Democratic Alliance (DA) MP Mark Burke is facing calls for his removal from Parliament’s finance-related committees after the High Court dismissed a challenge by fintech company Kastelo over a Reserve Bank blocking order linked to suspected exchange-control contraventions involving about R4 billion.
Kastelo, which Burke founded and chairs, is the subject of a South African Reserve Bank (SARB) investigation into its business activities.
The Johannesburg High Court dismissed Kastelo’s application to set aside a Reserve Bank order freezing its bank account on July 28.
The court found that the Reserve Bank had established a valid, objectively reasonable suspicion.
The allegations are contained in a Reserve Bank affidavit, which states that investigators identified a reasonable suspicion of exchange-control contraventions involving approximately R4 billion.
Kastelo is led by Burke’s brother, Nicholas Burke, who serves as its chief executive officer.
The Reserve Bank’s allegations have prompted both the African National Congress (ANC) Parliamentary Caucus and the Economic Freedom Fighters (EFF) to call for action over Burke’s continued participation in Parliament’s finance-related oversight structures.
The ANC has called on the DA to remove Burke from the Standing Committee on Appropriations and his alternative membership of the Standing Committee on Finance, pending the conclusion of the relevant investigations.
The caucus said the allegations included the use of third parties’ foreign investment and discretionary allowances to externalise funds, transactions allegedly conducted without clients’ knowledge or participation, and alleged misrepresentation of Kastelo’s activities in compliance declarations submitted to the Reserve Bank.
It said the allegations raised questions about the integrity of South Africa’s financial system, the movement of capital across the country’s borders and the possible circumvention of exchange-control regulations.
“This is not a minor compliance dispute,” the ANC Caucus said.
The caucus said Members of Parliament should be held to a higher standard and should lead by example to maintain public confidence in South Africa’s democratic system.
“Certainly, MP Burke’s association with this entity falls short of the standard expected of the Members of our Parliament,” it said.
The ANC questioned how Burke could continue sitting on parliamentary structures responsible for scrutinising financial regulation and holding the Reserve Bank to account while allegations involving Kastelo were being investigated.
It said it was “simply untenable” for the Finance Committee to exercise oversight over South Africa’s financial architecture while an MP associated with a company under scrutiny for alleged violations of financial laws remained part of the committee.
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“The Finance Committee must be a watchdog over South Africa’s financial architecture, not a place where individuals whose business affairs are under scrutiny for alleged violations of financial laws can exercise oversight over the institutions investigating such conduct,” the caucus said.
The ANC also called on parliamentary authorities to urgently examine whether Burke’s continued participation in finance-related oversight was consistent with Parliament’s ethical obligations and public-interest responsibilities.
It said Burke was entitled to defend himself and that Kastelo was entitled to challenge the allegations, but maintained that the Reserve Bank should be allowed to complete its investigation without interference.
The EFF has also called for the investigation to be pursued to its conclusion, saying the allegations contained in the Reserve Bank affidavit raised serious concerns about Kastelo’s activities and Burke’s position as a senior DA leader.
The party highlighted allegations that Kastelo used clients’ Single Discretionary Allowances and Foreign Investment Allowances without their full knowledge to externalise funds.
It also pointed to allegations that offshore bank accounts were opened in clients’ names without some of them being aware of the accounts, as well as allegations that Kastelo misrepresented its business activities in compliance declarations submitted to the Reserve Bank.
The EFF said the allegations went beyond ordinary administrative or regulatory infringements and warranted further investigation.
It also pointed to Burke’s parliamentary responsibilities, noting that he serves on the Standing Committee on Appropriations and as an alternate member of the Standing Committee on Finance.
The EFF said the investigation should be completed without special treatment because of Burke’s political position.
It called for any criminal conduct established through the investigation to be referred for prosecution.
The ANC and EFF’s calls come as the Reserve Bank’s investigation into Kastelo continues.
“The Reserve Bank must be protected. Parliament’s oversight authority must be protected. Most importantly, the integrity of South Africa’s financial system must be protected,” the ANC Caucus said.
The DA said questions relating to Burke and alleged violation of the country’s financial laws should be directed to Kastelo.
