The legality of a FirstRand Bank offshore tax scheme came under scrutiny in the Cape High Court on Wednesday when the bank sought an urgent interdict to stop noseweek magazine from publishing the names of clients involved in it.
Deputy Judge President Jeanette Traverso will give her ruling on Thursday morning.
The bank, which said it was bringing the application as a class action on behalf of the as-yet unnamed clients, said the names were on a list that formed part of the papers in an earlier court case, and which was meant to be kept confidential.
It is also demanding that noseweek hand over all copies of the list.
The scheme involved investment in offshore trusts set up by FirstRand’s former private bank, Ansbacher.
noseweek editor Martin Welz, who represented himself in court on Wednesday after his attorneys realised they were contracted to FirstRand, has been running articles on the ”FirstRand pirates”, as he calls the scheme’s administrators, since June.
He told Traverso FirstRand’s attitude had been not how it should comply with tax law, but rather how to avoid compliance in a way that was too clever to be detected.
The bank had seduced leaders in the corporate sector into a badly run criminal scheme.
”It [the scheme] is obviously absurd, it is obviously a sham. It is simply not real,” Welz said.
The clients had to have had a certain level of knowledge of what was going on.
FirstRand’s advocate, Nic Maritz, told Traverso that there was no basis for claiming the scheme was illegal or that there was any criminal conduct involved.
Problems with the administration of the scheme did not mean the scheme itself was illegal, or that the bank’s clients were party to tax fraud.
And a structure, even if used for an illegal purpose, might be perfectly legal in itself.
Maritz said the bank was not trying to gag criticism, but to stop clients being linked to a ”fraudulent conspiracy” without a factual and evidential foundation.
Traverso interjected that a person’s dealings with a bank might be confidential, but the fact that he was a client was not.
She also said she had problems with FirstRand claiming that the application was a class action, saying Section 38 of the Constitution, which sets out the parameters for class actions, was ”certainly” not meant for a situation such as this.
She asked repeatedly why none of the clients were in court, saying their names could have been kept secret even if they became co-applicants.
Maritz said this would have meant contacting all 100 or so clients on the list to ensure they were all represented in court. — Sapa