Phala Phala report: The cash in the couch that’s come back to bite

By Michael Appel

Cyril Ramaphosa’s continued future as president of the republic and the ANC has been thrown into disarray after an independent panel found he has a case to answer to on Phala Phala.

The panel was established to conduct a preliminary enquiry into circumstances surrounding the theft of an undisclosed amount of foreign currency “stored” or “concealed” in a couch at the president’s Limpopo farm in February 2020. The independent panel consisted of former chief justice Sandile Ngcobo, former judge Thokozile Masipa, and Advocate Mahlape Sello.

The panel officially handed over its findings and recommendations to the Speaker of the National Assembly, Nosiviwe Mapisa-Nqakula, on Wednesday morning. The report was subsequently made available to the public late on Wednesday evening and can be read in full here.

Where it all started

On 1 June this year, former spy boss Arthur Fraser laid criminal charges of money laundering, kidnapping and corruption against Ramaphosa and his head of security, Major General Wally Rhoode.

The panel makes the point that, “While Mr. Fraser has not disclosed the source of his information, given the seriousness of the allegations he is making and the potential harm they can cause if untrue, we assume that at an appropriate forum and when the need arises, he will, when called upon to do so, disclose the source or sources of his information.” 

It is of course, curious, that it took almost two and a half years for the allegations of criminality and impropriety to surface. This led many a political pundit to question whether Fraser had timed the unveiling of the allegations to coincide with the ANC’s elective conference, now just about two weeks away.

The burning questions

The panel had to do its best – with the information presented to it – to answer certain fundamental questions. These include:

• Whether there was foreign currency stored or concealed in the sofa?
• How much money was kept in the couch?
• What role did Rhoode play in the investigation of the housebreaking and theft?
• Was there a failure to open or register a case of housebreaking with the police station in Limpopo?
• Why did Mustafa Mohamed Ibrahim Hazim, a Sudanese national, buy 20 buffaloes from Phala Phala and then not take ownership of them?
• Why has no one been charged, prosecuted or convicted for the housebreaking?

In his sworn affidavit to the police, Fraser said he believes the money that was stolen from the farm was not the proceeds of the sale of animals at all, as Ramaphosa contends. In fact, he alleges the cash was illegally brought into the country after the president’s advisor, Bejani Chauke, “collected the money for both him and the President on certain trips he undertook to Middle Eastern and African countries [Saudi Arabia, Egypt, Morocco, and Equatorial Guinea]”.

Cash playing couch musical chairs

Fraser said the dollars were then stored in a couch at Chauke’s home in Hyde Park, Johannesburg, before being transferred to Ramaphosa’s farm, for round two of couch concealment. I’ll pause at this juncture to point out that Chauke isn’t just an advisor to Rampahosa, he’s also the man who has just received the highest number of branch nominations to contest the position of Treasurer General of the ANC come the December elective conference.

Once a multitude of investigations were launched into Phala Phala in June this year, Fraser said Chauke “is said to have moved $20m in cash to a South African citizen, Mr. Zahir Vallie…”.

Vallie is a Cape-Town based property mogul.

But, the panel makes the point that everything Fraser alleges – while it may assist the panel with information, cannot be verified as the “present process [preliminary enquiry] does not permit the panel to investigate these matters”. In other words, they remain allegations until properly tested in a more thorough manner by an appropriate forum with subpoena powers, for example.

Ramaphosa’s side of the story

While the president hasn’t said much at all since news of the scandal broke in June this year, he has consistently denied any wrongdoing and maintains that the money represents the proceeds of the sale and hunting of game. But here’s where it gets interesting.

The panel gave the president 10 days to respond to questions and the allegations made. This was his response.

“On 26 December 2019, I went to Phala Phala. While there, the Lodge Manager, Mr. [Sylvester] Ndlovu, informed me about what had transpired the previous day at the farm. At the time, the General Manager Mr. von Wielligh was on leave. Mr. Ndlovu said that: Mr. Mustafa Mohamed Ibrahim Hazim, a citizen of Sudan, came to the farm to view buffaloes that were for sale. Mr. Ndlovu showed Mr. Hazim the buffalos in Camp 6 and Mr. Hazim identified those that he liked the look of. Mr. Hazim made payment in cash in the sum of US$580,000 to Mr. Ndlovu. It was a payment for purchase of a number of the buffalo referred to above, based on information Mr. Ndlovu gave Mr. Hazim regarding the price of each of the animals he had identified and decided to buy.

“Mr. Ndlovu, upon receipt of the money, gave Mr. Hazim an acknowledgement of receipt and informed him that he would inform me about what had transpired. After Mr. Hazim had left Phala Phala, Mr. Ndlovu took the money and locked it in the safe at the Bayeto Centre office.”

The source of the funds

The panel makes the point that not only is the the source of the funds in dispute, so is the quantum. Fraser alleges it was anything between $4m and $8m, while Ramaphosa says it was $580,000. Fraser’s sources are unknown, and Ramaphosa’s version is based on hearsay from the Phala Phala lodge manager who hasn’t made any statement.

Even on the president’s version, it’s probably worth repeating that South Africa’s head of state has officially admitted that R9.94m in foreign currency was stored under the cushions of a couch in his private residence in Limpopo. The panel, however, cautions that the impression “we get from this statement is that it was Mr. Ndlovu’s idea that the money be stored ‘below cushions of a sofa’. Was the money stored in the sofa with the knowledge of the President?”

The conclusion the panel draws is detailed below.

Even more damaging to Ramaphosa – on his own version of events – is that a huge sum of money was paid for goods that never left Phala Phala. Who pays almost R10m for something but then doesn’t take ownership of it?

The panel notes: “The President has not told us why Mr. Ndlovu has not made any [sworn or even unsworn] statement. Nor has he explained to us why the buffaloes are still at the farm…there are troubling unsatisfactory features in the explanation of the source of the foreign currency given by the President.”

Below is an extract of just some of the panel’s discomfort with the scenario painted by the president.

There are, naturally, questions around exchange control regulations here. The panel highlights that while no report from the South African Reserve Bank (SARB) was submitted to it, on 30 August this year, SARB governor Lesetja Kganyago, said the Financial Surveillance Department (FSD) “has requested legal advisors of the President to provide information and details regarding the origin of the foreign currency and the underlying transactions that it may pertain to.”

The investigation by the FSD suggests that the SARB is probably not aware of the sum of $580,000 entering this country or being reported.

While the president has handed over the “acknowledgement of receipt” slip that the Sudanese businessman allegedly filled out, that receipt presents more questions than answers to the panel. Firstly, there are no particulars whatsoever of the buyer on the form other than his name. No passport number. No ID number. No address. No contact information. No business information or business address.

In considering the allegations made against Ramaphosa and his responses given, the panel reached the conclusion that: “We think that the President has a case to answer on the origin of the foreign currency that was stolen, as well as the underlying transaction for it.”

Ultimately, the panel – bearing in mind the information presented to it – prima facie, (on the face of it) makes findings against the president in five respects. These include that there was a “deliberate intention” not to openly investigate the burglary and theft of funds; that there were two violations of sections of the Prevention and Combatting of Corrupt Activities Act (PRECCA) “to keep the investigation a secret”; that Namibian police being asked to “handle the matter with discretion” in apprehending the mastermind in that country confirmed the request for secrecy; that Ramaphosa abused his position as head of state by asking the Namibian president to “apprehend a suspect”; and that there was more foreign currency “concealed in the sofa than the amount reflected in the acknowledgement of receipt”.

The political backlash from some within his own party and – predictably so – from opposition parties has been swift and ruthless. Tourism Minister Lindiwe Sisulu, who it must be added is vying for Ramaphosa’s position come December’s elective conference, simply tweeted: “CR must resign now!”

Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini Zuma – another person who fancies herself a presidential contender – similarly said Ramaphosa “must step aside now and answer to the case”.

As for the official opposition – DA leader John Steenhuisen has called for the dissolution of government, which would trigger early elections.

Steenhuisen said it would take a simply majority of 50% plus one to dissolve government. He believes Ramaphosa and his cabinet have lost the mandate and legitimacy to govern. As such, he announced the DA will be tabling this motion in the National Assembly.

On 6 December the panel’s report will be tabled before the National Assembly, where the motion to take further action and establish impeachment proceedings will be put to a simple majority vote. Impeaching Ramaphosa would ultimately require a two-thirds majority – no mean feat when the ANC controls 230 of the 400 seats in Parliament.

But, perhaps more importantly, the ANC National Executive Committee (NEC) called an urgent sitting for Thursday evening to discuss the report. But that sitting has now been postponed until Friday morning. There are several questions and possible outcomes here. 

Will the majority of NEC members – believed to be in Ramaphosa’s camp – close ranks and defend him from calls within his own party to resign? Will the ANC instruct its MPs to vote to defeat a motion calling for an impeachment inquiry? Has the panel report done significant damage to Ramaphosa, such that the majority of NEC members would support recalling him?

Two former presidents of the party – Thabo Mbeki and Jacob Zuma – have been recalled in the past. The ANC prefers this option to parliamentary processes. It has consistently defended its presidents from motions of no confidence – including a heap of them brought against Zuma. Zuma was forced to resign on Valentine’s Day in February 2018 when the party threatened it would vote with opposition parties in Parliament to remove him if he didn’t step down.

As for Ramaphosa – you can bet be your last couch dollar that his legal team is working furiously to poke as many holes in the panel’s findings as possible with a view to a judicial review of its findings.

But Accountability Now director Adv Paul Hoffman tells BizNews that while the option for judicial review is theoretically open to him, his legal advisors will likely indicate there isn’t a basis in law for doing it.

“The role of the panel is simply a filter to see to it that bullshit impeachment proceedings are not brought. It only makes a finding based on information presented to it. It really is a difficult thing for anyone seeking to poke holes to do so. The NEC could call the shots. He [Ramaphosa] is a deployed cadre of the ANC…so if the NEC says Cyril is too much of a liability to us and we want to win the next elections, then they can recall him.

“If they’re really cute, the ANC will look at the calculus and see that their star is waning at the moment and could therefore choose to call a snap election for early next year. Ramaphosa will not be part if it, the ANC then decides in December who will lead it and then their hope will be that not too many will have stumbled on to the fact that the ANC is a criminal enterprise and they then get enough votes to stay in power,” says Hoffman.

All eyes on that NEC meeting. The nation waits.

Read also:

• Phala Phala: “It was a complex matter” says panel as it delivers report to Parliament
• Ramaphosa likely to retain ANC presidency barring Phala Phala skeletons
• If charged over Phala Phala, Ramaphosa will step aside, but only then