Chantelle Benjamin
19 September 2007
Johannesburg — BANKING group FirstRand goes to court today in an urgent bid to prevent magazine Noseweek from publishing a list of clients who invested in offshore tax structures through its former private banking arm, Ansbacher.
Noseweek, which has run a series of articles questioning the legality of Ansbacher's offshore tax structures, has said it will publish some of the 80 names of FirstRand's clients who invested in a scheme that allowed them to build up a tax-free nest egg offshore under false pretences.
FirstRand, in its application to the Cape High Court last week, said allegations that Ansbacher was involved in money laundering, and that its offshore tax structure, Duisberg, was intended to assist clients to evade tax, would taint the image of the clients.
Naming them would imply that they were involved in an "illegal and fraudulent tax evasion scheme", it said. The banking group said the list in Noseweek's possession included the names of clients who did not invest in Duisberg, but in other Ansbacher offshore structures that were not under scrutiny.
FirstRand is asking the court for an interim interdict prohibiting Noseweek from "identifying" FirstRand clients or using their information. It also wants the magazine's editor, Martin Welz, to hand over the list.
The magazine has already identified some Discovery directors, including CE Adrian Gore, as being among FirstRand's "wealthy" clients who had offshore accounts.
FirstRand claims Welz received the documents illegally from a disgruntled former tax consultant, Barry Spitz, who is embroiled in a civil case involving R2,3bn in outstanding commission. It said it had a confidentiality agreement with Spitz not to reveal information in the documents, which means Welz obtained the documents improperly.
In an advertisement, Spitz yesterday denied the claim , saying he was not "an informant".
He said he had even refused to give the justice minister or other authorities confidential information in his possession.
Spitz was given the client list, among about 2000 pages of documents, after he successfully applied to court for documents relating to the income of the Henry Ansbacher Trust.
Spitz wants to prove that he qualifies for commission. The case has still to come to court.
Welz has refused to identify his informant, saying Noseweek frequently writes on "powerful corporate entities and government bodies" and has to protect "whistle-blowers".
In court documents, FirstRand denies allegations made in Noseweek that Duisberg was set up as a tax dodge scheme. It admits, however, that there were differing legal opinions as to the legality of the scheme, which led to it being abandoned.
It said the Noseweek articles were based on the assumption that it was an "illegal fraudulent scheme involving a criminal conspiracy between FirstRand and its clients", which was "unfounded".
FirstRand said Duisberg was established in the British Virgin Islands in 1999 before the establishment of Ansbacher SA, and "certain (FirstRand) private banking clients" were afforded an opportunity to purchase shares.
"Duisberg would in turn make an interest-free loan in the same amount received for the purchase of shares to an offshore trust established for the benefit of the client, thereby avoiding the transfer pricing provisions of the Income Tax Act," FirstRand said.
"In March 2000, a decision was taken to discontinue the investment by any future clients, pending the obtaining of legal opinion on various issues relating to the Duisberg structure."
In the court papers, Noseweek questioned FirstRand's motivation for the urgent interdict, saying the bank was not concerned about the rights of its clients, and that it only wanted to protect itself from the wrath of those clients who now found themselves "exposed" to an illegal scheme.
Welz said: "FirstRand will run the risk of losing both those clients who realise that (the banking group) has sold and implicated them in illegal schemes which will expose them to the risk of severe financial penal ties and criminal prosecution, and those clients who have knowingly participated in these schemes but have relied on FirstRand to keep their participation secret or private."
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