Is Fresnaye the new Nkandla?

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CAPE TOWN – Hot on the heels of the recent exposé of President Cyril Ramaphosa’s CR17 election campaign, there is new information that has surfaced that could give the president even more of a headache.

It transpires that payments linked to a campaign account, totaling R21 million in three tranches in March 2018, were paid into the account of his family trust known as Tshivhase, which administers a large number of his private properties.

In a strange coincidence, the month before, it appears that Ramaphosa’s family trust also embarked on renovation processes at his Lion’s Head mansion, located in upper Fresnaye, Cape Town, valued at around R60 million.

Upon assessing CR17 bank statements, which were recently leaked, payments from the NASREC-connected, Linked Environmental Services FNB account, which is at the center of the president’s campaign funding woes, shows that on the 8th of March 2018, R18 million was paid to Tshivhase.

On the 13th of March 2018, another payment of R2.5 million was made to the same trust – during the renovation processes. The following day, 14th of March, another payment of R500 000 was also made to the Tshivhase Trust.

Earlier this month, Independent Media revealed how almost R1 billion was channeled through Ramaphosa’s successful presidential campaign.

The exposé showed how some politicians, campaign managers, and strategists, earned millions through donations made by big business and influential figures in SA’s economic landscape.

Journalists, who visited the property, which appears to be completed, found a police van stationed nearby, with limited activity during the day.

Around 2010, Ramaphosa purchased two steep mountainside plots on Lion’s Head, prime real estate in Cape Town, for approximately R30 million and which, are administered by Tshivhase Trust.

Khusela Diko, Ramaphosa’s spokesperson said the presidency is not commenting on the details of the statements.

However, on Thursday last week, addressing parliament for the first time since the explosive leaks, Ramaphosa said individuals involved in his CR17 presidential campaign owed no one an apology for raising funds.

Other reports suggest that the president had informed Public Protector Busisiwe Mkhwebane, in his submission, that some of the money he gave to the CR17 campaign fund was a loan, which he had personally donated.

In court papers, Ramaphosa said no money was taken from the campaign and given to him in his private capacity or to his family.

“In fact, the president contributed R6.2 million to the campaign and loaned the campaign a further R31 million, of which, the campaign has only refunded R21.5 million.”

Currently, all trusts in South Africa are subject to 40% income tax and capital gains tax.

It is unclear at this stage if income tax from some of the accounts associated with CR17 trusts has been paid to the South African Revenue Service (SARS).

In a report published on law firm Norton Rose Fulbright’s website states: “A trust beneficiary is entitled to benefit under the trust arrangement, from vested or discretionary rights determined by the trust deed.

“A trust does not have a legal personality because it is, simply, an accumulation of assets. In some circumstances – such as for tax purposes – it is regarded as having a separate legal identity.”

The report states that a trust may be used to hold and protect personal or business assets, which is especially beneficial in the event of subsequent liquidation, sequestration or divorce.

“Trusts may also be used to hold shares in businesses and to ensure the continuity of ownership of assets. Assets may be placed in a trust by donation of assets to a trust or selling assets to a trust,” reads the report.

The University of Zululand Professor and former ministerial advisor, Sipho Seepe, said the unfolding drama around the CR17 campaign funds, achieves the opposite of what the president sought to realize.

“Truth has a way of coming out and by the time the truth comes out, enormous damage would have occurred. Even when the revelation of truth is postponed, there will always be a lingering suspicion,” he said.

He was of the view that Ramaphosa cannot have it both ways. He cannot praise the media for supposedly exposing the rot associated with other prominent politicians and business people and then expect that the rot that is suspected to be associated with his campaign, should simply be ignored.

“Nothing short of total transparency will be acceptable. These revelations are pushing him into a corner to establish a Commission of Inquiry. Worse still, the former president, Jacob Zuma, is on trial for allegedly soliciting a bribe. This was long before he became a president. It could be argued that the situation is not that different,” he said.

This story first appeared in the Business Report Online