JUDICIAL FOCUS: Phala Phala review puts ‘paid work’ and business interests under spotlight

The question of whether Ramaphosa’s Phala Phala game and cattle farm business constituted paid work, which the Constitution, the Executive Ethics Act and code prohibit, or merely permissible business interests, is an important thread throughout the Phala Phala saga.

The Constitution, in Section 96, prohibits the President and his executive from undertaking “any other paid work”. The Executive Ethics Act gives effect to this prohibition and extends it to premiers and MECs, while the executive ethics code says those in the executive “may not… receive remuneration for any work or service” beyond their executive functions.

In Thursday’s court proceedings, advocate Kessler Perumalsamy for the African Transformation Movement (ATM), whose leader Vuyolwethu Zungula brought the impeachment motion in July 2022, argued the Section 89 panel report got it right on all four counts; it found Ramaphosa had a case to answer.

Legal meaning of paid work

The money stolen from the Phala Phala game farm had to be accounted for, as Ramaphosa said he did not do paid work, the advocate said before Judge Mark Sher asked for the evidence that the Christmas 2020 sale of buffalo was a personal transaction, rather than part of a trading operation. 

That brought the focus on to the legal meaning of paid work. 

For the judge, paid work was working for someone else, “making yourself subservient to someone else’s instructions in an employment situation with remuneration”. In that context, Sher asked what the relevance was of money coming in through a transaction the farm conducted, no matter how peculiar.

For Perumalsamy, the approach rested on Ramaphosa’s active role in the trading, including knowledge about the animals. He argued that the panel had not defined paid work in relation to loyalty to an employer, but the obligation not to be distracted from the responsibilities of office. In doing so, it rejected the President’s “narrow view” of paid work as work for financial gain or reward, whether as an employee or self-employed.

“If you are actively involved in business operations that generate an income, we consider that paid work,” said Perumalsamy.

Disclosure and bad faith

Later in the day, EFF advocate Mfesane ka-Siboto argued that disclosing a business interest did not do away with bad faith. 

“To the extent he (Ramaphosa) is running a commercial enterprise that is capitalised, you must accept he is undertaking paid work,” he argued. 

Both ka-Siboto and Perumalsamy referred to the widely reported, and not disputed, comments Ramaphosa made at a Limpopo ANC conference on 5 June 2022, four days after former spy boss Arthur Fraser laid criminal charges over the forex theft from Phala Phala. 

“I’m a farmer. I’m in the cattle business. I’m in the game (farming) business,” he said. “And through that business that has been declared in Parliament and all over, I buy and sell animals… This was a clear business transaction of selling animals.”

Business interests

On Wednesday, Ramaphosa’s lawyer Wim Trengove had argued that nothing in the executive ethics law or code prevented the President from holding business interests, even in a closed corporation, pointing out that Ramaphosa had declared all interests.

Or, as the President’s affidavit put it, “I remain the sole member of Ntaba Nyoni. I have systematically declared this, and any other financial interests… (M)y membership of Ntaba Nyoni has been reflected in the public section of the declarations; it is therefore readily available for those wishing to see it.”

Parliamentary declarations Ramaphosa made as deputy president until mid-February 2018 are easily accessible online. Those made as President require an appointment and a trip to the Union Buildings in Pretoria. 

That focus on the business entity, rather than the President, was pursued politically by the ANC in Parliament in September 2022 as opposition parties pushed for an ad hoc committee inquiry into the Phala Phala saga.

Instead, ANC MPs deflected this by asking why anyone wanted to investigate a victim of crime at a business premises, and ultimately voting down the opposition-proposed parliamentary ad hoc committee.

Whether what constitutes paid work versus disclosed business interest will be clarified remains ultimately up to Parliament, when it gets to consider amendments to the Executive Ethics Act as part of a wider review. The justice ministry has released draft proposals for public comment.

South Africa requires its public representatives to annually declare not only gifts over a certain value, but business interests, directorships and sponsorships such as travel, alongside properties and pensions. MPs’ declarations are easily accessible online; executive declarations, while not secret, require a scheduled visit to the Union Buildings. 

The electronic system proposed in executive ethics amendment legislation may change that – if the aim is to ease access, rather than just ease executive compliance.

The draft law raises the gift disclosure threshold to R2,500 and adds the disclosure of political party leadership contest donations, but it leaves much of the old law largely intact, including the lack of definition in the ban on “undertaking any other paid work”.

That leaves Parliament to fill the gap raised in Thursday’s court proceedings – where does a permissible business interest end and prohibited paid work begin? DM