SARS swats skin-lightening cream heir
MARK Krok, billionaire heir to an apartheidera skin-lightening company, has lost control of his South African assets worth R297million.
Immediately after Friday’s ruling in the North Gauteng High Court, Krok’s family launched a blistering assault on the authorities for harm done to the family.
“We’re struggling to keep our heads above water,” said Krok’s wife, Janine, after court. “Today’s been a very difficult day. I can’t tell you the toll it’s had on my family, I can’t even tell you.
“All Mark is guilty of is inheriting the amount of money he did,” she said. “He’s no Dave King, no Barry Tannenbaum. He’s a decent down-to-earth man.”
The ruling paves the way for SARS to sell off Krok’s property to pay the Australian Tax Office the R228-million it claims it is owed.
Speaking from Cape Town, where he moved back to 17 months ago, Krok expressed disappointment. “They want too much money,” he said.
Krok said the ruling was premature because his case was still being heard in the Australian Tax Office (ATO).
This case is significant for a number of reasons. First, this is the first time the ATO and SARS have joined forces to take control of an alleged tax evader’s property.
Krok’s South African assets — including a R40-million mansion in Clifton, Cape Town, as well as vast chunks of pharmaceutical company Aspen and casino company Tsogo Sun — were ring-fenced and placed under curatorship in August when a provisional preservation order was granted.
Although it has been technically possible since 1999 for the Australian and South African revenue offices to help each other snaffle tax dodgers, it was only in October 2012 that assets could be “preserved” to stop them being sold off while the inevitable litigation processes played out.
This latest ruling has upped the stakes dramatically because it paves the way for SARS to sell off Krok’s assets for the ATO, clear evidence of the two countries’ collaboration to extract revenue.
Adrian Lackey, SARS spokesman, said South African tax evaders could expect the same treatment in Australia. “We have a reciprocal arrangement,” Lackey said.
It is sure to set off alarm bells among some in the rogue’s gallery of tax offenders who have skipped across the Indian Ocean with hundreds of millions of rands owed to SARS.
All Mark is guilty of is inheriting the amount of money he did. He’s no Dave King
The list that has outraged compliant South Africans includes the likes of John Stratton, Barry Tannenbaum and even Mark Krok’s estranged half-brother Maxim.
Controversy and derision have followed the Krok family’s steady accumulation of untold wealth for more than five decades.
Abe and Solly Krok, father and uncle to Mark and Maxim, started by making their first fortune out of skin-lightening concoctions aimed mostly at black women during the height of apartheid.
Demand dropped off dramatically in the early 1990s as the changing political environment imbued the products with racial connotations.
Unfazed by the end of an empire, Abe and Solly set off to make their second fortune, this time in a company called Gold Reef, specialising in luxury resorts and casinos.
Gold Reef was in 2011 merged with SABMiller’s Tsogo Sun in a $2.23-billion all share deal, creating one of the largest casino groups in Africa.
The merger was fraught with dubious cash transactions and tooth-rotting share options for Gold Reef executives — including the Krok sons — which infuriated Gold Reef shareholders and raised eyebrows within corporate South Africa.
But things had been getting increasingly acrimonious within the family just before the deal. At the time of Maxim’s first brush with the ATO, headlines on the family’s tug of war over who should mete out Abe and Solly’s wads of cash splashed round the world.
Abe eventually died in Johannesburg early this year.
Mark’s tax debt of A$25 361 875 — as well as “considerable” interest — dates back to his emigration to Australia in 2002.
Between leaving South Africa and arriving in Australia, Mark stopped in Lichtenstein and established a series of trusts and companies registered in the British Virgin Islands.
He structured his South African assets so that while he remained the legal owner, the benefits and income from them were to be ceded to a BVI company — carefully out of reach of the Aussie Tax Office.
Mark no longer owed the local taxman anything, but he nevertheless had to file tax returns. His assets were eye popping — his 2004 tax return estimated conservatively his local properties to be worth about R68-million, his Aspen and Gold Reef shares about R98-million, his shareholdings in unlisted entities about R6.5-million and his cash resources about R12-million.
Mark was never going to live on bread alone.
In 2004 he got Investec to take control of his South African assets and arranged with the Reserve Bank that the income from these assets — dividends and interest and so on — be sent to his bank accounts Down Under.
He neglected to mention anything about the BVI company that should have got the income.
Meanwhile, he carried on buying and selling shares and properties much as he did in South Africa.
The ATO last year managed to get some cash out of Mark — they got a garnishee order for the A$2.9-million he held in credit at the St George Bank in New South Wales.
It didn’t help Mark’s case that in 2005, when he set about borrowing $4.5-million, he said he would be able to service the loan because he owned shares in Aspen and Gold Reef worth about R176-million, among other things.