The SA Revenue Service (Sars) has told the Constitutional Court ANC donor United Manganese of Kalahari (UMK) engaged in opaque transactions to hide the ultimate beneficiary of its proceeds, an entity owned and controlled by Russian oligarch Viktor Vekselberg.
In legal papers filed with the court, the tax agency said UMK entered into four transactions designed to mask its interrelated transactions with Renova Manganese Investments.
Sars, which is pursuing R350m it says it is owed by UMK, told the court the Northern Cape-based manganese miner engaged in several transactions that were presented as being at arm’s length when they were not. It said UMK went out of its way to hide its related transactions with Vekselberg-related entities.
UMK paid R30m into the ANC’s coffers in the past two years, including R15m towards its December elective national conference, according to declarations made to the Electoral Commission of SA (IEC), in line with the requirements of the Political Party Funding Act.
The act became law in 2021, forcing parties to disclose all donations received above R100,000, whether in cash, kind or both, to the IEC each quarter. Media reports suggest UMK has been a consistent ANC donor for several years.
Business Day understands in 2017 Sars alerted UMK that it would conduct a transfer pricing audit in respect of the 2011, 2012 and 2013 income tax years of assessment. The scope of the audit was transactions between it and its “offshore connected parties”.
UMK is the fourth-largest producer of manganese in SA. It owns a mine in the John Taolo Gaetsewe district municipality in the Northern Cape, where it extracts unrefined manganese that it crushes and screens before it is stockpiled.
US President Joe Biden’s administration seized a R1.5bn yacht owned by Ukrainian-born Viktor Vekselberg
Investigative journalism team amaBhungane reported financial records from Cyprus showed UMK paid out R2.4bn in dividends in 2020, after a year of favourable manganese prices in 2019. UMK started prospecting for manganese in 2005 after being awarded prospecting rights for 15,200ha within the Kalahari manganese field, and this was followed with the mining right in 2008.
It was established Vekselberg’s Renova Manganese Investments owned a 49% stake in the company, while BEE group Majestic Silver Trading holds the remaining shares. Chancellor House, which was set up as an ANC funding vehicle, has a commanding stake in Majestic.
Chancellor House MD Mogopodi Mokoena is UMK’s board chair. The sole shareholder of Chancellor House is Chancellor House Trust, and the ANC is a beneficiary of the trust.
Vekselberg, said to be an ally of Russian President Vladimir Putin, is subject to US sanctions against dealing with Russia.
He was first sanctioned by the US authorities in 2018 and again in March 2023 after Russia’s invasion of Ukraine. The 2018 sanctions related to alleged tampering with the 2016 US elections by Russian entities.
US President Joe Biden’s administration has since seized a $90m (R1.5bn) yacht owned by Ukrainian-born Vekselberg, who is estimated by Forbes to be worth nearly $7bn (R122.3bn).
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