South African millionaire Christo Wiese, one of the continent’s wealthiest, is continuing his legal battle with the South African Revenue Service (SARS), with the Supreme Court of Appeal (SCA) opening the next chapter in their protracted conflict.
SARS is holding Christo Wiese and accomplices personally accountable for allegedly assisting Energy Africa, a firm he subsequently acquired, in dissipating assets to avoid a prospective tax obligation. The SCA ruling opens the door to the next round of the dispute between Wiese, his accomplices, and the tax office.
SARS accuses Energy Africa, which has a possible tax debt of roughly R940 million ($52.35 million), of disposing of its only valuable asset, an R217 million ($12.1 million) loan claim, in order to hinder tax collection.
The case is based on a provision in the Tax Administration Act that empowers SARS to hold persons accountable if they are aware of a potential tax liability and take actions to delay collection. Wiese and his friends claim that a formal tax assessment is required before a debt exists, and SARS cannot use this provision until then.
The dispute originates from Tullow Oil’s 2007 reorganization. Tullow Overseas Holdings acquired interests in a company from Energy Africa, which was previously part of Tullow’s African activities. Wiese eventually bought Energy Africa.
SARS audited the 2007 deal in 2012 and informed Energy Africa of a potential tax adjustment, which included R453 million ($25.23 million) in capital gains tax and R487 million ($27.12 million) in dividend withholding tax.
Wiese and his previous directors challenged the results on April 15, 2013. Just four days later, on April 19, 2013, Energy Africa transferred its single asset, the loan claim, to another company, Elandspad, in what SARS interpreted as an attempt to evade potential tax liabilities. This preempted the formal tax assessment.
Christo Wiese, a prominent figure in South Africa’s commercial landscape, developed his retail empire, Pepkor, by giving low pricing. In 2015, South African furniture retailer Steinhoff International paid $5.7 billion in cash and stock for Pepkor.
Wiese resigned as Steinhoff chairman in December 2017 after the company revealed accounting issues. The incident prompted Steinhoff’s share price to drop, briefly removing Wiese’s billionaire status. However, he reclaimed his billion-dollar fortune in 2022 after settling his case with Steinhoff for cash and stock, including a 5% ownership in Pepkor.
Today, Wiese is still an important player at Shoprite, Africa’s largest retailer. He owns 11.5 percent of the corporation, which corresponds to 68,083,200 shares. This $1 billion stake is the foundation of his $1.4 billion fortune, establishing him as one of Africa’s wealthiest individuals and a notable South African billionaire.
