The High Court in Pretoria’s decision to declare certain sections of the Currency and Exchanges Act unconstitutional opens a door for a parliamentary review of the country’s “antiquated” exchange control system, the DA said on Sunday.
Democratic Alliance MP Tim Harris said he would write to the chairman of the Standing Committee on Finance to ask that it urgently convene public hearings on exchange controls with a view to amending the act and making recommendations about overhauling the associated regulations.
On Thursday, the court dismissed an application by billionaire entrepreneur Mark Shuttleworth to have the country’s entire exchange control system declared unconstitutional.
“Although Mr Shuttleworth did not win his case overall, he has achieved a significant victory in shedding light on the need to overhaul our exchange controls,” said Harris.
The court dismissed Shuttleworth’s application to strike down the whole of section nine of the act and all of the Exchange Control Regulations as unconstitutional.
Judge Francis Legodi also dismissed Shuttleworth’s application to set aside the imposition of a R250 million levy he had to pay to get some of his assets out of the country in 2009, and for the Reserve Bank to return his money.
The court also dismissed his application to declare invalid the Reserve Bank’s policy of not dealing directly with members of the public, but insisting they communicate through bank dealers.
However, the judge granted an order declaring unconstitutional section 9(3) of the act and portions of the regulations.
Section 9(3) gives the president the power to amend or suspend any part of the act, and to amend or suspend any other act of Parliament.
Legodi said this was an extraordinarily wide power, which in effect vested in the president the power to amend or suspend any act of Parliament, irrespective of whether it dealt with currency, banking or exchange.
Shuttleworth, who now lives on the Isle of Man, has blamed the existing system of exchange control in South Africa for “forcing” him to emigrate in 2001.
He had assets worth over R4.27 billion in South Africa when he emigrated, but transferred the assets out of the country in 2008 and 2009, each time subject to the payment of a 10 percent “exit charge”.
The government abandoned the levy a year later.
Legodi ruled that Shuttleworth had not proved that his constitutional right to lawful, reasonable and procedurally fair administrative action had been infringed, or that the Reserve Bank’s so-called “closed door policy” was unfair.
He said the object of the 10 percent “exit charge” had been to limit the adverse consequences of the outflow of funds on the external balance of payments necessary to maintain South Africa’s macro-economic health and to promote financial growth and stability.