Johannesburg - The executive chairman of Hosken Consolidated Investments (HCI), Marcel Golding, has admitted that he and Johnny Copelyn, HCI's chief executive, breached South African foreign exchange regulations when they set up offshore family trusts that held investments in their company, as revealed by Business Report last Sunday.
Golding said he had applied for the amnesty offered last year to South Africans whose investments and transfers offshore had contravened exchange control regulations. He said the amnesty had been granted.
Moving more than R750 000 from South Africa to invest offshore is a criminal offence.
An irate Golding asked why Business Report had picked on him and Copelyn when there were probably more than 600 other South African citizens who had invested offshore in contravention of the country's foreign exchange regulations.
"I presume that this is the beginning of a series of articles about businessmen who have their money offshore. The article was irrelevant," Golding said.
He, however, failed to provide any names of the businessmen whom he knew to have illegal offshore investments.
He denied that investing offshore was unpatriotic, particularly by people like him and Copelyn, given their struggle background, their history of trade union activism and Marxist leanings.
Last year, the government declared an amnesty for those with undeclared offshore investments, and the cutoff date was February 29, 2005.
Explaining the amnesty process, Ernie Lai King, a director at law firm Werkmans and an expert on offshore structures, said the offenders had to pay a 5 percent surcharge on their investments if they brought the money back to the country and 10 percent if they kept it offshore, plus 2 percent tax.
Thoraya Pandy, a spokesperson for the national treasury, said confidentiality rules prevented her from disclosing whether Golding had applied for and been granted amnesty.
"But if he chooses to go to the media that is his prerogative."
Pandy added that although the cutoff date had passed, the treasury had found that many people had not provided all the information in their applications, forcing it to go back to them.
She said that the minister of finance had received 43 000 applications for amnesty.
Golding's and Copelyn's trusts were set up on May 24 2002 in Jersey, a tax haven.
Copelyn set up the Jocor Trust, a discretionary trust, which was declared by the Equity Trust. Similarly, Golding set up the Marigold Trust, also declared by the Equity Trust.
The assets of the Jocor Trust comprise the issued share capital of Ravensdale Limited, which in September 2003 owned 97 045 ordinary shares in HCI directly and a further 4 348 965 ordinary shares held on its behalf by HQ Nominees, a company that forms part of the Equity Trust group of companies and that acts as nominee for clients of Equity.
The assets of the Marigold Trust comprise the issued share capital of Mile End Limited, which in September 2003 owned 1 231 925 ordinary shares in HCI directly and a further 250 000 ordinary shares held on its behalf in a similar manner to that of the Jocor Trust.
Golding and Copelyn removed themselves as beneficiaries of their trusts on September 19, 2003, when their status would have been revealed in litigation that Marathon Asset Managers, a minority shareholder in HCI, was preparing to launch.
The litigation was to challenge the R3.50 a share HCI was offering to buy out the minorities.
Marathon's settlement officer had several phone conversations with an officer of the Equity Trust to get the names of the beneficiaries of Golding's and Copelyn's family trusts.
Copelyn did not return Business Report's phone calls.