The Pretoria High Court this week ordered the liquidation of Grand Azania, a company owned by Brain Shivambu, the brother of EFF deputy president Floyd Shivambu, over unpaid tax amounting to R11.5 million.
SA Revenue Services (Sars) applied for the provisional liquidation after conducting an audit in 2020. It relied on a forensic report which suggested Brian Shivambu, as the sole director and shareholder of Grand Azania, directly or indirectly received gratuities of R16.1 million by VBS Bank, which was placed in curatorship in 2018 after looting taxpayers and depositors of an estimated R2 billion.
Read: VBS loan recipients ordered to pay back R100m, plus interest
Of the R16.1 million received from VBS Bank by Shivambu, R6.4 million was paid directly to Grand Azania.
The Pretoria High Court judgment says Grand Azania is unable to pay its debts, that Sars is a legitimate creditor, and that the company should be provisionally wound up.
Sars won a judgment for R11.5 million in unpaid tax against Grand Azania in June 2021. The case this week was to determine whether or not the company could pay its debts.
In its audit of the company, Sars established income of R828 101 and R7.6 million for the 2017 and 2018 tax years respectively. The company financial statements recorded a profit before tax of R389 384 for the 2017 tax period, and a loss before tax of R1.3 million for the 2018 tax period.
However, Sars found irregularities in the financial statements.
“It was found that these expenses were not paid from the taxpayers’ bank account, neither is there any loan accounts to indicate that these were paid by a third person, or any shareholders. Hence none of these invoices provided have been taken into account,” wrote Sars in its final audit letter in March 2021.
Grand Azania was given an opportunity to challenge the Sars assessments, as the company had not filed returns for the 2017 and 2018 tax years. In its answering affidavit, the company claimed Sars’s estimated assessments were unreasonable, contained material procedural defects and were substantially flawed. The affidavit, dated 7 December 2021, said the missing tax returns and grounds of objection were being drafted, but the company’s supplementary affidavit was only lodged on 24 January 2023, the day of the hearing. Grand Azania’s legal representatives claimed a systems error prevented them from filing objections, and that the missing tax returns had been filed – a year after being promised.
Sars responded that the company was out of time, after having missed two previous extensions.
The order says Grand Azania had still not filed VAT returns for the relevant years.
“The enquiry into whether a respondent in liquidation proceedings is unable to pay its debts is a factual one. Judgment has been taken against the respondent on 18 June 2021 and the amount in respect of which the judgment was taken is still unpaid. The respondent is therefore deemed to be unable to pay its debts to Sars,” reads the judgment by Judge Ronel Tolmay.
“In my view Sars made out a case that a provisional liquidation order should be granted.”
An investigation by Daily Maverick’s Scorpio claimed the Shivambu brothers used VBS money to pay for houses and a car, and to benefit family members. Floyd Shivambu told Parliament in October 2018 “without any fear of contradiction that the EFF and ourselves as members of Parliament never benefited anything from the VBS Mutual Bank looting and the so-called heist that happened there.”
The Scorpio investigation found otherwise, detailing R12.26 million in VBS funds that were used to fund lifestyle expenses, with another R1.3 million allegedly funnelled to two EFF accounts and another R5.2 million to Julius Malema’s Mahuna Investments.