Mining company with Russian, ANC links mum on war with Sars

A local mining company still hurting from a major court loss in its battle with South African Revenue Service (Sars) Commissioner Edward Kieswetter is tight-lipped about whether it will fight on or fold and settle with the tax agency.

“With reference to your queries regarding the Sars litigation, kindly note that United Manganese of Kalahari (UMK) does not have any comment to make at this point in time,” UMK company secretary as well as its legal and compliance officer, Ori Phayane told Sunday World in an email reply.

Kieswetter has smacked UMK, which mines manganese in the Northern Cape, with a R351-million extra tax bill, which the company has so far fought tooth and nail.

UMK is partly owned by Russian oligarch and billionaire Viktor Vekselberg, who lives in Moscow, and the ANC’s investment vehicle, Chancellor House, also has a stake in the company. The US government has issued sanctions against Vekselberg.

Forbes estimates that at the end of March, he was worth $6.7bn (R120bn), which made him the world’s 360th most wealthy person.

The events that led to the extra tax bill started in March 2017 when Sars issued a letter to UMK and indicated that it would audit the company for the 2011, 2012 and 2013 tax years.

Then, in January 2020, Sars issued UMK with an assessment letter stating that it would increase the company’s tax bill by R351-million.

As a result, in February 2020, UMK instituted legal action against Sars in the North Gauteng High Court in Pretoria to set aside the extra assessments. However, the high court dismissed that application and ruled that the tax court should adjudicate the dispute.

UMK then applied to the Supreme Court of Appeal (SCA) to set aside the high court’s ruling. Three SCA judges heard the matter on 22 February.

However, this month, those judges found that the SCA lacks jurisdiction to review the matter.

“It follows that the appeal must fail, and it is accordingly dismissed with costs,” the SCA judges ruled.

UMK will have to move swiftly if it wants to lodge an appeal against the SCA ruling.

The UMK shareholders established the company in 2005, and according to its website, it is South Africa’s fourth-largest manganese producer.

Vekselberg holds his interest in UMK via a Cyprus-registered entity called New African Manganese Investments (Nami), which owns a 49% stake in UMK, according to amaBhungane.

Majestic Silver Trading is a consortium that includes Chancellor House, Pitsa Ya Setshaba Holdings and a Kalahari community trust, and owns 51% of UMK. Chancellor House managing director Mogopodi Mokoena is the chair of UMK’s board.

UMK has been a significant donor to the ANC, given its strong political links to the party.

According to the Independent Electoral Commission’s (IEC) party funding disclosure report issued in late February, UMK donated R30-million to the ANC in the IEC’s 2023 financial year, comprising a declared donation of R15-million and R15-million in-kind donation.

“The [in-kind] donation from UMK was a payment made on behalf of the party to the Johannesburg Expo Centre for the ANC elective conference of December 2022,” the IEC noted.

During the IEC’s 2022 financial year, UMK made significant donations to the ANC, the IEC added.

The US Department of Treasury sanctioned Vekselberg in April 2018 and again in March last year after Russia invaded Ukraine. However, Nami’s shareholding in UMK of under 50% means it will not get sanctioned by the US government. US laws state that a company in which a sanctioned individual owns over 50% is liable for sanctions.

Spanish police and the FBI in April 2022 seized Vekselberg’s $90-million superyacht Tango in Spain.

The Spanish police acted following a request from the US government for assistance after the issuance of a seizure warrant filed in a US court, which alleged that the Tango was subject to forfeiture based on violation of US bank fraud laws, money laundering, and sanction statutes, the US Department of Justice said in a statement at the time.

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