Site icon HTXT.AFRICA

Shuttleworth loses bid to export cash for free

Billionaire founder of Canonical and father of the Ubuntu Linux distribution, Mark Shuttleworth, has lost his bid to declare the South African policy of exchange controls unconstitutional. A SAPA report on yesterday’s supreme court judgement is currently doing the rounds, which says the North Gauteng High Court rejected his application to recover a R250 million levy held against assets removed from the country in 2009.

From the report:

Shuttleworth, who now lives on the Isle of Man, has blamed the existing system of exchange control in South Africa for “forcing” him to emigrate from South Africa in 2001. He had assets worth over R4.27-billion in South Africa when he emigrated, but transferred the assets out of the country in 2008 and 2009, each time subject to the payment of a 10% “exit charge”.

Government abandoned the levy a year after Shuttleworth moved the remainder of his assets out of the country.

Judge Legodi ruled that Shuttleworth had not proved that his constitutional right to lawful, reasonable and procedurally fair administrative action had been infringed or that the Reserve Bank’s so-called “closed door policy” was unfair. He said the object of the 10% “exit charge” was to limit the adverse consequences of the outflow of funds on the external balance of payments necessary to maintain South Africa’s macro-economic health and to promote financial growth and stability.

Exchange controls are controversial, and a common cry of many start-ups and business incubators is that moving money in and out of South Africa creates a huge problem for young companies looking for investment. As Judge Legodi points out, however, it’s not quite as simple as that.

“The idea of such discouragement cannot be said to be bad and an unconstitutional policy. ” …Imagine what will happen to this country if the wealthiest men and women … were allowed to take their wealth out of the country with impunity every time when the country is in economic grief or when there is a change of government or leaders in the government.

“It could have a devastating effect on the country as a whole,” he said.

The judge did, however, declare the ability of the president to change exchange controls in times of emergency unconstitutional.

Exit mobile version