JUDICIAL FOCUS: Phala Phala review puts ‘paid work’ and business interests under spotlight

The Phala Phala court review has placed a basic but consequential question under the spotlight: when does running a private farm become “paid work” for a sitting president?

Section 96 of South Africa’s Constitution prohibits the president and members of the executive from undertaking “any other paid work”. The Executive Ethics Act extends the restriction to premiers and MECs, while the executive ethics code bars them from receiving remuneration for work or services beyond their official functions.

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If you are actively involved in business operations that generate an income, we consider that paid work.

During Thursday’s proceedings, advocate Kessler Perumalsamy represented the African Transformation Movement, whose leader, Vuyolwethu Zungula, brought the impeachment motion in July 2022. Perumalsamy argued that the Section 89 panel was correct on all four counts when it found that Ramaphosa had a case to answer.

The dispute turned partly on money stolen from the Phala Phala game farm and on the December 2020 sale of buffalo. Judge Mark Sher asked for evidence that the sale represented a personal transaction rather than part of a trading operation. He described paid work as working for someone else under employment instructions and receiving remuneration, then questioned why money from a farm transaction should matter under that definition.

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To the extent he (Ramaphosa) is running a commercial enterprise that is capitalised, you must accept he is undertaking paid work.

Perumalsamy urged a broader interpretation. He said the issue was not limited to loyalty to an employer, but included the risk that commercial activity could distract an office-holder from official responsibilities. “If you are actively involved in business operations that generate an income, we consider that paid work,” he said.

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I’m a farmer. I’m in the cattle business. I’m in the game (farming) business.

EFF advocate Mfesane ka-Siboto argued that declaring a business interest did not eliminate bad faith. “To the extent he (Ramaphosa) is running a commercial enterprise that is capitalised, you must accept he is undertaking paid work,” he said.

Both lawyers referred to comments Ramaphosa made at an ANC conference in Limpopo on June 5, 2022, four days after former spy chief Arthur Fraser filed criminal charges over the foreign-exchange theft. Ramaphosa said, “I’m a farmer. I’m in the cattle business. I’m in the game (farming) business,” and described the sale as “a clear business transaction of selling animals.” The review is also considering how paid work differs from dividends and comes as executive ethics legislation undergoes review.

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This was a clear business transaction of selling animals.