TAX FRAUD: Court hears UK-based Zimbabwean businessman sent part of £58m loot to SA lover
By IOL News
Patience Mwakurudza, a Zimbabwean who lives in Johannesburg, was provisionally sequestrated last month after Gauteng High Court, Johannesburg Judge, Norman Manoim, found that she received millions of rands from her lover Zwelithini Ncube over a number of years.
Ncube, a certified chartered accountant, is accused by the liquidators of his UK company Unified Payroll Limited (UPL) of using two intermediary firms, Applemed UK and Applemed SA, to channel funds to Mwakurudza.
He registered UPL in the UK in 2015 and was its founder, sole director and sole shareholder, with the company operating as an employment agency employing mostly healthcare workers and supplying them to other employment agencies, who would then link them to employers, who were primarily the UK’s National Healthcare Service Trusts.
Mwakurudza was employed as manager: compliance by Applemed SA, which is linked to UPL. The payment trail of the funds sought by UPL’s liquidators in the UK shows that they flowed from the company to Applemed UK, then Applemed SA and then into Mwakurudza’s bank account.
UPL’s UK liquidators have stated that Ncube is liable for just over £40m in respect of national insurance contributions (NICs) and pay-as-you-earn (PAYE) and £17m in respect of value-added tax (VAT).
The fraud was discovered after the UK closed a tax loophole which enabled tax avoidance through the use of personal service companies by health and care workers.
“This affected the obligations of umbrella companies such as UPL,” reads papers before the court.
“UPL received the employee’s gross remuneration from the employer, typically an NHS Trust. UPL was obliged in terms of the new tax legislation to deduct PAYE and NICS (national insurance) from an employee’s remittance, before paying the balance over to the employee.
“UPL was then responsible for paying the deducted PAYE and NICS to the HMRC. But UPL did not always do so. It retained monies it received on behalf of the employees, and which did not belong to it, but which were owed to the HMRC.”
“In order to conceal that UPL had not made the tax deductions, Ncube and the respondent manufactured false pay slips which reflected that the worker was on the PAYE scheme whereas in fact the worker had contracted through a PSC and was on the Ltd Co. scheme. The false pay slips reflected that PAYE and NICs had been deducted which was a misrepresentation of the true position.”
The liquidators also accuse Ncube of using Mwakurudza to conceal the flow of monies he unlawfully misappropriated from UPL to evade the company’s creditors, with their relationship enabling him to do so without the need for any paper trail beyond payments and withdrawals.
They allege that Mwakurudza committed several acts of insolvency and that between December 2017 and January 2022 she made payments from her bank account exceeding R43m.
In her defence, she did not dispute that the payments were made but insisted that they were made before UPL was liquidated, and that no creditors had claimed against her.
However, Judge Manoim concluded that the payments must have been dispositions made in contravention of the Insolvency Act, which states that a debtor commits an act of insolvency by making or attempting to make any disposition of any of their property which has, or would have, the effect of prejudicing creditors or preferring one creditor above another.
He found that the R43m that was disbursed from her bank account which would constitute a self-standing ground of insolvency in terms of the Insolvency Act.
The judge noted that her assets were valued at R25m while her liabilities exceeded R34.7m and she had outstanding debt of a bond on her property.
The liquidators also argued that Mwakurudza’s sequestration will advantage creditors as she owned unencumbered properties valued at R19m whose proceeds could be distributed to creditors.
Mwakurudza was found by liquidators to have received over R34.7m through intermediaries into her FNB bank account.
She was paid about R20.7m by Applemed UK, nearly R10.3m by Ncube and another R1.7m to Applemed SA.
Mwakurudza told the court she was an innocent scapegoat for Ncube’s fraudulent design, and that due to their relationship she was taken advantage of, was a junior player acting under orders and asked no questions. She did not contest that her lover misappropriated moneys from UPL but disputed that she was a partner in a fraudulent enterprise and believed the application for sequestration was unfounded.
“I did not know that the primary source of the income was from the applicant (UPL) as I never ran financial interest (sic) of Mr. Zweli Ncube. I did not play any pivotal role as I was never a director or shareholder of the applicant,” she explained.
Mwakurudza maintained that she did not know that the money originated from UPL and that Ncube never discussed with her how he made payments, and she did not know that the funds were fraudulently obtained.
In addition, according to Mwakurudza, Applemed SA was a legitimate company working on UPL’s behalf dealing with candidate compliance and customer service.
“There is a justifiable basis for the receipt of the funds, the liquidators are desperately looking for the money and they have targeted me with no factual and legal basis to do so. There is no shred of evidence that I colluded with Mr. Ncube to defraud anybody, I was never, and I am not joint wrong- doer,” she added.
Mwakurudza’s lawyer Tafara Mukwani told the Sunday Independent that his client would be appealing Judge Manoim’s ruling.
Judge Manoim issued a rule nisi (interim order) on December 14 calling upon Mwakurudza and any interested parties to show cause, if any, to the high court on a date to be advised by the registrar, why her estate should not be placed under final sequestration and the costs of UPL’s application not be costs in the administration of her insolvent estate.