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Reserve Bank Governor

Dear Mr Kganyago

Report on Phala Phala matter

Thank you for your letter dated 21 August 2023 (copy attached).

Today is exactly one year after correspondence was sent to your office by the Chairperson of the Standing Committee on Finance regarding allegations against President Ramaphosa. Those allegations relate to foreign currency, US Dollars, that was in the possession of the President. In particular, the concern raised by the Committee was that a contravention of Exchange Control Regulations had occurred given that it is illegal to hold foreign currency beyond the legislated period.

In your letter, you indicate that the South African Reserve Bank (SARB) will account to Parliament in accordance with its constitutional obligations on 30 August 2023.

I am writing ahead of that meeting to express my concern at the finding you have published in your media release of 21 August 2023. SARB finds that there was no perfected transaction and thus the SARB cannot conclude that there was any contravention of the Exchange Control Regulations. Given that there was no legal entitlement to the foreign currency, there was no contravention.

Your media release is completely silent on the apparent fact that foreign currency was actually in the President’s possession. That is the crux of the matter, not whether the transaction was perfected or not. The status of the transaction cannot be the determinant, it is the possession of the currency. If the transaction status is considered the deciding factor, then the door is wide open to money laundering and foreign currency being held for lengthy periods pending transaction completion.

Given our recent greylisting by FATF, South Africa can ill-afford non-compliance with financial regulations. There is no doubt that FATF is also closely monitoring the outcome of this investigation.

I, therefore, request that you make the SARB report available, failing which we will submit an application in terms of the Promotion of Access to Information Act and/or approach the Court for relief.

Regards Dr Dion George MP