CONTROVERSIAL businessman Dave King, who famously arrived in South Africa in 1976 with R170 in his pocket and ended up in a decade-long war with the South African Revenue Service (SARS), says he is now looking forward to “an exciting couple of years” building Micromega, the JSE-listed services company he founded.
This week, Mr King finally settled the 11-year case by agreeing to pay R706.7m to SARS and nearly R12m to the National Prosecuting Authority (NPA) to settle his tax affairs and clear him of any criminal charges.
Micromega, which has seen its share price fall 5% over the past year partly due to the uncertainty concerning Mr King, is expected to be the largest beneficiary of this week’s settlement.
SARS attached Mr King’s shares in Micromega, which has operations in information technology, financial, occupational health and safety, and labour supply services. Its action raised uncertainty over ownership and weighed on the share price.
“I don’t think people were sceptical about doing business with me (while this was hanging over my head); they downright wouldn’t do business with me,” he told Business Times on Friday.
“All the energy I’ve spent on the SARS matter, which has been quite considerable, can now go into Micromega. We have some exciting projects in the pipeline, and hopefully shareholders will be rewarded for their patience,” he said.
This appeared evident from the fact that after the settlement was announced on Thursday, Micromega’s share price shot up 27%.
As his outstanding debt of about R306m will be paid from cash held by an offshore trust, the family will keep the mansion in Sandhurst, estimated to be worth R85m, and holiday homes in Plettenberg Bay and Fancourt, the luxury golf estate near George.
SARS has already received about R400m through the sale of other King assets, including Quoin Rock wine farm near Stellenbosch for R85m and a Falcon jet for about R100m.
Last year, SARS won a court order allowing it to sell Mr King’s assets to pay his tax bill of R2.7bn, including penalties of 200% and interest.
“SARS had to take into consideration the recoverability of outstanding taxes from assets in South Africa and overseas that are currently available and measure that against the settlement offer of R706.7m,” said SARS spokesman Adrian Lackay.
The often ugly and public battle with SARS did not affect his day-to-day lifestyle “in terms of paying the bills”, though the freezing of his international assets, particularly his private jet, was an “inconvenience”, Mr King said.
In 2011, he asked a court in Guernsey, where his assets were frozen in line with a request from SARS, for a monthly stipend of R2.2m, including R1m for legal expenses in South Africa, R800,000 for debts on his homes in Sandhurst, Plett and Fancourt, R200,000 for expenses on these homes, R23000 for gardeners and R40,000 for horticultural services.
Mr King’s troubles with SARS began in 2001, when SARS investigator Charles Chipps wondered how Mr King, with a declared income of only R60,000 a year, could afford to pay R1.76m for an Irma Stern painting after reading about the purchase in a magazine. Mr Chipps pursued the King matter doggedly and worked for SARS until his death last year aged 83.
Mr King made more than R1bn in profit when he sold his shares in the now defunct Specialised Outsourcing. The share tanked when his sale became public knowledge, causing other investors huge losses. This led to accusations that he defrauded investors and lied to the JSE.
In 2009, a R636m settlement agreement between SARS and Mr King fell through after the NPA refused to approve it. At the time, the NPA was still hoping to get a criminal conviction against Mr King, who was facing 322 charges including fraud, money laundering, racketeering and tax evasion.
The NPA also pursued 37 charges of fraud and racketeering against him related to the Specialised Outsourcing case.
Finally brought to court last year, the Specialised Outsourcing case turned out to be hugely embarrassing for the NPA, which called only five of 71 expert witnesses. The judge acquitted Mr King and slammed the NPA for failing to put up a case.
• This article was first published in Sunday Times: Business Times