Two takes on Phala Phala sale
The Reserve Bank heard conflicting versions of the transaction – but accepted that of the president
The South African Reserve Bank’s report on the Phala Phala controversy reveals striking discrepancies between President Cyril Ramaphosa’s understanding of the deal the staff at his game farm struck with a Sudanese businessman and that of the buyer himself.
The central bank tried, but was unable to, speak to Hazim Mustafa and accepted the president’s version.
Its investigation began in June last year, after complaints about potential exchange control violations from three opposition parties and parliament’s standing committee on finance.
The bank cleared Ramaphosa in August but, for legal reasons, declined to release its full report, which was leaked to the media this week.
According to the 31-page report, the bank’s initial inquiry — a search of its databases — found no trace of a foreign currency transaction, declarations made by the parties or requests for exemptions filed by them.
This meant further investigation was needed, given the complaints, and a formal case was opened a few days later.
The questions sent to Ramaphosa included exactly how much foreign currency was held at, and stolen from, his farm, and whether any of it had been recovered. It also requested “full particulars as to the underlying reason or transaction(s) leading to the said foreign currency being kept at the premises of Phala Phala Wildlife farm”, plus details about the buyer and the farm employee who received the cash.
In the president’s version, the genesis of the purported sale to Mustafa is that in 2019, he had a discussion with Phala Phala manager Hendrik von Wielligh about selling “substandard” buffalo at the farm’s Camp 6 enclosure.
“Their thinking at the time was that the buffaloes should be sold as a parcel (rather than individually or having them hunted) because that made better financial sense. The president knew of potential buyers from the Middle East and other African countries and advised Mr Von Wielligh accordingly.”
One of these buyers was Mustafa, who visited the farm on Christmas Day 2019, and was met by the lodge manager Sylvester Ndlovu, because Von Wielligh was on leave.
Mustafa selected 20 buffalo and handed Ndlovu $580000 in cash. Ndlovu gave him an invoice printed on stationery bearing the Phala Phala letterhead, reflecting the cash as being “for the payment of 20 buffaloes from Camp 6”.
Ramaphosa visited the farm the next day.
According to his affidavit, “Mr Ndlovu relayed to the president that: ‘Mr Hazim [sic] showed interest in the buffalo and told Mr Ndlovu that he wanted to close the deal and buy the buffalo. Mr Hazim handed over $580000 in cash to Mr Ndlovu, as payment for the buffalo.”
Ramaphosa told Ndlovu he was en route to Cape Town and told him to keep the money at the farm until his next visit, when he “would have an opportunity to brief Mr von Wielligh to enable him to process the transaction and have the money banked following that.”
That never happened because on 10 February 2020, Ndlovu informed the president that the money had been stolen.
When the burglary became public knowledge more than two years later, it turned into a political nightmare for Ramaphosa.
He came close to resigning in December last year, three years after the purported sale, when a panel headed by former chief justice Sandile Ngcobo recommended he face an impeachment inquiry into whether he had committed a serious breach of his constitutional obligations.
The panel pointed to holes in the president’s version of events at the farm and the subsequent covert investigation by the head of his protection team, Major General Wally Rhoode.
After he was persuaded not to step down, Ramaphosa took the report on legal review.
In papers filed to the constitutional court, he argued it was unfair to find a case to answer in his perceived failure to remove all doubt about the source of the stolen money, the strangeness of Ndlovu’s decision to hide it in a sofa when a safe was at hand and the extent of Rhoode’s efforts to investigate the crime.
According to a sworn statement to the bank’s investigators in September last year, Ndlovu “decided to move the foreign currency from the safe [to which many employees had access and which was used for general storage purposes at the Phala Phala farm] to a bedroom in the president’s house on the Phala Phala farm [which he considered to be a safer place] and hid it under the cushions of a sofa, for fear of same being stolen while he would be on leave”.
Regarding the transaction, he said he had told Mustafa that the buffalo he had viewed cost R400 000 each.
“Mr Hazim considered this amount to be reasonable and in order to secure the 20 buffaloes … he gave $580 000 to Mr Ndlovu. Mr Ndlovu’s evidence is that at the day’s exchange rate, this equated to approximately R8000000.”
It was Mustafa’s version, the bank said, that “he gave the $580 000 as a security deposit”.
It is here that his account and those of Ramaphosa and Ndlovu start to diverge.
According to Mustafa, the money would be used as payment for the buffaloes only once he had secured end-buyers and relayed that information to Phala Phala Wildlife.
“Neither the president nor Mr Ndlovu mentioned the condition regarding end-buyers in their affidavits,” the report notes.
Instead, according to the president, the sale could not be completed until Ndlovu had obtained approval from Von Wielligh that the sale price was fair with respect to each of the 20 buffalo, taking into consideration “some of the animals were older and some were younger”.
The money handed over in cash was therefore paid to secure the buffalos, “but on the understanding that the agreement was subject” to conditions, including the confirmation of the price and administrative steps regarding export and transportation of the animals.
Their export was in turn subject to certain veterinary tests and procedures, including taking blood samples to test them for disease.
If test results from the Onderstepoort state veterinary facility revealed the buffalo carried disease, Ramaphosa stated, the farm would not be able to conclude the agreement with Mustafa.
“However, if the test results are negative, then the state vet is informed accordingly and advised that the buffalos can be moved to the new location (destination).”
The president and his staff told the bank that the entire process could take between three and 18 months, depending on the export destination of game sold from the farm.
“As a result of this, it is not uncommon for buffalos to stay on the Phala Phala farm of the seller for even longer periods of time.”
The bank concluded the information given by Ramaphosa was consistent with Von Wielligh’s description of standard practice.
It stressed its approach was not premised on “an unquestioning acceptance of the versions placed before the investigators and that all the truth has been told”. Instead, it was premised on the need to reach conclusions on the facts before investigators and “to restrict the investigation to the scope and purpose” of determining whether there had been a violation of section 6.1 of the exchange control regulations.
This section compels South African residents who receive foreign currency to declare it in writing within 30 days. On the facts, the bank said, the sale had not been completed, hence the obligation to report the forex received from Mustafa within a set timeframe had not arisen.
The bank has been criticised for restricting the scope of its year-long investigation to the simple question of whether section 6 was flouted. In response, governor Lesetja Kganyago said the bank could only consider the case with regard to the legislation that is relevant to the institution.
“When we say we were narrow in the scope it is because we focused on the laws that we administer,” he told MPS.
Similar limitations, and criticism, have applied to probes by other statutory bodies, stemming from either their mandate or the scope of complaint that informed the inquiry.
This includes the report of the public protector, who found in June that allegations that Ramaphosa had acted in a manner inconsistent with his office could not be sustained.
It is being taken on review by the African Transformation Movement, which argues in court papers that acting pubic protector Kholeka Gcaleka failed to obtain relevant information, among them Ramaphosa tax records and oral evidence from Ndlovu and the housekeeper at the farm, Froliana Joseph.
In a fresh twist, Joseph and fellow Namibian Imanuwela David were arrested by the Hawks at the weekend for housebreaking.