Mark Shuttleworth takes SA gov’t to court over exchange controls

Ubuntu founder and South African-born tech billionaire Mark Shuttleworth is set to take the South African government to court in a bid to have the country’s exchange control system declared unconstitutional.

Shuttleworth also wants the Reserve Bank to pay back some R250-million (US$24.5-million) that he had to set aside to get his money out of the country in 2009. According to the South African Press Agency (SAPA), he also wants an order declaring the bank’s so-called “closed-door policy”, of insisting that the public communicate with it through the intermediation of authorised banks, unconstitutional and invalid.

The entrepreneur, who holds dual British and South African citizenship, also blames the system of controls for forcing him to emigrate to the UK in 2001, because the system made it impossible for him to conduct his entrepreneurial and philanthropic ventures.

At the time of his emigration, Shuttleworth had R4.27-billion in South Africa, but transferred the assets out of the country in 2008 and 2009, paying a 10% levy each time. Shuttleworth’s wealth is now split between the UK mainland and tax haven The Isle of Man.

Shuttleworth’s lawyer Gilbert Marcus reckons that the Reserve Bank is not run according to the dictates of the law, but the dictates of an organ of state which were not accessible to the public. The processes it follows, he says, means that it violates a number of constitutional rights.

“One of the founding principles of a parliamentary democracy is that there should be no taxation without representation and that the executive branch of government should not itself be entitled to raise revenue for its operation, but should rather be dependent on the taxing power of Parliament which is democratically accountable to the tax-paying public,” Marcus said.

“[The SARB] claims because the levy is only imposed on a small part of the population it does not qualify as tax,” he said.

He added that current currency regulations violate the right to procedurally fair administrative action and the rights to property and free trade.

“[The regulations] set up a system of exchange control in which the crucial rules are made not by publicly accessible promulgated laws, but rather by an inaccessible system of ‘in-house’ rules. …The effect of the regulations is that the president has vested in the minister the sole power to determine the lawfulness or otherwise of every single transaction involving foreign exchange without any guidance.”