Sars files for Malema bankruptcy
01 February 2013
Posted by: SAIT Technical
By Adriaan Basson (City Press/FIN24)
SARS has applied to the North Gauteng High Court to have Julius Malema, former ANCYL leader, sequestrated. Malema owes SARS R16m and is factually insolvent and in no position to make payment. If the application succeeds or is unopposed, all his properties will be auctioned off to cover his debts.
Julius Malema is about to lose all his assets, City Press stated on Thursday.
On Wednesday the taxman applied to the North Gauteng High Court to have the former ANC Youth League leader sequestrated, reports the newspaper.
Malema owes the South African Revenue Service (Sars) R16m and is "factually insolvent and in no position to make payment of his indebtedness to Sars", according to court papers.
Malema is meeting his lawyers on Thursday to decide whether to oppose the application.
If the application succeeds or is unopposed, all Malema's properties would be placed under curatorship and auctioned off to cover his debts.
This includes both his houses in Sandton and Polokwane, and a smallholding and farm outside the Limpopo capital.
The hearing is scheduled for February 27.
Malema faces 51 counts of corruption, money laundering and racketeering in a case brought by the Hawks, which is separate from the Sars investigation.
The insolvency application, supported by an affidavit of senior Sars investigator Pieter Engelbrecht, makes serious claims against Malema and about his honesty in dealing with Sars.
It reveals that Malema had offered to borrow R4m to settle his outstanding taxes until 2011, but the offer was rejected.
Engelbrecht states that Sars rejected the offer because of inconsistencies in Malema's representations to the tax authority.
"Initially (Malema) had net assets to the value of R8.5m, which was reduced to R5.6m and again further reduced to R1.4m.
"It is contended that these discrepancies are not conducive in concluding that the respondent (Malema) had indeed made a full and frank disclosure to SARS and support SARS' contention that it would be to the benefit of (Malema's) creditors to sequestrate his estate.”
Engelbrecht's affidavit also reveals that R5.8m was paid by third parties to build a house for Malema in Sandton, after he knocked down the existing house on the R3.6m property.
According to Engelbrecht, Sars approached Malema in 2009 about his outstanding tax. At the time, he had not yet submitted any tax returns.
Malema's Ratanang Family Trust was also not registered for tax.
During their interaction with him, Malema allegedly provided conflicting explanations of his financial affairs.
Initially he told Sars all deposits received by him and the trust were donations from anonymous donors.
When Sars pointed out to him that not all deposits were made anonymously, Malema then said "donation” was the wrong word to use; he had received "distributions of earnings”.
"Later (Malema) contended that some of the payments were exempt dividends. (Malema) further alleged that some of the receipts by the trust were not received on the trust's behalf, but for specific charitable purposes,” stated Engelbrecht.
His responses did not "bear scrutiny” and Sars told him so.
Sars assessed that Malema owed them R16 131 002. In October last year, the taxman told him they were intending to assess a further R2m which didn't form part of the first assessment.
Malema filed a notice of objection and his lawyers made several representations to Sars.
The parties agreed that Malema would present a proposal to settle his tax disputes, accompanied by a "full and frank disclosure and statement of assets and liabilities”.
This, according to Engelbrecht, didn't happen.
But Malema's lawyers requested a "compromise of his tax debt” in accordance with tax legislation.
This is when he offered to pay R4m for his outstanding taxes.
Sars rejected the offer and said he was not honest in his dealings with them. Engelbrecht said Malema failed to include any "indirect assets”, like the smallholding owned by the trust and the farm he lives on, that is owned by Gwama Properties, to Sars.
"(Malema) is not forthright and honest relating to his financial affairs, notwithstanding numerous opportunities provided to him,” Engelbrecht stated.
He said Malema used the trust, named after his son, "merely … as a conduit” and that it was "in actual fact the alter ego of (Malema)”.
The trust received a "large number of deposits”, the majority of which were spent on Malema's "personal expenses”.
The cars Malema drives, like a Mercedes-Benz Viano, are not registered in his name, but are provided to him as "part payment for services rendered and/or the use and/or association with his name”.
If appointed, a trustee "would be able to find the assets, where hidden” and "lift the corporate veil, where necessary”.
Malema must notify Sars by February 18 if he intends to oppose the application.
His criminal trial is scheduled to begin on April 23.