Shuttleworth in court showdown
TECH wunderkind and space tourist Mark Shuttleworth will face off against the South African Reserve Bank in the Constitutional Court on Tuesday as the central bank argues why it must not repay R250million to Shuttleworth.
The bank first hit Shuttleworth with a R250-million “exit levy” when he tried to repatriate about R4.3-billion in 2009. Shuttleworth paid this under protest and then challenged the exchange control system in the high court in 2010. A few months later, former finance minister Pravin Gordhan repealed that levy — but it was too late for Shuttleworth.
Last year, the Supreme Court said the bank shouldn’t have imposed the levy and ordered it to repay Shuttleworth.
Ben Cronin, a tax associate at Webber Wentzel, said the case illustrated why government needed to address the outdated exchange control regulations.
“It is not the Reserve Bank’s fault … the Currency and Exchanges Act, upon which the exchange control regime relies, is outdated and dates back to the Great Depression in the 1930s,” Cronin said.
He said it was important that “we comply in a constitutional democracy with constitutional norms”.
If it did not update the laws, the government risked further applications similar to the one launched by Shuttleworth.
“The fact that the Constitutional Court will [rule] on this won’t necessarily finalise the matter. The act and regulations remain potentially susceptible to challenge in their current form and it is only really parliament that can resolve this,” Cronin said.
The bank will argue that it was simply performing an administrative function, and that the levy was not a form of tax. Given the size of Shuttleworth’s claim, the bank says it is in the public interest to clarify the Supreme Court’s decision. GROUND CONTROL: Mark Shuttleworth is challenging exchange rules
“If the charge was lawfully imposed, then it is clearly in the public interest for [the Supreme Court] order to be overturned,” said Alexander Ellis, the bank’s specialist legal counsel, in court papers.
It is unclear whether Shuttleworth will attend the hearing. He lives on the Isle of Man.
Robert January, an associate at Glyn Marais Incorporated, acting for Shuttleworth, said if the Constitutional Court agrees to hear the matter, the case will “proceed to consider the merits of the appeal”.
Shuttleworth’s argument will be that this “exit levy” was rigidly and inflexibly imposed, without procedural fairness.
But the key issue that will be watched by many South Africans will be Shuttleworth’s argument that the exchange control rules are “unconstitutional and invalid”.
Should he win, the Free State-born Shuttleworth has pledged to put the R250-million into a trust to fund legal cases for people without means and in which the state is a counterparty.