year as well.  

Vekselberg now has no direct stake in UMK, but is a 25% beneficiary of a trust which remained invested in the vehicle that replaced Renova - New African Manganese Investments Limited (NAMI). The ANC's investment arm Chancellor House also owns a major stake in the mining company.

READ | Sanctions, a Russian oligarch and a SA mine: ANC-linked NCape company safe for now - chairperson

In 2017, SARS told UMK it was doing an income tax audit for 2011, 2012 and 2013. The audit was completed in January 2020, and it was determined that UMK owed it R351 million at the end of the following month. The amount excluded interest levied on the dividend tax assessment. On 17 February, UMK said it was challenging SARS' assessment at the North Gauteng High Court in Pretoria.

High courts can only take on tax matters in specific circumstances, and where an applicant argued for a deviation from the matter being heard in tax court. UMK did not make a case for that deviation, and its case was unsuccessful on that technical point. It then approached the Supreme Court of Appeal, which on Friday dismissed the appeal based on the same point.

"The purpose of [legislation] is clearly to ensure that, in the ordinary course, tax disputes are taken to the tax court. The high court consequently does not have jurisdiction in tax disputes unless it directs otherwise.

"It follows that the appeal must fail and in the result it is accordingly dismissed with costs, including those of two counsel."

News24 previously reported that Vekselberg was sanctioned by the US in 2018 because of his alleged proximity to Russian President Vladimir Putin. amaBhungane reported in March 2022 that following the invasion of Ukraine, the sanctions against Vekselberg and others were intensified with his yacht and jet, together allegedly worth $180 million, being frozen.

amaBhungane | The ANC's manganese 'gold' mine, the windfalls, and the Russian oligarch

The investigative journalism unit also reported that financial records from Cyprus show that UMK paid out a R2.4 billion in dividends in 2020 following a year of favourable manganese prices in 2019. Later financial reports were available at the time but prevailing prices likely resulted in similar distributable profits in subsequent years.

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