Property mogul Roux Shabangu loses another Sars battle

Businessman Roux Shabangu’s run of bad luck with the taxman continued this week.

The Pretoria High Court issued provisional sequestration orders against his personal estate and The Roux Shabangu Family Trust, with the applicant in the case being the South Africa Revenue Service (Sars).

This is the latest in a string of court defeats for the controversial property mogul who, in 2011, famously scored a 10-year property lease worth R520 million from the Department of Public Works, which had entered the agreement on behalf of the SA Police Services.

It was later revealed that the department could have constructed a new building for less.

That deal was declared invalid by then Public Protector Thuli Madonsela, who found that then police commissioner Bheki Cele and former public works minister Gwen Mahlangu-Nkabinde had over-stepped their authority in approving the deal.

Shabangu has been fighting multiple court cases over the years, most recently against Sars over unpaid taxes.

The court ruling notes that Shabangu owed Sars R1.3 million, while his family trust owed R7 million.

There was no dispute as to the tax debts and the fact that acts of insolvency had been committed. However, Shabangu and the trust argued that no provisional order for sequestration should be granted as there was no advantage to creditors.

Instead, they argued, Sars should use the Tax Administration Act to recover its tax debts.

Shabangu and the family trust also argued that as preservation orders had already been granted in favour of Sars under the Tax Administration Act (TAA), there would be no advantage to creditors if they were provisionally sequestrated.

The judgment read in part: “It is the case for Sars that Mr. Shabangu is in control of a complex corporate structure of which the Trust is a part and that through this control, despite the non-payment of his debts, he continues to enjoy, what was argued, a lavish and luxurious lifestyle.  Having regard to the fact that both the assets of Mr. Shabangu and the Trust are subject to preservation orders in terms of section 163 of the TAA, it is somewhat inexplicable that Mr. Shabangu has been able to finance and maintain such lifestyle in circumstances where the source of his funds is unknown and undisclosed by him. There is nothing before the Court to explain this.”

Sars Commissioner Edward Kieswetter has welcomed the court decision which held Shabangu accountable for his failure to pay outstanding taxes owed by him and his linked entities.

Sars said it has been involved in protracted efforts since 2018 to collect on the outstanding tax debts owned by Shabangu and had previously won a preservation order to prevent any realisable assets from being dissipated.

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Majestic Silver …

The preservation order was sought against Majestic Silver 275, the main property holding company used by Shabangu and his family members in their capacities as members of family trust.

Sars said Majestic Silver 275, in an attempt to delay matters, applied to go into voluntary business rescue, which would place a general moratorium on all legal proceedings.

Sars opposed this business rescue attempt and in February 2023 obtained a provisional preservation order which uplifted the moratorium provided for in terms of section 133 of the Companies Act. A curator bonis was appointed to effectively take control of the interests of Majestic Silver 275, Shabangu and his family members.

Sars was granted a final preservation order in April 2024, and the business rescue proceedings of Majestic Silver 275 were set aside and terminated.

This was followed by liquidation applications brought by Sars, as a preferential creditor, against Shabangu, his companies and the family trust.

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Liquidation

In September 2024, the liquidation and sequestration applications were argued in the Pretoria High Court, which granted a final liquidation against one company and three provisional orders against the other company, Shabangu and his family members as trustees of the Roux Shabangu Family Trust.

“The results of the above applications serve as examples of Sars’s resolve to pierce through the corporate veil in its efforts to fulfil its legislative mandate to collect all money due to the country’s fiscus,” said Kieswetter.

“Significantly, the sequestration order granted against the Trust is of particular importance as it highlights Sars ongoing efforts to enforce tax compliancy against discretionary Trusts which have been commonly utilised as a vehicle to evade taxes. Sars will not waiver from its path to pursue all without fear, favour or prejudice. I hope this application will deter all who intend to follow this route,” the commissioner added.

This article was republished from Moneyweb. Read the original here.