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Sars claims 19 billion rand in “astronomical” taxes from company accused of smuggling tobacco



A recent South African Revenue Service (Sars) lawsuit against Verbena Freight and Logistics Management offers a fascinating window into the world of contraband tobacco and its staggering impact on the tax authorities.

The High Court in Pretoria has ordered the final liquidation of Verbena after Sars claimed nearly R19 billion in unpaid taxes.

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In an affidavit in court, Pule Mantso, director of operations in the debt management department that is part of Sars’ illicit economy unit, claimed that Verbena owed R18.99 billion. taxes – most (R18.88 billion) in the form of unpaid tariffs. You also have to pay 31.38 million rand in value added tax (VAT) and 73.65 million rand in income tax.

Verbena is described as a company specializing in cross-border transport and customs clearance and shipping across southern Africa. The company has its own fleet of vehicles and a sister company based in Zimbabwe.

SARS audit

Sars launched an audit of the company in 2019 and found that the company had imported 8.1 million kilograms of tobacco between March 2016 and February 2019, all supposedly “taking care” of eight other entities listed at customs.

Mantso says the Customs Act does not provide for the importation of goods “in the care” of a third party. Verbena also acted as a customs clearance agent for imported tobacco, which entered through the Beitbridge border post. Under the Customs Act, excise duty is payable on locally manufactured cigarettes.

Several requests were made to Verbena to provide details of imports “chargeable” to third parties, but no meaningful response was received.

In December 2020, lawyers representing Sars informed Verbena that it had been concluded that the imported goods had been moved to premises controlled by the company and had been used to make illegal cigarettes.

Verbena was asked to refute these claims, which she did not.

In March 2021, Sars issued letters of demand for R18.88 billion in unpaid tariffs, which Verbena has not paid.

Attached assets

Sars then obtained a judgment against Verbena and the sheriff seized eight trucks and other assets with a total value of 2.2 million rand.

“This is woefully insufficient to make the payment of the 18 billion rand owed to Sars in relation to the customs debt,” Mantso says.

Sars also placed liens on several other assets owned by the company, but discovered that several of them had been unlawfully removed from the premises, constituting a criminal offense.

Sars officials then attempted to locate other assets in Musina in Limpopo, but three of the listed addresses could not be found and a fourth was a residential address, with the occupants knowing nothing of Verbena.

Verbena’s lawyer responded to Sars on July 12, claiming that most of the company’s vehicles were either in poor condition or had been exported out of SA, and as such it was not plus the owner of the exported vehicles. No proof of transfer of ownership or export was provided, Sars says, although eNatis documents showed Verbena was still listed as the owner of the vehicles.

Sars says he assumes Roy Muleya and Ruth Dhliwayo are responsible for running the business.

Intensification of investigations into illicit contraband tobacco

Sars says he has stepped up his investigations into the illicit cigarette trade which is expected to cost the tax authorities billions of rand a year in lost revenue. Its investigations show that large volumes of tobacco are imported into South Africa under the pretext of being re-exported, but in reality the tobacco is used to make cigarettes which disappear into the local economy and avoid paying excise duties.

Read: The cigarette war goes radioactive

“Import officials, such as [Verbena], just refuse to provide details, documents or information regarding the whereabouts of the tobacco, ”according to Mantso’s affidavit.

“When Sars finally demands the rights, he is unable to recover the substantial amounts owed because the transgressors have concealed or dissipated their assets. This makes the collection of unpaid debt extremely difficult and, in most cases, impossible. ”

Verbena was repeatedly asked to explain to Sars what had happened to the imported tobacco, but refused to do so.

What is known is that the tobacco is gone and millions of rand have gone into the company’s hidden bank account, Sars says.

According to court documents, Verbena has been exporting trucks and other SA assets since 2014, and Sars is asking the court for an urgent liquidation order to prevent any further dissipation of assets.

“Flagrant offense”

By acting as it did with imported tobacco, and by removing containers held in detention in flagrant violation of customs law, Verbena has shown that it has little respect for the law, Mantso says.

“In this context, there is a real risk that the respondent has [of] these vehicles to his Zimbabwean brother, a move that would make it virtually impossible for Sars to liquidate these assets in order to satisfy the judgment against the respondent.

Sars is of the view “that there is a serious and emerging risk that the vehicles and possibly additional assets will be concealed or moved across the border so that the respondent can evade payment of his substantial tax debt.” That is why it was of the utmost importance to grant an urgent final winding-up order.

During his audit of the company, Sars said Verbena disclosed two bank accounts but withheld information on a third, an Absa bank account, on which taxable income of R68.4 million was calculated.

Sars should be “recommended”

Fair Trade Independent Tobacco Association (Fita) chairman Sinenhlanhla Mnguni said Sars, together with other law enforcement agencies, should be commended for making significant strides in the fight against illicit trade in cigarettes and other tobacco products.

“In recent times, we have highlighted the increase in the number of illicit cigarettes smuggled into the country via our neighboring countries, especially following the ill-advised five-month ban on the sale of tobacco. ”

Mnguni continues: “We are continuing our advocacy that the relevant authorities continue to monitor the situation at our various border posts, particularly in Beitbridge, as there appears to be collaboration between the criminals involved in the smuggling of these cigarettes and some officials from stationed service. at these border posts.

“We strongly believe that better checks and balances must be put in place by the government to ensure that the system is foolproof and incapable of being easily manipulated.”

Failure to nip this in the bud will in all likelihood lead to the eventual demise of the legitimate local tobacco industry and reduce government taxes on the tobacco business, Mnguni says. “We are, however, very encouraged by the latest efforts by various law enforcement agencies to combat this scourge, and we hope that by working together we can successfully eradicate this threat to our society.” ”

“Get this dishonest importer to name his payers”

According to the founder of Tax Justice SA, Yusuf Abramjee: “These actions demonstrate that a determined new Sars team finally appears to be tackling one of the largest illegal cigarette markets in the world and this is good news for all. South Africans.

“The breathtaking tax demand of R19 billion is double the revenue Sars will actually receive in the form of excise duty on cigarettes this year,” Abramjee said.

“It is imperative that the authorities ask this dishonest importer to name his payers and that a national investigation be carried out into our tobacco trade. ”

Questions were emailed to Verbena and its lawyers, but no response had been received at the time of publication. Moneyweb also contacted Verbena and its lawyers by phone, to no avail.

Read: British American Tobacco demanded to tell the truth about espionage allegations



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COVID-19 pandemic has reduced life expectancy for most since World War II – Reuters study



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© Reuters. FILE PHOTO: Crosses are seen outside a church as each cross represents a life lost due to coronavirus disease (COVID-19) in the state of Louisiana, Baton Rouge, Louisiana, United States, April 10, 2020. REUTERS / Carlos Barria

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By Victor Jack

LONDON (Reuters) – The COVID-19 pandemic has reduced life expectancy in 2020 in the most significant way since World War II, according to a study released by the University of Oxford on Monday, life expectancy of American men declining by more than two years.

Life expectancy fell by more than six months from 2019 in 22 of 29 countries analyzed in the study, which covered Europe, the United States and Chile. There have been reductions in life expectancy in 27 of the 29 countries in total.

The university said most of the reductions in life expectancy in different countries could be linked to official deaths from COVID-19. So far, nearly 5 million deaths from the novel coronavirus have been reported, according to a Reuters tally.

“The fact that our results highlight such a large impact which is directly attributable to COVID-19 shows what a devastating shock it has been for many countries,” said Dr Ridhi Kashyap, co-lead author of the article, published in the International Journal. of epidemiology.

There have been larger declines in life expectancy for men than for women in most countries, with the largest drop in US men, who have seen their life expectancy drop by 2.2 years. compared to 2019.

Overall, men have shaved for more than a year in 15 countries, compared to women in 11 countries. This reversed the advances in mortality that had been made in the previous 5.6 years.

In the United States, the increase in mortality mainly affects people of working age and those under 60, while in Europe, deaths of people over 60 contribute more significantly to the increase in mortality .

Kashyap called on more countries, including low- and middle-income countries, to make mortality data available for further study.

“We urgently call for the publication and availability of more disaggregated data to better understand the impacts of the pandemic on a global scale,” she said.

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Indonesian tech startups drop deal plans with US Spac in favor of local approach



The successful nationwide listing of Indonesian e-commerce group Bukalapak has prompted other start-ups in the country to abandon plans for overseas equity offerings in favor of a local one, signaling a payday for their foreign donors.

International investor interest in Indonesia’s tech sector has increased, with groups including Facebook, Microsoft, Tencent, Alibaba, Google, and private equity firms KKR and Warburg Pincus cram into local start-ups.

The largest economy in Southeast Asia, Indonesia has the region’s largest harvest of unicorns, or private start-ups, valued at over $ 1 billion.

Up to Bukalapak’s $ 1.5 billion listing as of August, however, none had made it public, a critical step in a startup’s lifecycle for global investors.

Today, other Indonesian tech groups are seeing the Indonesian Stock Exchange (IDX) as a credible alternative to international IPOs. Conglomerate MNC Group, founded by a billionaire Hary Tanoesoedibjo, dropped plans to list its video streaming service in the United States through a merger with a blank check vehicle this month.

“When you have a date like this [Bukalapak], it attracts the attention of late stage funds, ”said William Bao Bean, general partner of global venture capital fund SOSV. “Not only was it successful and he fired the starting shot, [but] we should [also] see an influx of funding into the market from international investors. ”

The IDX has sought to attract more tech names through the introduction of regulations to adapt to the industry, such as dual class stocks that would give founders and existing shareholders more control over their businesses.

Bukalapak, an online marketplace backed by Microsoft, Chinese billionaire Jack Ma Ant Group fintech and Singapore sovereign wealth fund GIC, enlarged its IPO from an initial target of $ 300 million to $ 1.5 billion, making it the largest stock exchange listing in the country.

The early days boosted prospects for other tech companies slated to go public in Indonesia. GoTo, a “super app” that offers e-commerce, rideshare, delivery and payment services, is planning a dual listing in Indonesia and the United States targeting a market valuation of over $ 40 billion.

GoTo backers include Tencent, Google, SoftBank, Alibaba, Visa, and Warburg Pincus.

Raghav Maliah, global vice president of investment banking at Goldman Sachs, said Indonesia has the “largest addressable market” and is at the forefront of global investor demand.

Barrett Comiskey, CEO of Migo, a start-up that enables consumers to download movies and television broadcasts on their cell phones through a machine installed in convenience stores, said a shore listing made “a lot of sense” in the wake of Bukalapak’s IPO.

“Our leading investors have always encouraged us to go to the market where the investor base understands best,” he said. Migo’s investors include Singaporean public investment fund Temasek and YouTube co-founder Steve Chen.

MNC Group this month ended an agreement to merge its subsidiary Asia Vision Network, the holding company of local streaming platform Vision +, with the Nasdaq-listed special-purpose acquisition company, Malacca Straits Acquisition. Company. MNC cited “the growing enthusiasm of IDX investors” for digital businesses.

Willson Cuaca, co-founder of the heavily Indonesian-focused venture capital firm East Ventures, said a number of companies in his portfolio are considering selling shares in the country.

“It’s about scarcity value; there aren’t many public technology companies listed in Indonesia, ”he said.

However, Indonesia still has a long way to go to catch up with the United States or other markets in demand for tech start-ups.

The IDX ranks 23rd in the world in terms of market capitalization of its companies listed at around $ 500 billion, behind Singapore and Thailand in the region, according to World Bank data. Trade also remains predominantly retail focused, making stock prices volatile.

“There is still a lack of institutional investors providing stability, although that could change if we get a series of successful IPOs,” said Hwee Ang, founder of financial advisory group Anagram Advisors.

Political risks are another problem, she added. “There is always a question of the longevity of government in Southeast Asian countries, and how policies might change.”

And while Bukalapak rose sharply in its trading debut, its stock has since fallen back to near its IPO price.

Last month, the parent company of Kredivo, Indonesia’s “Buy Now, Pay Later” app, agreed to go public through a $ 2.5 billion merger with a Nasdaq-listed Spac company.

While Kredivo had no plans to pursue an IPO in the United States, founder Akshay Garg said: “We believe that it is always better, as a strategy, to do a capital market quote. most [the] WE.”

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Nersa offers complete overhaul of Eskom pricing



A discussion paper published by energy regulator Nersa on the occasion of Heritage Day on September 24 calls for a complete overhaul of Eskom’s tariff setting methods.

He proposes moving away from the current revenue-based approach to determining electricity tariffs in South Africa to a cost-of-service approach that could benefit large electricity users who subsidize residential customers for years. years.

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Read: Eskom is fighting tooth and nail for a massive price increase

Stakeholders have until October 29 to submit written comments, after which Nersa will hold public hearings through Microsoft Teams. The regulator hopes to finalize the new methodology by mid-November.

It is expected to decide next week whether or not to reject Eskom’s tariff request for the next three fiscal years, which was submitted in early June. This request was drafted according to the rules of the current tariff period, called Multi-Year Tariff Determination 4 (MYPD4).

If Nersa approves this proposal from her own Electricity Subcommittee (ELS) to send Eskom back to the drawing board in terms of new rules, she will have to design an interim measure to determine at least the 2022/23 tariffs, as she It takes about a year for Eskom to write a rate request.

The issue was discussed by the ELS behind closed doors last week.

Time limit

Eskom’s tariffs for 2022/23 are due to be finalized by March 15, when the utility is due to table the tariffs in parliament. Tariffs come into effect on April 1 for direct Eskom customers and municipalities increase their tariffs for end users on July 1.

Ideally, Eskom’s new tariffs should be known by December for municipalities to factor them into their budgets, which are implemented on July 1.

If Nersa does not approve Eskom’s tariffs on time, she cannot legally recover any income.

In his discussion paper, Nersa states that the current revenue-based methodology “has failed to deliver stable prices”.

Read: The same old funding model cannot keep South African cities in business or serve residents

Disastrous decade

Over the past decade, electricity prices have risen 175%, exceeding the Consumer Price Index (CPI).

Read: Electricity: who pays more?

The availability of the Eskom generating station fell and the utility managed the stability of the grid by implementing gradual blackouts.

Escalating prices and unreliable supply have held back economic growth as customers have reduced demand, sought alternative energy sources, shut down or requested special tariff agreements.

Eskom’s sales fell 14.7%.

Source: Nersa

Nersa therefore argues that an appropriate new methodology must be developed to ensure price stability.

Messy system

The current methodology places the regulator in an impossible situation where it determines Eskom’s revenues and tariffs based on its costs and sales, while Nersa has no control over sales.

When the expected sales do not materialize, Eskom does not recover the promised revenues. This must then be recovered at a later stage through the Regulatory Compensation Account (RCA), resulting in a different price development than expected.

The current system also relies on cost aggregation to determine Eskom’s total revenue and average price.

“Because the individual retail price[s] which are then derived from the average costs bear no resemblance to the actual costs incurred by the utility to provide a service to groups of individual customers, it has in fact harmed customers, in particular industrial and industrial customers by making them pay costs that they do not contribute to. ”

Average pricing is not sending the right pricing signals to different users about the cost their consumption imposes on Eskom, Nersa says.

“The enemy of the current approach to electricity pricing is ‘averaging’, which results in inefficiencies, cross-subsidization and cost socialization, which is central in determining revenues.”

In the consultation document, Nersa proposes three essential principles:

  • Cost based on activity: desegregation of generation, transmission, distribution, network operation, market operations, trade and other ancillary services;
  • Cost of service type – different load profiles: base load or constant demand, average or semi-constant demand, peak or variable demand and ad hoc or emergency demand are satisfied by different production units and the associated costs differ ; Nersa says these should be recognized; and
  • Marginal pricing to set tariffs: The costs associated with the different plants used to meet a specific demand also differ, and the question is how these different plants are deployed. “The answer lies in how the market would have dealt with the problem, that the cheapest plants in each slice of service would be deployed first in order of their cost and the costs associated with the last plant which” balances »The market will determine the price of this service.

According to Nersa, the idea is that the provider of each service – for example, each power plant – will charge, depending on its cost, its own tariff, which will include a certain profit.

These individual tariffs will be restricted and, within the framework of an independent market and network operator, this marginal tariff will guarantee the efficiency and the appropriate control or deployment of the different production units.

The discussion paper also highlights other key determinants of the new methodology, namely the separation of trade from distribution, allowing bilateral contracts and the requirement that different services be priced and contracted separately.

The regulator asks 11 sets of questions on which stakeholders can comment.

Discussion paper can be downloaded here.



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China’s biggest air show to display self-reliance, military prowess By Reuters



© Reuters. FILE PHOTO: The fifth prototype of the Chinese-built C919 passenger plane takes off for its first test flight from Shanghai Pudong International Airport in Shanghai, China on October 24, 2019. Photo taken on October 24, 2019 . REUTERS / Stringer

By Stella Qiu and Yew Lun Tian

ZHUHAI, China (Reuters) – China’s drive to achieve self-sufficiency in aerospace and its growing military prowess will be on display at the country’s largest air show this week, in an event amid a pandemic coronavirus and trade friction with the West.

The normally biennial China Airshow in the southern city of Zhuhai, delayed for one year due to COVID-19, will primarily be a domestic affair due to strict quarantine rules.

“The fact that Airshow China is happening, when the global airshow schedule has been quite disrupted, allows China to show that it is back to normal post-COVID,” said Douglas Barrie, senior researcher in military aerospace at the International Institute. for Strategic Studies (IISS).

Local aerospace and defense companies have significantly increased their presence. Major Western suppliers like Airbus and Boeing (NYSE 🙂 will send their teams based in China, and there will also be a virtual component for those who cannot travel.

The country’s efforts to improve local aerospace technology will be in the spotlight at a time of growing strategic rivalry with the West.

“As China faces increasing threats from the West, it must improve its military-industrial, aeronautical and aerospace capabilities,” said Song Zhongping, military commentator and former PLA instructor on missile technology.

Trade frictions with the West are also accelerating China’s desire to reduce its dependence on foreign-made commercial products.

Commercial Aircraft Corp of China’s (COMAC) narrow-body C919 aircraft, due for certification this year, is made up mostly of Western parts, but the mix is ​​expected to change over time as Chinese technology advances, the engines being a key target for a possible national replacement. .

ARMS RACE

More than 100 planes have signed up for display in the air or on the ground as China shows off its military might and space ambitions, including a next-generation crewed rocket and heavy launcher.

State media reported that the J-16D electronic warfare version of the J-16 fighter jet would make its show debut.

The flight demonstrations will showcase some products that China wants to export, including the AG600, the world’s largest amphibious aircraft, designed for firefighting and rescue missions at sea.

The Wing Loong II, an armed drone similar to the US MQ-9 Reaper, has already been sold to customers such as the United Arab Emirates, Saudi Arabia, Egypt and Pakistan as China competes with its Western rivals for more military exports.

A new series of drone products named Feihong, including unmanned helicopter, floating missiles and a new generation of stealth drones, will debut at the show.

“Beijing intends not only to promote military aircraft and locally-made aerospace technologies, but also its ability to meet almost any military requirement,” said Kelvin Wong, Singapore-based defense technology analyst at Janes. .

The show comes as analysts warn Asia could slide into an accelerated arms race as countries respond to China’s military growth.

The United States and its Asian allies have expressed growing concern over Beijing’s military build-up, pressure on Taiwan, and deployments in the contested South China Sea.

Taiwan, claimed by China, has been complaining for a year or more about repeated thefts by the Chinese Air Force near the democratically ruled island.

The United States, Britain and Australia established a security partnership this month that will help Australia acquire nuclear-powered submarines.

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Cracks appear in the user-pay principle of government electronic tolls



The government and some public entities seem to be getting into a corner on the user pay principle, which the government continually uses to justify electronic tolls on the Gauteng Highway Improvement Project (GFIP).

Finance Minister Enoch Godongwana reportedly warned earlier this month against forgiving road toll debt in a presentation that was made at an ANC meeting and seen by the service media company Bloomberg Financials.

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He said Godongwana told the meeting that the government would need, among other things, 4.6 billion rand to forgive unpaid road tolls in central Gauteng, adding that this “demand has serious consequences in the long run. term if the user-pays principle is rejected “.

SABC ‘suggestion’

Meanwhile, the South African Broadcasting Corporation (SABC), in a submission to the Communications Department’s public hearings, last week repeated its suggestion of a household tax to help recover and stabilize its finances.

Under this proposal, the household charge will be based on the ability to access SABC services, rather than the actual use of its services.

Read: SABC wants “domestic tax” to fund public broadcasting

Organization Undoing Tax Abuse (Outa) CEO Wayne Duvenage said the SABC-suggested household tax “sends mixed messages on user-pay principle and sends a message from a government very confused who clings to the straws where they can “.

Duvenage said only local government will be able to administer a household tax, but the SABC is a matter of national government.

“So the whole idea of ​​the household tax just doesn’t make sense, it’s a joke and it’s not going to happen,” he said.

Principle in perspective

Duvenage added that the user pay principle is internationally accepted, but only if it can be managed.

When user pay cannot be managed, governments must find other mechanisms, he said.

Duvenage said user payment for electricity is easy with users cut off if they don’t pay, but if electronic tolls and SABC TV license fees can’t be managed “they’re dead. in water”.

“This is not about principle, but about applicability and enforceability,” he said.

Automobile Association (AA) spokesperson Layton Beard said the user pay principle is not applied to the Gautrain although people pay fares to use the rapid rail system because the Gautrain users are subsidized by the patronage guarantee of the Bombela Concession Company (BCC), the operator of the Gautrain, but road users are not subsidized.

The Gautrain sponsorship guarantee is a subsidy to the BCC when its total income from Gautrain users is less than an amount agreed contractually.

According to the latest annual report of the Gautrain Management Agency (GMA), the payment of the sponsorship guarantee by the GMA rose to 1.971 billion rand until the end of March 2020, against 1.667 billion rand the previous year.

Taxes …

Beard said it was not appropriate to limit oneself to paying electronic tolls on GFIP and “just say yes or no” because there is a link between the taxes people pay and the money that has already been. used to subsidize the Gautrain.

He said various finance ministers had very strong opinions on GFIP and electronic tolling, but had to consider what consumers already pay when using their private vehicles on the roads.

“They pay for these vehicles to be on the road in the form registration disc fees, they pay to have these vehicles on the road in terms of the taxes on the fuel they use, they pay to have these vehicles on the road through the taxes they pay through the tax on Income.

“They are already taxed in three ways. Now they have to pay more because their taxes are used to pay a private concessionaire and the GFIP itself is completely onerous for them.

“This is why they have decided not to pay and the compliance rate with electronic tolls is so low,” he said.

Read: 5.8% of the population pays around 92% of all personal taxes

Transport Minister Fikile Mbalula has said repeatedly over the past 18 months that a final decision on the future of electronic tolls on the GFIP is imminent, but no decision has yet been announced.

President Cyril Ramaphosa appointed Mbalula in 2019 to head a task force to report on options available for the future of electronic tolls by August 2019.

Mbalula said during his speech on the budget vote in May this year that he had presented nine possible solutions to the electronic toll deadlock and confirmed that the first of those options was “to remove electronic tolls”.

Divergent opinions, even within the ruling party

Beard said the AA was having great difficulty reconciling the different views on electronic tolls because there were so many different opinions on it, even within government.

This is a reference to Gauteng MEC transport Jacob Mamabolo stating in a radio interview in May 2021 that electronic tolls are “being phased out” and the Gauteng ANC repeatedly stating that electronic tolls on the GFIP should be abolished.

Beard said the AA believes the current model of electronic tolls is unsustainable, does not work and that an alternative solution must be found.

Read: Deputy Minister of Transport accused of being disconnected from reality on the issue of electronic tolls

Duvenage said that Godongwana’s comments, and in particular his reference to the 4.6 billion Rand of outstanding electronic toll debt, “signal a slightly different approach to electronic tolls if you read between the lines.”

“I think they [government and National Treasury] recognize that the [GFIP] the obligation and the interest on this bond will have to be recovered by the state and they will try to get some of the electronic toll money in circulation from the users.

But Duvenage said the reality is that there is no way for the South African National Roads Agency (Sanral) to enforce non-payment of electronic tolls because it has stopped calling motorists to non-payment, enforcement orders are not issued and motorists are not blacklisted or their licenses are not held for non-payment.

He added that it will be a farce and that the public will “see through it” if a decision on the future of electronic tolls is taken on the eve of the local elections on November 1, especially if the ANC claims it as “theirs. victory ”because they called for the elimination of electronic tolls.

The Congress of South African Trade Unions (Cosatu) in Gauteng had warned in August that there would be disastrous consequences for the ANC in Gauteng if Mbalula did not make “an announcement favorable to our demands by the end of September”.

He said the electronic toll policy has failed, with motorists not paying even when Sanral offers them discounts.



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New York could call in National Guard to replace unvaccinated healthcare workers By Reuters



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© Reuters. FILE PHOTO: A nurse receives one of the first vaccines at Pfizer-BioNTech’s Mt. Sinai Hospital during the coronavirus disease (COVID-19) pandemic in the Manhattan neighborhood of New York, New York, United States United, December 15, 2020. REUTERS / Carlo Allegri / Fi

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By Nathan Layne

(Reuters) – New York Governor Kathy Hochul plans to employ National Guard and out-of-state medical personnel to fill hospital staff shortages as tens of thousands of workers may lose their jobs for failing to meet Monday’s deadline for mandatory COVID-19 vaccination.

The plan, outlined in a statement by Hochul https://www.governor.ny.gov/news/preparation-monday-vaccination-deadline-governor-hochul-releases-comprehensive-plan-address on Saturday, would allow him to declare a state urgently to increase the supply of healthcare workers to include licensed professionals from other states and countries as well as retired nurses.

Hochul said the state is also considering using National Guard officers with medical training to keep hospitals and other medical facilities adequately staffed. Some 16% of the state’s 450,000 hospital staff, or about 72,000 workers, have not been fully immunized, the governor’s office said.

The plan comes amid a larger battle between state and federal leaders pushing for vaccine warrants to help counter the highly infectious Delta variant of the novel coronavirus and workers who are against the demands of vaccination, some opposing for religious reasons.

Hochul attended the Sunday service at a large church in New York City to ask Christians to help promote vaccines.

“I need you to be my apostles. I need you to come out and talk about it and say, we owe each other this,” Hochul told worshipers at the Christian Cultural Center in Brooklyn, according to an official transcript.

“Jesus taught us to love each other and how to show that love but to care about each other enough to say, please get vaccinated because I love you and want you to live. . ”

Healthcare workers who are fired for refusing to be vaccinated will not be eligible for unemployment insurance unless they are able to provide a valid request for medical accommodation approved by a doctor, said the Hochul office.

It was not immediately clear how the ongoing legal cases regarding religious exemptions would apply to the state’s plan to move forward and fire unvaccinated healthcare workers.

An Albany federal judge has temporarily ordered New York state officials to allow religious exemptions for the state-imposed vaccination mandate for healthcare workers, which was put in place by the former Governor Andrew Cuomo and takes effect Monday.

A requirement for teachers and staff at New York City schools to get vaccinated was temporarily blocked by a U.S. appeals court just days before it went into effect. A hearing is set for Wednesday.

The highly transmissible Delta variant has led to an increase in COVID-19 cases and hospitalizations in the United States which peaked in early September and has since declined, according to a Reuters tally https://tmsnrt.rs/2WTOZDR. Deaths, a lagging indicator, continue to rise, with the country reporting an average of 2,000 lives lost per day on average over the past week, mostly among the unvaccinated.

While cases nationwide are down about 25% from their fall peak, the increase in new infections in New York has only recently leveled off, according to a Reuters tally.

In a bid to better protect the most vulnerable, the CDC on Friday supported a booster shot of the Pfizer-BioNTech COVID-19 vaccine for Americans aged 65 and older, adults with underlying health conditions and adults working in high risk professional and institutional environments.

On Sunday, CDC director Dr Rochelle Walensky clarified who should be eligible for booster shots based on their work in high-risk environments.

“This includes people in homeless shelters, people in group homes, people in prisons, but also and most importantly, our people who work… with vulnerable communities,” Walensky said in a statement. television interview. “So our healthcare workers, our teachers, our grocers, our transit workers. ”

Walensky decided to include a wider range of people than was recommended Thursday by a group of expert external advisers from the agency. The director of the CDC is not bound to follow the opinion of the jury.

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Domestic tourism ‘is the only market’ right now – Tsogo Sun Hotels CEO



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September is Tourism Month in South Africa and today [September 27] is World Tourism Day.

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We have been chatting to movers and shakers in the tourism and hospitality industry during the month, in particular, hotel property owners and developers.

In this episode of The Property Pod, I speak to Marcel von Aulock, CEO of JSE-listed Tsogo Sun Hotels, South Africa’s largest hotel operator and owner.

The group, which was spun out of Tsogo Sun’s gaming hospitality business a few years ago, has a history going back over 50 years, with its first hotel being the Beverly Hills in Umhlanga that opened in 1964.

Iconic hotel gaming and resort developer, the late Sol Kerzner, played a key role in the early growth and development of the group, which later became known as Southern Sun. In fact, the Beverly Hills hotel is named after Kerzner’s daughter.

Marcel von Aulock has effectively been with the broader Tsogo Sun Group for over 20 years, barring a year-long sabbatical of sorts in 2017.

He moved up the ranks to CEO of the Tsogo Sun Group in 2011 and became CEO of Tsogo Sun Hotels in 2018, upon rejoining the group ahead of the unbundling of the hotels division 2019.

Covid-19 has inflicted a heavy blow on the tourism industry since the global outbreak early last year. While initial hard lockdowns and restrictions to travel locally have eased, international and business tourism to SA is still in the doldrums.

Now, more than ever, the tourism industry depends on domestic demand for its bread and butter.

Von Aulock chats about how the hotel and tourism industry is doing and Tsogo Sun Hotels’ recovery, with more of the company’s hotels opening up ahead of the summer season. He also speaks about the hot-button issue of Covid-19 vaccinations and how vital it is for the tourism industry’s recovery efforts.

Highlights of his interview appear below. You can also listen to the full podcast above or download it from iono, Spotify or Apple Podcasts.

Highlights

“We’ve got 112 hotels in the portfolio, and there are a few different business segments. Of those there are about six or seven that we don’t run ourselves. They are legacy properties we acquired with hospitality [Hospitality Property Fund] that are under long-term contracts with Radisson and Marriott.

“And there are about 25 hotels that we manage for third parties. A big chunk of that is some of the gaming hotels which, when we split from gaming, are very integral into the casino – your Palazzo node, for example, at Montecasino.

“We also have about seven timeshare resorts. I think we are the largest timeshare operator in the country. We operate, as you say, for the Liberty Consortium, for Acsa [Airports Company SA], for a pension fund in Zambia. So we’ve got quite a big management operation itself.

“And then the bulk of our cashflows come from the remaining 80 or so hotels that we own and operate outright for our own account. That covers everything from five-star properties like the Beverly Hills, Arabella, Mount Grace and so on, down to your one-star budget offerings like Sun1.”

Where is the tourism industry recovery at, and how important is domestic tourism currently, considering the constraint on the international side?

“Up to now there’s very little international travel. There is only essential business travel, which is very small. There’s a little bit of the US markets that’s come back, very much safari-orientated. So one night in Joburg, up to the bush. But by and large international doesn’t exist.

“So that impacts areas like Cape Town – which is built for the international tourist – and Joburg, which has a lot of corporate and a lot of that inbound business travel that’s not existing [currently].”

Read: Tourism bosses want SA off UK traveller ‘red list’ this week

“Domestic is the only market that’s out there, and those results are trading at about half our normal levels. Domestic leisure is strong … domestic leisure is very important.

“And then there’s quite a bit of domestic government-related travel, which is not so much what we call ‘the transient’, just a person going about their business, but group stuff where, for example, the Department of Education is doing examinations, the IEC is doing training. So there’s a fair amount of that across the country where government has to move to function. But it’s all domestic-related.

“The parts of the market that are missing are your international, events and conference tourism … and then your international and your local corporate market. Sandton is still quiet. There is traffic, but it’s not what it should be.”

With the summer season coming up, how many of your hotels are open at the moment, or are set to reopen?

“Most of our portfolio is open. Not so much that it is running full, but it’s open. We find if you can trade above 10% to 15% occupancy, you are losing less money than if you are closed. So, if possible, we get our hotels open.

“They’re also not buildings that like to be closed. They’re not designed to ever be closed. If you switch off a building, you start getting issues with your lifts that aren’t moving, the lubrication around the cables, and your water systems and so on. So we prefer to have hotels open, even if it’s at low occupancy.”

“The areas where we still have closed properties are Cape Town, because there is just too much stock without an international market in there …

“But we’re hoping that some of this Red List issue will get sorted, and that a bit of a late summer season will come through for us. And then in Sandton some of the big real corporate-focused hotels are not open. Those are your two trauma markets.

“The balance of the portfolio, all our outlying stuff – Mthatha, Bloemfontein, Polokwane – is all open. And most of Africa is open. I think Tanzania is the only hotel that’s still closed. Everything else is open.”

Expansion with the Hospitality Property Fund takeover and a new property in Stellenbosch …

“These are two different types of transactions. The Hospitality Fund, when we took that over, we had a number of properties that were contracted out to third parties, and Marriott in particular walked away from a number of leases that they had. So we took those in-house, which in hindsight is actually great for us.

“We would have previously had to buy them out of those, and we are quite glad to take those. Arabella is an important one with Mount Grace – because they are leisure, and leisure is doing well at the moment – The Edward [Durban], Hazyview [Mpumalanga] and so on. We brought those in-house and it’s about six properties, I think, we’ve taken over.”

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“Then something like the Stellenbosch Hotel [now branded Southern Sun de Wagen] – we’ve got a long relationship with Remgro and the Rupert family going back many years to Malelane Sun at Leopard Creek. They’ve done an exercise really to preserve historic buildings in the centre of Stellenbosch.”

“It’s a small property with 22 suites. It’s attached to the Volkskombuis, which is Jean Engelbrecht’s restaurant there. Because of our long relationship with them, they approached us to run that for them. So it’s more looking after the history of Stellenbosch than it is a hotel thing, but it will work I think really well once your internationals are back.”

How important is the vaccination drive to the recovery of tourism?

“It’s pretty vital. If we don’t get vaccinated, we are not going to get accepted on the international stage, and we’re not going to be considered a safe environment to come to. The vaccination programme was [initially] botched.

“Fortunately, that is fixed, and we’ve seen in recent months since sort of late June/July, it’s really opened up and it’s gone rapidly… Now you’re dealing with vaccine hesitancy – people who don’t want to get vaccinated as opposed to people who want it and can’t get a vaccine.

“If you want it, you can get it now. That’s really important … We are, for example, internally heavily encouraging all our staff to get vaccinated.

“It’s absolutely vital. You will not get international travel inbound or outbound if the world doesn’t perceive your vaccination programme as solid.”

“We have a very good programme here. It just needed to get, I guess, the bureaucracy out the way. This Red List issue is now about the Beta variant that hardly exists in South Africa.

“This sort of stuff will pass. I think, in a month or two, I hope, it’s certainly cleared out. But the vaccination programme is vital for us not becoming a pariah in the international market.”

With the local holiday season approaching, which are expected to be Tsogo Sun’s destinations that are going to stand out in the summer?

“Our strongest domestic market is Durban. Obviously, the beachfront is still very, very popular. We have a very loyal Indian market that goes in and out of there, visiting friends and family. So the Durban strip, both in Umhlanga and along the beachfront, should do really well.

“And then our outlying resort properties … the Mount Graces, the Arabellas and so on will do well, because they’re easily accessible within an hour from Cape Town and Johannesburg respectively.”

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“Our timeshare resorts are very resilient. In that market the minute the restrictions are lifted, timeshare runs full. People use their timeshare. They want to be there. And a couple of those – we’ve got hotel offerings with them that I think will do well. We also make good money out of food and beverage and so on, and you need volume through that.

“I think we’re going to have quite a good leisure season, provided there are no changes in the restrictions, which we saw last December when that second wave came along.”

“But I’m pretty optimistic about that. This third wave was very heavy and intense on the country. So, without knowing too much about the science behind it we’re in for a good summer season because there’s a lot of pent-up demand after the impacts of this third wave and the Level 4 restrictions that went with it.”

Eyeing further expansion?

“It’s quite challenging having a long-term view when the market’s been so uncertain – and hospitality is the hardest-hit industry by far. Our short-term aim is survive, avoid a rights issue, maintain our balance sheet, get us out of this trauma.

“Our medium-term view is recover. We do think there’ll be a strong recovery in both business and leisure travel. Leisure – you can see it there, that demand is there we think. Business travel will come back; people need to move. So that’s our medium term.

“When you get into the longer term, it gets a bit harder and it depends very much on what the conditions will be at that point. What we’re seeing at the moment is the implied value of hotels. If you look at listed-share prices, they are enormously discounted and that has no bearing on what individual properties are trading at.

“Overall we’d still want to grow the portfolio. I don’t see a lot of distressed stock out there that is trading at prices that could justify not rather just buying our own shares, but you don’t know what it will be like in two or three years’ time when the recovery is there.

“There is a small outside chance that we have a really strong boom in travel, a bit of a roaring twenties, after the market opens up.”

“And then we’ve got to look at what the market does at that time. But that would really be first prize. If we get that strong economic growth and business and leisure travel all at once, then we’re firing on all cylinders.”



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China goes on the intellectual property offensive



Foreign companies in China are becoming key targets in a growing number of intellectual property lawsuits filed by Chinese companies. Improved intellectual property laws, which have resulted in significant damages for violations awarded by the courts, have opened the floodgates to litigation.

As Chinese companies became more protective of their own intellectual property rights, the number of intellectual property-related lawsuits filed in China in 2020 was more than three times that of 2016.

This trend has forced Japanese companies, for example, to adjust their intellectual property strategies in China, traditionally focused on dealing with infringements involving Chinese companies, in order to be better prepared for the risk of being sued by Chinese competitors.

A Japanese company involved in intellectual property disputes with Chinese companies is Ryohin Keikaku, the Tokyo-based company that operates the Muji household goods store chain.

“We will continue to keep our eyes on the ball,” said Kenko Kikuchi, head of the company’s legal and intellectual property department, after the company won a trademark lawsuit by Beijing Cottonfield. Textile Corp and another Chinese company was established in July. The legal battle lasted two and a half years.

Japanese Ryohin Keikaku, who runs Muji stores, continues to fight to protect his “Mujirushi Ryohin” brand (no brand, quality products) in China © Bloomberg

But Ryohin Keikaku is still involved in more than 10 disputes with companies over his brand “Mujirushi Ryohin” (meaning no brand, quality products) written in Chinese characters used in some of its fabric products, including bedspreads and towels. The Japanese company’s fight to protect its brand in the country is not in sight.

Ryohin Keikaku is one of a growing list of foreign companies that have faced intellectual property lawsuits in China. Apple has been sued by a Chinese artificial intelligence company that claims the voice recognition technology of US tech group Siri infringes its patent.

This article is from Nikkei Asia, a global publication with a unique Asian perspective on politics, economics, business and international affairs. Our own correspondents and external commentators from around the world share their perspectives on Asia, while our Asia300 section provides in-depth coverage of 300 of the largest and fastest growing listed companies from 11 economies outside of Japan. .

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“Traditionally, intellectual property cases involving Chinese and foreign companies have mainly concerned alleged violations by Chinese parties,” explains Japanese lawyer Yoshifumi Onodera. “But the number of contrary cases has increased. We are getting more and more requests for legal advice from Japanese companies (operating in China), ”he said.

The number of intellectual property lawsuits in China is on the rise. A total of 28,528 intellectual property infringement cases involving areas such as patents, utility models and designs were adjudicated by Chinese first instance courts in 2020, an increase of 28% from to the previous year. Copyright and trademark lawsuits are also skyrocketing.

Two key factors are behind the growing wave of intellectual property litigation. One is an increasing amount of intellectual property owned by Chinese companies. China was once known for its proliferation of counterfeit products and was known as “Imitators’ Heaven”. There is still no shortage of counterfeit products in China, but Chinese companies now have more intellectual property rights to protect.

In 2020, China was the world’s largest source of international patent applications for the second year in a row, with a total of 68,720 filings. A growing number of Chinese tech-oriented companies see intellectual property protection as a key part of their business strategy.

Number of IP cases in China

The other factor is the improvement of intellectual property legislation. The Chinese government revised the trademark, patent and copyright laws in 2019 and 2020. The revisions increased the maximum damages that can be awarded by the courts in these cases. The changes also introduced punitive damages, which are awarded in addition to actual damages in certain circumstances. Now, five times the actual damages can be awarded in cases involving serious violations of intellectual property rights.

The revised patent law reduced the burden of proof for plaintiffs in patent infringement cases. This will increase the merits of patent infringement lawsuits, according to attorney Makoto Endo. In other words, Chinese companies are more likely than ever to sue foreign competitors for intellectual property infringement.

This trend has particularly important implications for two areas of technology: fifth generation wireless communication technology and artificial intelligence. The Chinese government encourages innovations in these fields in a national dynamic of technological development.

Many Chinese companies have world-class 5G or AI technologies. Onodera predicts a peak in Chinese lawsuits against foreign companies over these technologies.

“Japanese companies tend to be slow to strengthen their defense against the potential risks of lawsuits,” said Rieko Michishita, a US registered lawyer operating out of China. According to Michishita, many Japanese companies, even those who are used to suing Chinese companies for intellectual property infringement, find it difficult to defend themselves in court in the intellectual property cases where they are being sued.

When they are the ones who file the lawsuits, they can gather evidence and strategize for court battles at a pace that suits them. However, when prosecuted, they must react quickly to actions taken by complainants. Japanese companies are generally not good at this.

In many cases, Japanese companies do not grant significant authority to their local offices in China. By spending time consulting their headquarters in Japan, these companies could become at a disadvantage.

Intellectual Property Laws in China

“It’s not uncommon for a Japanese company to panic when it is sued in China and fails to provide appropriate legal responses,” Michishita explains.

In such a case, the Japanese company will embark on a frantic wild goose hunt as they try to find a local political or business figure who can help them with the lawsuit.

At the very least, companies should run internal simulations and develop manuals for dealing with lawsuits against them, Michishita warns. It is essential to study the Chinese legal procedures involved. The Japanese head office and local units should be jointly responsible for verifying issues that require internal approval and allocating the time necessary to deal with them, she said.

A large Japanese manufacturer with little experience in Chinese legal proceedings has launched several patent infringement actions against its Chinese rivals. The action is in part designed as a learning stage to better prepare for prosecution, the Japanese firm’s head of intellectual property change said. By working with local attorneys renowned for their expertise in intellectual property litigation, the company aims to get used to handling court proceedings as well as rapid legal responses from Chinese companies.

China has become known as a litigation-oriented society, with the trend extending to intellectual property issues as well. Foreign companies could become prime targets of lawsuits if they tend to be too willing to make concessions in trade disputes or seek financial settlements to avoid their escalation.

It is becoming increasingly important for Japanese and foreign companies to develop effective and viable plans and strategies for handling intellectual property lawsuits in China, be they plaintiffs or defendants. An important element is to clearly define the roles played by headquarters and local units.

A version of this article was first published by Nikkei Asia on September 22, 2021. © 2021 Nikkei Inc. All rights reserved

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White collar crime is a serious challenge for the country



As Steinhoff makes his way to the still distant finish line, it’s hard not to feel some respect for the tenacious leaders who have spent much of the past four years in the equivalent of a body war. hand-to-hand with a variety of aggrieved investors. .

Of course, it helps that all that hard work is paying extremely well. This means that executives win no matter what. This is not the case with shareholders for whom “winning” only means losing a little less.

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Of course, the biggest winners in all of this will be the financial creditors who got Steinhoff loans at a fraction of their face value after the December 2017 announcement of accounting irregularities at the company. They are not only ready to get 100c on the rand when things are finally settled, but in the meantime they get 10% interest every year. This extremely generous interest payment is built into the initial € 9 billion, which presumably means the loan now exceeds € 11 billion.

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As it stands, the biggest threat to the finalization of the Section 155 plan of arrangement appears to be the liquidation request filed by the founders of Tekkie Town led by Braam van Huyssteen and Bernard Mostert.

While it seems unlikely that they’ll be able to sidetrack things, they could definitely delay resolution. Van Huyssteen and his co-founders announced that they were opposing the South African court’s request to sanction the crucial Section 155 plan of arrangement. However, given that the program received 100% support from creditors, it’s hard to see how the court wouldn’t approve it.

It is also difficult to imagine that the Constitutional Court will interfere.

Steinhoff apparently approached our highest court in an attempt to postpone the Western Cape Court hearing on Van Huyssteen’s liquidation claim. A swift and favorable (for Steinhoff) decision of the Constitutional Court would ensure the high court’s approval of the Article 155 regime. This approval would eliminate any legal threat from Steinhoff’s creditors.

The risk for Steinhoff is that if the liquidation request is successful, the liquidator obtains control of the company and retains that control even if Steinhoff appeals the liquidation decision.

Steinhoff is likely to be particularly keen to ensure that PwC’s infamous report is not exposed during a possible liquidation process; such a disclosure would spark all kinds of antagonism and legal action.

However, although white-collar crime is a serious challenge for the country, it might not be seen as of sufficient constitutional interest to warrant urgent intervention by the Constitutional Court.

Listen to Moneyweb editor Ryk van Niekerk’s interview with Christo Wiese below (in Afrikaans) or read the transcript in English here.

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JCI Limited

On a more prosaic note and just to prove that the wheels of justice and regulation are slowly turning, earlier this month the Corporations and Intellectual Property Commission (CPIC) won a lawsuit against JCI Limited.

Most investors may have forgotten about JCI, but at the time – well, especially from the mid-1990s, when it was the subject of an Anglo-American unbundling / BEE exercise – it was almost as controversial as Steinhoff has become.

It appears that CPIC inspectors found that for the period 2011-2017, JCI did not compile audited financial statements as required by the Companies Act.

After initially seeking to have the CPIC notice of compliance rescinded, JCI admitted that it was unable to prepare financial statements as required by the Companies Act.

In terms of the settlement agreement reached with CPIC, JCI must now pay an administrative fine of R 1 million and call a meeting of shareholders to pass a special resolution for the voluntary liquidation of JCI Limited.

African rainbow capital

Speaking of BEE, it looks like Patrice Motsepe, Johan van Zyl and Johan van der Merwe were the main BEE tycoons at the start of the 21st.st Century.

The main players behind African Rainbow Capital (ARC) seem to be able to close any deals they want.

It’s quite astonishing that thanks in large part to ARC’s acquisition of a stake in Sanlam Investments last year, the number of assets managed by black-owned fund managers nearly doubled. In June 2021, black-owned businesses managed 1.15 trillion rand, up from 667.8 billion rand a year earlier. Sanlam Investments accounted for R344 billion of the increase.

Read: Reconsideration of the valuation of Rain

Sasol

Meanwhile, Sasol’s determination not to take a “big bang” approach to carbon emissions is not going to win him friends in the environmental activist community.

The company, which is South Africa’s second-largest greenhouse gas emitter, has tripled its “aspiration to reduce emissions by 2030” and is putting in place plans to transform the group by 2050.

Tripling the aspirations seems quite exhausting and also remarkably vague.

Perhaps all executive bonuses should be suspended until these aspirations make a tangible appearance in the operation of Sasol.

Read: Sasol plots his future



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