Cold cash: How was Jooste’s mistress able to access frozen assets?

[Nat Quinn]

JIMMY MOYAHA: For the last couple of days, probably about a week and a bit at the moment, I’ve been annoying my producer about finding a lawyer to look into this particular case. Let me give you a bit of a summary or a quick background as to what’s been happening here. There was a preservation order from the South African Reserve Bank [Sarb] related to some funds that were frozen.

There was a company called Mayfair Speculators, which was a company that the late Markus Jooste was a director of, and this handled a lot of his horse-racing businesses.

That company subsequently paid 12 loans amounting to more than R60.5 million to a Berdine Odendaal, who has been mentioned in the media as being the mistress of the late Markus Jooste, or the ex-girlfriend of the late Markus Jooste.

Now, the conversation gets particularly interesting when you dig into the fact that the preservation order was obtained by the South African Reserve Bank to freeze these assets as part of an ongoing investigation, as part of freezing the other assets that belonged to Markus Jooste. So this is freezing affiliated assets.

But despite freezing the assets, [the firm] still paid out about R150 000 a month to Ms Odendaal for her monthly expenses.

Now that seems very strange, and that’s kind of what piqued my interest around this. So I thought, let’s speak to a lawyer. Let’s understand what’s happening here. Perhaps we’ve missed something and let’s try and understand how we got to this point.

I’m joined on the line by the director of BBM Attorneys, Angelo Christopherou, to take a look at this and try and unpack it. Good evening, Angelo. Thanks so much for taking the time. Let’s start by identifying or defining a preservation order as we know it in legal terms, and what this kind of preservation order allows someone like the central bank to do if it’s approved by a court.

ANGELO CHRISTOPHOROU: Good evening, Jimmy, and to your listeners as well. We are really talking about giving efficacy to the provisions of the Currency Exchanges Act 9 of 1933, as well as the exchange control regulations pertaining to that act.

Regulation 22 (A) is really in question over here, where Treasury or its authorised agent under whom delegated authority has been given – such as the South African Reserve Bank in question over here – is entitled to attach certain money and goods and blocking of certain accounts.

That is an instances where the South African Reserve Bank would have a reasonable suspicion that there has been contravention of the regulations to the Currency and Exchanges Act, they [the bank] would be entitled to block and preserve the money contained in bank accounts that arose pursuant to questionable transactions and reasonable suspicions.

JIMMY MOYAHA: Angelo again, everybody in South Africa is innocent until proven guilty. What is the purpose of preserving these funds? What would be the rationale from a Reserve Bank perspective to say, ‘We want to put a hold or a freeze on these accounts’?

ANGELO CHRISTOPHOROU: Essentially to ascertain whether there has been a contravention of the regulations.

Issues such as restrictions on purchase and sale, on loan of foreign currency, and gold, issues such as declaration of foreign currency and foreign assets, acquisition of foreign currency which is undeclared, any type of conduct or omission which is a failure to act when there is a duty to act on any issues pertaining to exchange-control regulations.

So the purpose of the preservation would be to hold on to those funds, to block the funds from being released from the accounts in question, pending the outcome of the investigation.

And Treasury or its delegated authority body would have a period of 36 months – in other words three years – to investigate the matter.

JIMMY MOYAHA: And in those three years, while the funds are being frozen or locked in the way they are, the aim there of course is to ensure that the value of those funds can be preserved in the event that those funds need to be seized or handed over. Is that correct?

ANGELO CHRISTOPHOROU: That’s absolutely correct, yes, so as to ensure that the accounts are not depleted of the funds, so that the very purpose for which the act has been promulgated – and the regulations to the act have been promulgated – is not defeated.

And of course, if there has been found to have been a contravention either of the act or the regulations, then to enforce the penalty provisions and to ensure that the funds are preserved so that the penalty provisions can be enforced – which of course include a forfeiture of those funds to the state.

JIMMY MOYAHA: You mentioned a very important word there, ‘depletion’ – to avoid depletion. So Angelo, if we’re avoiding depletion, why then does the central bank enter into an agreement to pay out R150 000 from the said frozen accounts to the individual from whom they froze the accounts? Is there a legal precedent or a case law that that’s based on?

I’m not expecting you to understand the exact agreement that the central bank went into, because I tried to look for it. I don’t think it’s available in the public domain at the moment. So we’re only able to speculate, based on what case law might provide for.

ANGELO CHRISTOPHOROU: Yes. Well, Treasury or its authorised agent like the Reserve Bank, has a discretion.

The wording of Regulation 22 (A) is actually relevant to your question, which provides that Treasury may in such manner as it may deem fit – the wording of the regulation, the intention of the legislature and the drafters of the regulations, are such that Treasury or its authorised agent is afforded a degree of discretion.

So it usually considers the matter on a case-by-case basis. In some cases it may choose not to exercise its discretion to the extent that it allows any payouts.

In other instances where, for example, the survival of the person in question is dependent on accessing funds [in] the account in question, it may of course allow certain provisions to be made out and concessions to be made for maintenance claims and claims of that nature.

JIMMY MOYAHA: It’s very interesting, Angelo, that you mentioned that survival, because I imagine that is what Ms Odendaal would’ve argued – that these funds would be necessary to keep up her reasonable expenses, including whatever costs that she would’ve outlined to the central bank. Interestingly enough, that agreement the Reserve Bank has found since they no longer want to abide by that.

I suppose, as you mentioned, they deem fit to provide those funds so they can deem fit to, at their discretion, take those funds away.

Angelo, I want to look at the funds while frozen – if there’s interest earned. If we’re looking at bank accounts, I understand there are four bank accounts involved here. We’ve almost depleted one of the bank accounts, and we are looking at the other bank accounts there. [Over] the time that those accounts are frozen and those monies are earning interest, what happens in that respect?

Does that interest get forfeited to the state as well if there is sort of forfeiture of the rest of the funds or the rest of the assets. And if not, if we find at the end of it that we’re returning all of the funds back to Ms Odendaal, does she then benefit from that interest as well?

ANGELO CHRISTOPHOROU: There is a high probability that the funds – including the fruits of the funds which would naturally incorporate interest; that would be the typical example of the fruits of those funds – would either be forfeited or paid back should it be found either way that there was a contravention and that the penalty is appropriate for the forfeiture of the entire fund and fruits. Or vice versa. Or that a contravention has not been made and that there should be a release of those funds, including their fruits.

JIMMY MOYAHA: So Angelo, if we come back to the funds, the payout that was being released, from the Sarb, the central bank’s perspective – which is at their discretion to do, and to enter into that agreement, an agreement which we have yet to see here – what does that do for the case? If we get to a situation where in the 36-month period of investigation the central bank has paid out all of the funds that are there, effectively that would defeat the purpose of having preserved those funds in the first place.

ANGELO CHRISTOPHOROU: Absolutely. And the Reserve Bank would have to answer as to why it did so in circumstances where it had a reasonable suspicion – if it had a reasonable suspicion to preserve those funds instead of paying them out.

JIMMY MOYAHA: I suppose at this point only the central bank can provide some of the answers that we’re looking for.

But thank you so much Angelo, for those insights and for helping us unpack the legal side of this conversation. We’re going to keep an eye on this to understand what happens here going forward. We understand at the moment that Ms Odendaal is appealing in the Supreme Court to have these withdrawals reinstated from a Reserve Bank perspective. We’ll keep an eye on this and other stories and see how that develops.

Thanks so much, Angelo. Angelo Christopherou, a director at BBM Attorneys, has been helping us unpack the debacle that sits around the assets that the Reserve Bank had frozen previously.

 

source:Cold cash: How was Jooste’s mistress able to access frozen assets? – Moneyweb

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