South African entrepreneur and multibillionaire Mark Shuttleworth. Picture: BUSINESS DAY
South African entrepreneur and multibillionaire Mark Shuttleworth. Picture: BUSINESS DAY

AFTER winning his case against the government, billionaire philanthropist Mark Shuttleworth will put the R250m the Reserve Bank must pay him into a trust to pay the costs of Constitutional Court cases for people who cannot afford to pay the costs when the counterparty is the state.

The payment refers to the "exit levy" Mr Shuttleworth paid under protest when he emigrated to the Isle of Man in 2001. "I will put the returned funds … plus interest, into a trust, to underwrite Constitutional Court cases on behalf of those whose circumstances deny them the ability to be heard where the counterparty is the state," he said on his website on Wednesday.

SA’s exchange control system had created a "cartel of banks" that acted as agents of the Bank, he said, adding that "we all pay a very high price for that cartel, and derive no real benefit in currency stability or security".

The Supreme Court of Appeal ordered the Bank to repay Mr Shuttleworth the 10% levy on the value of his assets, with interest, declaring the levy inconsistent with the constitution and invalid. It was not passed as part of a statute, but was levied in terms of the Exchange Control Act.

Mr Shuttleworth also attacked other provisions underpinning exchange controls, but the court found no basis to declare them invalid.

Mr Shuttleworth vowed to take the matter to the Constitutional Court. There was no use having an eloquent constitution if it was not binding on the state, he said.

In essence, the court found that control over SA’s foreign currency was vested in the Treasury. The levy was intended to discourage South Africans from taking their assets abroad. It was implemented in terms of the Exchange Control Act and, according to Mr Shuttleworth was used as a "revenue collection mechanism".

The Bank denied this, but the court agreed.

Mr Shuttleworth said exchange controls might appear to be targeted at a very small number of (rich) South Africans, but their consequences were significant for all. "It is more expensive to work across South African borders than almost anywhere else on earth, purely because the framework of exchange controls creates a cartel of banks authorised to act as the agents of the Reserve Bank in currency matters."

The Bank did not deal with individuals, only with "authorised dealers" such as banks, claiming this was a "practical arrangement" as its exchange control department did not have the capacity to deal with the large number of applications.

Norton Rose Fulbright head of tax Andrew Wellsted said the levy has raised R2.9bn in revenue for the state.

The court said there was no danger of a flood of similar claims to Mr Shuttleworth’s. But Mr Wellsted said it was not clear if it thought so because other people had not paid the levy under protest, as Mr Shuttleworth had, or if it was alluding to the time that has lapsed since the levy was abolished in 2010.

The Bank said it was reviewing the judgment.