Reserve Bank ‘clears’ Ramaphosa in Phala Phala saga

The South African Reserve Bank (SARB) has found that no exchange control laws were violated in the reported ‘transaction’ between president Cyril Ramaphosa’s Phala Phala farm and a Sudanese businessman for 20 buffalo.

The Reserve Bank published the limited findings of its investigation into the matter on Monday (21 August), where the matter was seemingly set aside on a technicality.

The investigation specifically centred around the Phala Phala buffalo transaction that took place before the alleged theft of millions of rands in foreign currency.

Questions have surrounded the source of the money since the scandal broke, with the president claiming in 2022 that it came from a typical sale on the farm, where Sudanese businessman Hazim Mustafa purchased 20 buffalo.

Given the size of the transaction in question – $580,000 – the questionable way in which the money was allegedly and infamously stored, and the murky conditions under which it was stolen from the farm, complainants were certain that the country’s exchange control laws must have been violated in some way.

However, the SARB found that, based on the facts available, there was no violation of the country’s exchange control laws because there was no “perfected transaction” to require a declaration on the part of the farm.

In its findings, the central bank concluded that the transaction in question was “subject to conditions precedent which were not fulfilled”. More plainly, the buffalo purchased with the money were never delivered – thus the Phala Phala farm (Nyoni Estates CC) was not entitled to the money in the first place and didn’t meet the conditions necessary to declare it.

“Thus, the SARB cannot conclude that there was any contravention of the Exchange Control Regulations (the applicable Regulation is Regulation 6(1)) by Ntaba Nyoni Estates CC (the entity involved) or for that matter by the President,” it said.

How the investigation was conducted

The bank said that, due to legislative requirements and constraints which apply to the SARB, the report by the SARB into the matter is a private internal report and will not be made available to the public.

However, given the fact that this is a matter of significant public importance, the SARB provided some information on the process it followed.

The Financial Surveillance Department (FinSurv) of the SARB conducted its investigation in two phases. The initial phase involved a consideration of internal information and databases and the analysis of cross border foreign exchange transactions over the relevant period.

This was followed by a more comprehensive phase involving FinSurv requesting and receiving additional information and documents, supplemented by statements and/or affidavits and thereafter, conducting interviews with various individuals and liaising with other parties.

FinSurv also sought and obtained legal advice in relation to its investigation and the process it followed.

Based on the information, documentation and evidence received and considered as part of the investigation, the legal framework applicable to exchange controls, the mandate of the SARB and FinSurv and legal advice, the SARB then finalised its investigation and report in this matter.

The investigation was carried out over a period of approximately a year and was a comprehensive investigation, having regard to the limited mandate of the SARB and FinSurv in this matter, namely whether there were exchange control violations.

The investigation considered dozens of documents and related information, running into hundreds of pages; obtained or considered no less than 15 affidavits or statements; liaised with other relevant authorities and undertook formal interviews with relevant parties.

The SARB stressed that its investigation was limited only to the question of whether exchange controls were violated in the matter.

Read: Ramaphosa Phala Phala findings: There are no winners here