Farm-gate… Busting my opinion streak for some breaking news

We begin today’s opinion-piece-morphed-into-breaking-news with an early 19th Century quote by Scottish Novelist, Sir Walter Scott. It reads: “Oh, what a tangled web we weave, when first we practice to deceive!” You could trawl the web for weeks without finding a more appropriate line to introduce the sorry tale of a South African president; a Limpopo game farm; a handful of over-priced and unclaimed buffalo; a cash-stuffed couch; and a robbery cover-up. The story begins with the cover-up of a robbery that occurred back in February?2020. But first, the breaking news today’s tagline promises.

Could section 89 be the president’s undoing?

On Thursday, 1?December?2022 the South African news wires were ablaze with conjecture and speculation that President Cyril Ramaphosa might announce his resignation, sending the rand into freefall against the US dollar and adding to the uncertainty that already blights our financial markets. By the end of the day the rumours of his resignation were replaced by hints that the president would ‘fight to the bitter end’. Sadly, given the political positioning taking place within the ruling African National Party (ANC) going into its 55th elective conference, this could be the best outcome for South Africa Inc.

Claims that a resignation was imminent followed on from the release of a damning section 89 report into goings on at the Phala Phala game farm, dating back to February?2020. The report, prepared by an independent panel established in accordance with section 89 of the Constitution was handed to the Speaker of the National Assembly on Wednesday, 30?November, and made public late that evening. An article in Business Day summarised some of the most damaging findings contained in the 82-page report. First and foremost, it concluded that the president had a case to answer regards money that was ‘concealed’ or ‘stored’ in a couch at his private residence on the farm, located in the Limpopo province. The report did not make a finding on how much money was involved, but the sum ‘settled on’ by the mainstream media seems to be USD580?000,00 or ZAR9?million. Incidentally, the affidavit that started this series of events mentioned a sum of USD4?million.

Furthermore, the report noted that the money was in foreign currency, US dollars, and it was not known how the money entered the country. Based on various media accounts of the matter, it seems likely the money was brought into the country by a Sudanese national to fund the purchase of a number of buffalo. To date, these buffalo remain on the farm, begging the question what was actually paid for, and what other good or service the money may have been earmarked for. As Alice once said in Alice’s Adventures in Wonderland: “curioser and curioser!”

?A Netflix drama, two years in the making

Of course, dear reader, we would not have known about these events had Arthur Fraser, former State Security director-general, not reported the matter to the police on 5?June?2022. PS: This action does not position the man as a good actor in this unfolding saga.?

In broad brushstrokes, Fraser’s statement sketched a series of events worthy of a Netflix drama. He noted that a robbery had taken place at Phala Phala in February?2020; that the assailants removed a large sum of foreign currency; that the matter was not reported to the police, but rather insourced to the Presidential Protection Unit; that the perpetrators were tracked to various locations in Cape Town and Namibia; and that instead of being arrested they were ‘paid off’ for their silence. This affidavit is available online, using the Google.

As reported by EWN at the time, Fraser said: “The mere fact that [the president] had large undisclosed sums of foreign currency in the form of US dollars concealed in his furniture at his Phala Phala residence [was] prima facie proof of money laundering”. It beggars belief that Fraser sat on this information for more than two years, unless you buy into the conspiracy theory that many, if not all, of South Africa’s political elite are holding onto damning evidence that they can produce, strategically when it best serves their interests. How else would you explain the June?2022 timing of the affidavit, leaving just enough time for the necessary Parliamentary processes to play out prior the ANC elective conference, and potentially leaving the president with no choice but to resign.?

Could this signal Round II RET?

This last-minute ace-in-the-sleeve leaves the ANC election process in total disarray, perhaps opening the door for a second round with the so-called radical economic transformation (RET) and State Capture ‘cluster’. After all, if Ramaphosa steps aside the contest would be between Zweli Mkhize, whose reputation has been sullied by the Digital Vibes scandal, and one or more as yet un-named opponents who would have to muster the necessary support at the conference. The bottom line, long-suffering South Africans look set for another decade of compromised leadership as an all-important election is decided by skulduggery and sleight-of-hand rather than a transparent process anchored on ethics and trust.

As an aside, Ramaphosa’s handling of the entire saga has been abysmal. His first mistake was not making the whole sordid affair public when it happened, way back in 2020. If you have nothing to hide, then… When Fraser’s affidavit went public, the president appeared arrogant and non-plussed, dismissing any allegations of wrongdoing with disdain. This nonchalance was short-lived, replaced with ‘no comment’ and an outright refusal to answer questions put to him in Parliament. As the writer noted in a recent LinkedIn Post: Not only has the president repeatedly stalled his responses to the allegations; but when made, his responses seem wholly disconnect from the alleged transgression.

Instead of talking about why thousands of dollars are scattered about a farm or why cash transactions of this size are happening in a time of FICA, Know Your Customer and Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), the president deflects. The core allegations were never commented on, and the president transitioned the story from that of a murky underworld, bags of loot and priceless bovines to one in which he had not benefited from the cash or stolen any money. Yes, Mr. President, we know your farm is held in a trust; we know you didn’t steal the cash or benefit from it… What we want to know is what was it doing on your farm; why was the robbery swept under the carpet etc.

Immediate hiccup for SA bonds, rand

The country’s investors and savers, already reeling from the multi-year pandemic and post-pandemic inflation and interest rate crises, now look certain to take another hammering. As reported on Fin24.com, “the dollar-rand cross jumped by as much as 4.4% [on Thursday, 1?December?2022] to 17.9596, its biggest increase since March 2020”. At the same time, “the yield on 10-year rand-denominated debt surged 91 basis points to 11.71%, the most in a day since former President Jacob Zuma’s axing of Nhlanhla Nene as finance minister in December 2015 roiled markets”.

We have not even begun to assess the impact of these developments on long-term foreign investor confidence. At this early stage, the handful of analysts and market commentators assembled by Fin24 offered up a rather gloomy outlook, with the consensus being that uncertainty was never good for financial market returns, and by implication, foreign direct investment.