Economic Freedom Fighters (EFF) leader Julius Malema's about-turn in his sequestration hearing on Monday means that he will now have to prove to the court that he is not insolvent and that he can pay his debts, according to analysts.
Malema initiated proceedings in court on Monday to avoid being sequestrated, after initially accepting liability for the R16-million debt during settlement talks. The South African Revenue Service (Sars) brought the application on the grounds that Malema cannot pay his debts, because he is effectively bankrupt.
Malema previously argued that Sars was acting under political orders, and unfairly targeting him. Malema claims in the court papers that there are ulterior motives behind the sequestration.
But analysts say now that he wants to oppose Sars's sequestration application, his only way out is to prove to the court that he has enough money to pay his debts. His utterances about Sars will do little to damage the credibility of the institution until he convinces the court otherwise.
On Monday, Malema's attorneys asked the high court in Pretoria for a postponement on two grounds: firstly, he wanted to finalise the corruption case pending against him, and secondly, he wanted to apply to have his admission of liability set aside.
Postponement granted
Dolf Masoma, for Malema, argued that Malema admitted liability when settlement negotiations with Sars were still under way. If he succeeded in this application, Malema then intended applying to have the entire sequestration application set aside, Masoma said. Sars is opposing the application for a postponement.
Court documents indicate Malema owed R16-million to Sars, plus interest, after failing to submit tax returns between 2006 and 2010. Malema filed his outstanding returns, 18 months later. He also failed to register the Ratanang Trust for tax purposes.
Marguerite Loots, an attorney at Willson Attorneys in Johannesburg, explained that Malema would now have to prove to the court that he was able to pay his debts. In this case, Sars has applied to the court for compulsory sequestration – effectively asking the court to declare Malema insolvent.
"Sars probably has a strong case," Loots explained. "They are arguing that Malema should be declared insolvent because he won't be able to pay his debts, and that his creditors are at a disadvantage because they are losing money."
If Malema is successfully sequestrated, the master of the high court will appoint a trustee who will manage his debts for a period of about four or five years, Loots said. This also means Malema won't be allowed to incur any debt for that period and he won't be allowed to be a director of a company.
Independent
Political analyst Professor Sipho Seepe said it was vital that Sars not only acts independently, but that it is also seen to act independently.
He said previous allegations that Sars had not acted independently could give some weight to Malema's accusations, and this put the onus on Sars to prove that Malema was wrong.
Any indication that Malema was right – that Sars was acting in a politically impartial manner – would be "unacceptable".
"Sars has to prove to all and sundry that it is doing its work impartially. But Malema must also not use this to avoid his case; he must also prove a direct link between his political past and this case."
EFF spokesperson Mbuyiseni Ndlozi said Malema would co-operate with the court process, despite his misgivings about Sars's impartiality, and had never indicated that he would avoid answering the charges against him in court.
He said the EFF maintained that the tax evasion charges against Malema were politically motivated and timed, Malema would still abide by the outcome of the court process.
"We have always said we must allow the law to take its course. The legal conundrum before court is politically motivated and it seeks to delegitimise us, and we would all be naïve not to see this … While we should all allow the court processes to take place, I can't see how this stops us from challenging the timing [of the court action] … The commander in chief [Malema] never said he would run away from the rule of law that is why he shows up to court. And we've always encouraged all of us to do the same, through him, because it shows he's a person who respects the rule of law," Ndlozi said.
No damage
But could Malema's main defence – that Sars is unfairly targeting him – damage the reputation of the institution?
Seepe does not think so, although this does not mean that Sars should shy away from its responsibility to prove its independence.
"I don't think Malema has enough public backing to damage the institution by making these allegations. There are many people who are in politics who have not made as much money as Malema, and it won't be that easy for him to get away with accusing Sars of impartiality.
"I don't think his popularity is sufficient to remove those questions. But at the same time the concerns should not be dismissed out-of-hand. All such institutions must be seen to be acting independently and in line with what the constitution demands of them," Seepe said.
Meanwhile, Nick Maritz for Sars said Malema is seeking to delay a sequestration case brought against him by Sars.
'All a lot of nonsense'
Maritz argued that Malema had since April last year to file this application but had done nothing. He gave a timeline of how Malema's legal team had failed to file court papers on time, delaying matters.
"All this talk … is all a lot of nonsense in obtaining a delay, and since April last year no move was made," Maritz told the court. "This withdrawal of admission is not a new point."
He said Malema raised this point in his answering affidavit on April 17 last year.
There was no argument about the prospect of the application to have the admission set aside being successful, Maritz said.
"He shows no prospect of success in that application," he said. "He fails to say why since April last year he's done nothing to settle this issue." – Additional reporting by Sapa