Picture: Devina Haripersad
The SA Reserve Bank (Sarb) last week issued a notice of forfeiture against Silver Tiger Trade for more than R5 million in assets held in accounts at Standard Bank and crypto exchange Ovex.
The notice says the funds will be deposited into the National Revenue Fund (the central fund for national government).
This is the latest forfeiture by the Reserve Bank under exchange control regulations. The notice gives no details as to the nature of the alleged breaches, but it is believed to be the first time the central bank has issued a forfeiture notice to a crypto exchange.
ALSO READ: Reserve Bank attaches ex-Steinhoff CEO Markus Jooste’s properties
A legal precedent was set in April when Sarb attached the assets of Berdine Odendaal, the reputed lover of former Steinhoff CEO Markus Jooste, who committed suicide in March just as he was due to be arrested for fraud.
The Sarb seized R42 million in cash deposits held by Odendaal at Absa, Capitec, and Standard Bank, as well as her Val de Vie property valued at R18 million – meaning a total of about R60 million was forfeited to the state.
As in the case of Silver Tiger Trade, Odendaal’s funds were destined for the National Revenue Fund. The argument made by the state was that she had benefitted unlawfully to the tune of R60.5 million from a company called Mayfair Speculators, in which Jooste was a director.
Odendaal’s funds were frozen by the Sarb in April 2021, though it later agreed to release R150 000 a month from one of her accounts for reasonable expenses.
That arrangement ended when she approached the court to demand that the Sarb also cover her legal expenses.
She lost the case in the Western Cape High Court and the subsequent appeal in the same court seeking access to her funds.
Regulation 22A of the Exchange Regulations allows the National Treasury to attach assets linked to or suspected of being linked to breaches of exchange control rules.
The regulations are broad enough to allow assets to be seized even when there is no conviction.
Assets can also be seized under the Prevention of Organised Crime Act, but this first requires a conviction of one or other corrupt parties.
The Sarb merely requires reasonable grounds to suspect a contravention of exchange controls to attach and seize assets.
“This was effectively applied in Odendaal’s case, where assets were seized based on their alleged connection to illicit financial flows from Steinhoff, mediated by Markus Jooste,” according to a commentary on the case by Dhahini Naidu, director of law firm Fairbridges Wertheim Becker.
“The significant aspect here is the regulatory provision that allows for such actions without the prerequisite of a conviction, thereby fast-tracking the process of asset recovery.”
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The Sarb has been aggressively chasing down funds linked to Jooste and Steinhoff’s successor, Ibex Investment Holdings.
In June, Ibex raised R9 billion from the sale of 500 million Pepkor Holdings shares, reducing its interest from 43.7% to about 30%. It planned to use these funds to pay down foreign debt but in July was told by the Sarb that the funds had been placed “in abeyance” despite it having received approval for the transaction a few months earlier.
Ibex has since taken its case to the Gauteng High Court, arguing that the Sarb unlawfully reneged on a deal that would allow it to pay its overseas creditors. The company argues that Sarb officials simply changed their minds after previously agreeing to the transfer of these funds.
The Sarb wasn’t done yet. On 19 July, it published another notice in the Government Gazette that R6 billion in funds belonging to Ibex, Steinhoff International Holdings (SIHPL), and Steinhoff Africa Holdings (SAHPL) would be forfeited to the state.
In September and October 2023, SIHPL received approval from FinSurv, Sarb’s surveillance unit, to withdraw R854.6 million (€42 million) of the blocked funds, which was used to repay some foreign debt.
While these events severely disrupted debt repayment plans, the directors of Ibex believe the company’s going concern status has not been affected.
Moonstone speculates that Jooste’s personal assets and his family trust, Silver Oak Trust, worth about R1.4 billion, may be next on Sarb’s hit list.
The Sarb says where reasonable grounds exist that exchange control regulations have been flouted, it conducts an investigation that sometimes results in the attachment of funds or assets.
The affected party is invited to make representations as to why forfeiture should not take place. Once a notice of forfeiture is gazetted, the aggrieved party can make representations or institute legal action to review the bank’s decision.
Angelo Christophorou of BBM Attorneys told Moneyweb’s Jimmy Moyaha that the purpose of such seizures is to block funds from being released pending the outcome of investigations into whether regulations have been contravened.
It’s clear that the Sarb is taking no prisoners when it comes to what it believes are contraventions of exchange controls, and we can expect plenty more such forfeitures in the future.
This article was republished from Moneyweb. Read the original here.
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