BKB mulls le­gal ac­tion against govt

. . . de­nies ow­ing M1,4 Bil­lion in taxes . . . says it is con­sult­ing its lawyers over the“slan­der”by Min­is­ter Phori

Sunday Express - - FRONT PAGE - Bereng Mpaki/ Mo­halenyane Phakela

SOUTH African wool and mo­hair bro­kers, BKB, is mulling le­gal ac­tion against the gov­ern­ment over what it con­sid­ers to be “un­founded” al­le­ga­tions that it owes the gov­ern­ment M1.4 bil­lion in un­paid taxes.

BKB de­nied ow­ing any taxes, say­ing it has twice writ­ten to the Le­sotho Rev­enue Author­ity (LRA) for clar­ity over the is­sue but is not re­ceived re­sponses in both in­stances.

The wool and mo­hair bro­kers fur­ther chal­lenged the gov­ern­ment to prove its al­le­ga­tions about the un­paid taxes.

This fol­lows re­cent state­ments by the Min­is­ter of Small Busi­ness, Co­op­er­a­tives and Mar­ket­ing, Cha­lane Phori, who said that BKB had ac­cu­mu­lated tax ar­rears to the tune of M1, 4 bil­lion.

Mr Phori said this dur­ing a re­cent ad­dress to wool and mo­hair farm­ers in the Thaba Tseka dis­trict. The Thaba Tseka meet­ing is part of coun­try­wide tours that Mr Phori is cur­rently seized with along with his min­is­te­rial col­leagues, Tefo Mape­sela (Trade and In­dus­try), Ma­hala Mo­lapo (Agri­cul­ture and Food Se­cu­rity), Tlo­he­lang Au­mane (De­vel­op­ment Plan­ning) and Mach­esetsa Mo­fo­mobe (Deputy Min­is­ter of Home Af­fairs).

The min­is­ters are on a mis­sion to ex­plain to farm­ers, the ra­tio­nale be­hind the new Agri­cul­tural Mar­ket­ing (Wool and Mo­hair Li­cens­ing) Reg­u­la­tions of 2018 which were re­cently tabled be­fore par­lia­ment.

Among other things, the new regu- la­tions state that no one will be al­lowed to trade in wool and mo­hair with­out a li­cence from the Min­istry of Small Busi­ness, Co­op­er­a­tives and Mar­ket­ing.

The reg­u­la­tions fur­ther state that “the holder of an ex­port li­cence shall not ex­port wool and mo­hair un­less it is pre­pared, bro­kered, traded and auc­tioned in Le­sotho”.

BKB, which has been sell­ing wool and mo­hair on be­half of lo­cal farm­ers for the past 44 years re­cently reg­is­tered in Le­sotho to en­sure com­pli­ance with the new reg­u­la­tions which have been de­scribed as dra­co­nian by the op­po­si­tion.

De­spite the com­pany’s re­cent moves to com­ply with the new reg­u­la­tions, Mr Phori said the com­pany re­mained on the wrong side of the coun­try’s laws as it had been with­hold­ing taxes from the gov­ern­ment which had since bal­looned to M1, 4 bil­lion.

Mr Phori said the BKB had not been pay­ing tax de­spite de­duct­ing money from the farm­ers’ earn­ings over the years.

He fur­ther said the sit­u­a­tion was made worse by the fact the com­pany de­ducted value added tax (VAT) from the farm­ers’ earn­ings which was il­le­gal as wool and mo­hair should not at­tract VAT.

VAT was in­tro­duced in July 2003 as an in­di­rect tax levied on goods and ser­vices sup­plied in and out­side Le­sotho.

It is only ap­pli­ca­ble to prod­ucts and trans­ac­tions where there has been value ad­di­tion.

“BKB has not been pay­ing tax for more than 40 years since it started op­er­at­ing in the coun­try,” Mr Phori told the farm­ers.

“When you check on your pay slips you will see that tax has been de­ducted but BKB has never paid a cent to the gov­ern­ment.

“It is also a crim­i­nal of­fence to deduct tax be­cause wool and mo­hair is not sup­posed to be taxed. And the worst part is that when BKB has taxed you, it does not re­mit the tax to the gov­ern­ment.”

He how­ever, said de­spite the il­le­gal­ity of BKB’s ac­tions and the huge amount it owed, the gov­ern­ment would not take pre­cip­i­tous ac­tion and it was will­ing to ne­go­ti­ate with BKB to re­solve the is­sue.

But BKB re­cently shot back and counter-ac­cused the gov­ern­ment of mak­ing un­founded al­le­ga­tions and de­manded proof of the gov­ern­ment’s claims that it owed taxes.

“BKB cat­e­gor­i­cally de­nies the al­le­ga­tions and chal­lenges gov­ern­ment to prove its un­for­tu­nate al­le­ga­tions,” said BKB’s Gen­eral Man­ager of Cor­po­rate Mar­ket­ing and Pub­lic Re­la­tions, Ja­cobus A le Roux.

“The com­pany is in con­sul­ta­tion with its lawyers on what it deems as slan­der re­lat­ing to an al­le­ga­tion that it owes the gov­ern­ment taxes ac­cumu- lated over 40 years of its busi­ness with Ba­sotho farm­ers. We place on record that those are un­truths lev­elled against our brand.

“We wish to re­it­er­ate that BKB trades as a South African Bro­ker in Port El­iz­a­beth for the grow­ers and traders of Le­sotho and other South­ern African coun­tries. BKB was as­sessed by the tax au­thor­i­ties in Le­sotho and sought ad­vice from our au­di­tors and sent let­ters to the LRA through our Le­sotho at­tor­neys but to date a re­sponse is await­ing though a fol­low-up let­ter was writ­ten and served on the LRA on 14 May 2018.”

BKB fur­ther said it was con­sid­er­ing whether or not to de-reg­is­ter a com­pany that it reg­is­tered in Le­sotho on 3 April this year. Among other things, the com­pany would ad­dress is­sues of an­i­mal dis­ease con­trol through the whole­sale and re­tail sale of medicine and vac­ci­na­tions.

“The com­pany was reg­is­tered on the 3 April 2018 and the busi­ness ex­tract is avail­able for pub­lic scru­tiny. The com­pany was never reg­is­tered on the in­vi­ta­tion of gov­ern­ment but by a share­holder view of BKB, the pub­lic com­pany in South Africa.

“We have since stopped any pro­cesses on the ac­ti­va­tion of that com­pany which is cur­rently dor­mant. BKB is fur­ther con­sult­ing with its board about the Le­sotho en­tity on whether to pro­ceed with ac­ti­va­tion or de-reg­is­tra­tion.”

BKB how­ever, said they re­mained com­mit­ted to do­ing with lo­cal farm­ers who have trusted them “as a bro­ker of choice for the auc­tion of wool and mo­hair”.

“BKB has con­sis­tently been pro­ducer-cen­tric in its ap­proach. It is this pro­ducer-cen­tric ap­proach that has made BKB a part­ner of choice for Ba­sotho grow­ers and traders at the point and port of auc­tion at Port El­iz­a­beth. The trust and in­tegrity we es­pouse has seen the Le­sotho Wool and Mo­hair Grow­ers As­so­ci­a­tion (LNWMGA) and mem­bers of Farm­ers Rock as­so­ci­a­tion (an As­so­ci­a­tion of Traders) choos­ing BKB as their bro­ker.

“We would like to in­form Ba­sotho that BKB is not the only bro­ker in the re­gion and grow­ers and traders have a choice to trade with who­ever they wish as we all know that all per­sons in busi­ness trans­act in a free mar­ket en­ter­prise and at free will with whomever they so choose.

“We wish to ex­tend our con­tin­ued com­mit­ment to the grow­ers and traders in Le­sotho to en­sure Le­sotho wool and mo­hair re­mains com­pet­i­tive at the auc­tion house.

“We wish to in­form the Ba­sotho na­tion that the part­ner­ship be­tween BKB and its farm­ing com­mu­nity ex­tends to shearer sea­sonal work­ers who are con­tracted in South African farms through BKB- over 300 Ba­sotho labour­ers get em­ploy­ment be­cause of BKB,” Mr le Roux said.

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