Howard “Howie” Baker is seemingly on the ropes.

SARS is pursuing the notorious alleged money launderer for an astronomical R3-billion tax debt, more than half of which consists of penalties, after he – according to SARS – expatriated billions of rands from South Africa without declaring any income.

More than a year ago, the taxman had already quietly launched a successful application to provisionally preserve all known and unknown assets Baker might have in South Africa and abroad, as well as a number of properties he allegedly bought in the name of third parties to disguise their true ownership.

Originally launched on an ex parte basis  back in November 2022 (with Baker not being notified due to fears he might dissipate assets), the finalisation of the case has been delayed time and again as SARS tries to pin down additional respondents and negotiate settlements with those it has found.

As for Baker, he has asked for an extension to April this year to try and negotiate his own settlement before opposing SARS in court. This means his assets are frozen but not yet forfeit.

In a strange twist, Baker seemingly nonetheless succeeded in selling assets abroad even though one major deal was scuppered when the UK imposed sanctions on him in November for his alleged dealings in Russia.

More on this later.

SARS is not only pursuing Baker for his own alleged tax debt, but also wants to hold him personally liable for the debt of one of his companies, Inracom, which seemingly served as a conduit for spiriting money abroad undeclared and untaxed.

The case forms part of a wider SARS offensive against, among others, Baker and the man he is alleged to be the frontman for, Zimbabwean Simon Rudland and his Gold Leaf Tobacco Corporation, as well as figures in the illicit gold sector.

Most recently it was revealed that SARS is suing Sasfin for R5-billion – in part in relation to the bank facilitating parts of a larger operation involving Baker– and in part in relation to completely unrelated money laundering groups.

Money laundering

Even though SARS repeatedly implicates Baker in money laundering it has stressed that it “is not concerned with the crime of money laundering. SARS’s only interest is the under-declaration of income” irrespective of where the money came from.

It nonetheless points out how Baker’s affairs came to its attention during investigations into “financial flows arising” from the illicit gold and tobacco trade.

“SARS has reason to believe that these illicit financial flows involve money laundering activities, and that Mr Baker is implicated in these activities.”

“According to the relevant material SARS has, to date, uncovered, it has reason to believe that through Mr Baker’s involvement in inter alia the money laundering activities, he has generated vast amounts of income ranging into billions of Rands. The income was not declared to SARS and no taxes were paid thereon.”

The Baker case is based in large part on money laundering operations already documented by amaBhungane in past reporting and the taxman’s court papers spectacularly corroborate and expand on a number of our reports on Baker and the characters surrounding him.

One half of the case against Baker relates to Inracom, a company that has never paid tax, but which managed to receive over R2-billion in its bank account from a variety of known role-players in the underground financial world and then pay it forward to yet more known operators.

The second part of the case, against Baker himself, is rooted in funds received by his offshore companies from South African companies that make up part of the local money laundering machinery amaBhungane has previously reported on.

And, opening another front, SARS is gunning for ten properties and one luxury vehicle worth a collective R53 274 394 and ostensibly owned by a number of third parties, suspiciously bought for them by Inracom for no apparent reason.

Where the money came from

The SARS application provides detail of where Baker’s mysterious untaxed income came from – or at least who was employed to get it to him.

In the case of Inracom, the vast majority of cash, just over R2-billion, came from a company called Metal Enhancors.

Its director at the relevant time, Gysbert Kriel, is recently deceased but his widow told us that she has no idea what the company did. We have however encountered Metal Enhancors before, in our investigation into a colossal VAT fraud scheme revolving around gold refiner Rappa Resource, also owned by Baker.

Although not named in the story, Metal Enhancors was one of a number of smaller gold suppliers to Rappa in a scheme that involved disguising illicit gold as gold purchased as scrap, exporting it and then fraudulently claiming VAT refunds running into the billions.

At the very least this means there is a possibility that the funds from Metal Enhancors paid to Baker’s Inracom actually came from Baker himself – the money Rappa paid Metal Enhancors for its gold.

Inracom would rapidly pay out the funds it received from Metal Enhancors and smaller creditors to a dizzying array of roughly 500 other companies.

As for the money tied to Baker directly, SARS is zooming in on payments made from various local bank accounts to three of his offshore companies: Aulion Global Trading and Premier Trading Group in Dubai, as well as Prodigy Trading in Hong Kong.

These companies, and many of the money flows, have all also featured in previous amaBhungane reporting.

The payments to Aulion SARS is concerned with involve accounts held by well-known cogs in the alleged laundry machine: PKSA Finance, Ovenbird and Johannesburg lawyer Saleem Ebrahim.

In its court papers, SARS states, “Mr Saleem Ebrahim…being an admitted attorney, denies any wrongdoing. He contends that he was merely acting on the instructions of his clients. For present purposes, SARS is not in a position to dispute this.”

With PKSA and Ovenbird a total of about R1.7-billion was paid to Aulion and Premier from accounts at the now-liquidated Habib Overseas Bank.

With regards to Ebrahim, numerous payments making up the balance flowed from a number of accounts at Habib and elsewhere.

Assets frozen?

Even though SARS is laying claim to both Baker’s “known and unknown” assets, its preservation application listed a number of specific entities.

Locally the big one is Rappa, the gold refinery which is nominally worth R1-billion, as that is what Baker paid for it.

The offshore assets include the companies that received funds but also a gold company in Dubai called Paloma Precious DMCC.

This could prove controversial because, despite being a frozen asset in terms of the provisional preservation order, Baker has seemingly effortlessly transacted with it.

Paloma was until recently the major shareholder of a publicly listed company in the UK called Rockfire Resources. In September last year this company announced that it would be buying two operating subsidiaries from Paloma, assets subject to the preservation order.

This $20-million deal was scuppered in November when the UK added both Baker and Paloma to its sanctions list due to their alleged dealings in gold with Russian interests.

Meanwhile, however, Paloma also sold its 21% shareholding in Rockfire for GBP2-million – again trading in an asset that should seemingly be frozen.

SARS declined to comment on this, citing taxpayer confidentiality and Baker’s attorneys ignored our questions.

The third party freebies

Another front in SARS’ assault on Baker is a set of properties and one vehicle Inracom seems to have gifted to other people. The taxman claims this is a scheme to disguise the ownership of assets.

“Based on SARS’s investigation there appears to be no commercial rationale for the transactions in question. In particular, according to SARS’s investigations there appears to be no quid pro quo received by lnracom for paying out the funds used by the third-party

respondents to acquire these assets.”

The ten properties and one Mercedes were worth R53-million collectively and, in SARS’ view, only nominally belonged to a coterie of seemingly unrelated companies and individuals.

SARS has entered into negotiations with a number of these, although a few have not been traced.

Baker’s gambit

SARS is also seemingly at the negotiating table with Baker, at least according to a letter from his attorney Raees Saint which is part of the court record.

Saint had requested that SARS allow the final hearing of the preservation application be extended to April this year.

“Given that the discussions between our respective clients are still ongoing, our client requests the interim order to be extended until 1 April 2024, at the earliest, to establish if settlement can be achieved. If settlement cannot be achieved, this will provide our client with an opportunity to oppose the order,” reads Saint’s letter to SARS’ lawyers.

SARS did not object.

Until a final hearing takes place the preservation order remains provisional, which means that SARS has, at least in principle, frozen Baker’s assets but not seized them.

While Baker’s assets might be valuable to the fiscus, his knowledge of the expansive money laundering industry in South Africa and abroad may ultimately prove more valuable. This is where we will be focusing our attention, so watch this space.

The post The hunt for Howie Baker’s billions appeared first on amaBhungane.

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