South African Reserve Bank Concludes Investigation into Phala Phala Matter

On August 14, 2023, the South African Reserve Bank (SARB) announced the completion of its investigation into the Phala Phala matter. The investigation was initiated following allegations made by Mr. Arthur Fraser in June 2022 regarding foreign currency allegedly stolen from the Phala Phala farm on February 9, 2020. The SARB received subsequent complaints from various parties, including political ones, prompting the investigation.

Investigation Process and Findings

The investigation was conducted by the Financial Surveillance Department (FinSurv) of the SARB in two phases. The first phase involved a review of internal information and databases, with cross-border foreign exchange transactions analyzed over the relevant period. The second phase involved obtaining additional information, documents, affidavits, and conducting interviews with various individuals, as well as liaising with other parties. Legal advice was also sought during the process.

The investigation lasted approximately a year and was considered comprehensive despite the SARB’s limited mandate in the matter. Its focus was on whether there were any violations of exchange control regulations concerning the foreign currency allegedly stolen from the Phala Phala farm. The SARB found that there was no perfected transaction and, as such, could not conclude any contravention of the Exchange Control Regulations by Ntaba Nyoni Estates CC (the involved entity) or the President. This conclusion was based on the unfulfilled conditions precedent, resulting in no legal entitlement for Ntaba Nyoni Estates CC to the foreign currency.

Report and Feedback

Due to legislative constraints, the SARB’s report remains private and will not be publicly disclosed. However, the Governor will provide feedback within legal constraints during SARB’s upcoming engagement with Parliament. The inquiry sheds light on the complex nature of exchange control regulations and the potential implications for high-profile cases such as the Phala Phala matter. It is important to note that other matters potentially breaching other laws are to be addressed by relevant authorities, not the SARB.

Extensive Investigation

The investigation involved examining dozens of documents, obtaining at least 15 affidavits or statements, liaising with relevant authorities, and conducting formal interviews with related individuals. Despite the challenges presented by the limited scope of the investigation, the SARB remained committed to conducting a comprehensive inquiry into the matter. The findings will likely serve to inform future investigations, highlighting the need for a nuanced approach to exchange control regulations.