WHILE the wheels of justice at the Constitutional Court are grinding slowly, an important application involving a claim by a family against the Public Investment Corporation (PIC), for the payment of R1.35 trillion, is still on hold.
The family instituted a claim against the PIC and the Absa Group for payment of the repatriated funds deposited into holding accounts, of which the PIC is the Administrator and the Absa group the custodian.
The plaintiffs - Rehana Surtie Tayob and Edward Jeffrey Koorbanally - a financial and forensic expert instructed by the family to assist them in instituting the claim, encountered a legal hurdle, when the Gauteng High Court, Pretoria, upheld two exceptions against their claim.
This is after the PIC, argued that the pleading did not sustain a cause of action. Their exception included that the claimants had failed to seek an order that the apartheid government’s policy of precluding any person from paying money over to a foreign creditor, citizen or country was declared unconstitutional and invalid, or reviewed and set aside.
According to the PIC and the high court, this policy first had to be overturned before the claim could be adjudicated upon.
The plaintiffs, however, submitted that the additional provisions of the regulations 2 and 4A of the Currency and Exchange Act of 1933 last gazetted in October 1993, which came into effect April 1986, overwrote that argument.
They will argue that that the provisions that prevented payment to them, had totally lapsed in August 2001 and were not replaced by similar provisions, and by virtue of the lapse of these provisions, it placed them in a position to be able to retroactively claim payment of the money held in the two blocked accounts .
Following the high court ruling against them on the exceptions, which also turned down their application for leave to appeal the judgment, a subsequent application to the Supreme Court of Appeal was also turned down.
The plaintiffs launched an application with the ConCourt in September last year, for leave to appeal and to uphold the appeal.
It's been a long frustrating waiting game, the plaintiffs have not heard a word yet from the apex court concerning their application. They feel that they have been prejudiced by the unprecedented delays of the ConCourt.
“This seems to be no different to the prejudice we received from the SCA in their refusal to grant us the appeal,” Koorbanally said.
The refusal by the SCA to grant them leave to appeal, was prejudicial he said , as the plaintiffs (appellants) were never given the opportunity to make submissions, nor were reasons for the denial were given in their short judgement .
Koorbanally added that the SCA also erred in their processes by having only two judges to adjudicate their application, instead of three. He said by virtue the SCA failed to follow their own procedures and processes in terms of section 21A of Supreme Court Act,1959, as amended on Judicial Matters Amendment Act 104 of 1996 – its purpose to regulate certain appeals anew.
Due to all these frustrating delays by the ConCourt to adjudicate their matter, the plaintiffs have now sourced the services of Advocate AB Mahomed SC, to pursue an out of court settlement via arbitration or mediation process as per rule 41A of the high court, Koorbanally said.
He added that they cannot disclose its content at this stage, except to say that the plaintiffs have made a “generous offer” to rescue the country’s current energy crisis and rail and port crisis ( Eskom / Transnet).
“I am at this stage only prepared to say that the monetary value of the proposal amounts to a R750 billion and proposal solution, at a low cost of 4,5% return (with a proposed two year cooling off period from escalation ) and proposed capped interest rate of 10% on the 13th year.”
Koorbanally said this will go a long way towards improving Eskom’s operational performance , and financial sustainability and liquidity, in both the short and long term. He said this will undoubtedly result in positive credit upgrades for future borrowing.
According to Koorbanally other financial benefits of the proposal include that it will wipe away the entire Eskom Current Debt of R424 billion, thus reducing the debt servicing costs of R72 billion annually (comprising capital repayments and interest).
He said the settlement of Eskom’s debt will further give relief to the shareholder in terms of its commitment to a portion of Eskom debt relief solution in the amount of R258 Billion, in that the savings to the shareholder on interest repayment over a three year period will be R74.3 billion.
Koorbanally added that the operational benefit of the proposal was that it will provide the much-needed cash injection to resolve all manufacturers’ defects at both Kusile and Medupi, bringing all the units of the generation plant to full capacity and increase the lifespan of these assets.
“The surplus cash injection will further resolve all Koeberg financial constraints for the completion of the commitments that were stipulated for the safety of the plant, to support long-term operation to allow Koeberg Unit 1 to operate until July 2044 and Unit 2 until November 2045.”
He said the cash injection will further allow Eskom to expand its assets on clean Energy (Gas, Hydro, and Wind) and the requirement for transmission extended lines.
While the proposal is subject to the release of R1,35- trillion currently held at Absa Bank( CIB) on two blocked accounts, Koorbanally said: “The institutions that have the statutory powers to release this money is the Finance Ministry/ National Treasury, as per their power and authority found on Regulation 4(8) of Exchange Control Regulations of 1961.”
According to this regulation the treasury may grant exemptions from the provisions of this regulation, and authorise the refund to any person of monies paid by him into a blocked account.
Koorbanally stressed that of particular importance to the precondition to release the funds, was that while the claim was currently against the PIC, the release of the money will have no bearing on the balance sheet of the PIC or the Government Employees Pension Fund (GEPF) or its assets .
“Neither will the release have any effect or adverse bearing on the fiscus (revenue of the country) as these funds are from the Bond Investments R150/3 which were Issued 1986/9 and retrospectively in 1997.”
Koorbanally explained that in terms of the Constitution and in terms of Section 20 of the Exchequer Act, the repayment of the capital amount and the interest thereon shall be a direct charge against the National Revenue Fund and is deemed to have been appropriated by Law.
Neither will it have any effect or bearing on ABSA’s balance sheet as the settlement is an off balance sheet /ledger settlement,” he said.
The Surtie family has been struggling for many years to get their hands on the money of their offshore inheritance which they said legally belongs to them by virtue of a vindicatory claim which has a 30 year prescription period, and which only came into effect from 2011.
The source of the funds was from diamond mining claims and investments done with a share certificate portfolio 7315 after having been involved in commercial trade as far back as 1896.
The repatriated funds were deposited into a special restricted account in 1985, under the apartheid government’s regulations and laws.
The PIC then invested the funds in South African government bonds R150/3 which were underwritten by the South African Reserve Bank.
The plaintiffs accordingly seek payment of R1.35 trillion which they calculated at R87.84bn (exchanged from $36 billion) plus interest of 12,5%, over the period of the bond investments. The interest was determined by then finance ministers Barend Du Plessis and Trevor Manuel.
Pretoria News
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