His legal team, headed by Gilbert Marcus SC, on Monday asked Judge Francis Legodi to set aside the decision by the Reserve Bank that he had to pay this amount – and he wants to be refunded.
Shuttleworth’s team said the levy was unconstitutional and invalid and the decision to impose it, unlawful.
Marcus said the levy decision was taken without affording Shuttleworth a fair hearing. In fact, the entire existing system of exchange control in South Africa was unconstitutional, he argued.
Shuttleworth was the founder of Thawte Consulting, which he sold in 1999 for $575m (R5.8bn).
He subsequently devoted his career to a range of entrepreneurial and philanthropic projects.
This required the investment of large amounts of capital across the world in high-risk entrepreneurial ventures.
Shuttleworth was forced to emigrate (to London) in 2001, because it was impossible to conduct these ventures within the existing exchange control in this country, the court was told.
Following his emigration, Shuttleworth left substantial assets in South Africa. Over the years he transferred some of them out of the country.
In 2009, he decided to transfer his remaining assets and was told by the Reserve Bank that he could only do that, provided he paid a 10 percent levy.
Although Shuttleworth questioned the validity of this decision, he paid it under protest and transferred his assets. Apart from wanting his money back, he is also asking for an order declaring the Reserve Bank’s policy of refusing to deal directly with the public regarding its exchange control regulations, to be declared unconstitutional.
In terms of its rules, the Reserve Bank insists that the public communicate with it through the mediation of authorised dealer banks – a policy Shuttleworth referred to as “the closed door policy”.
When Shuttleworth emigrated in February 2001, his assets – valued at an estimated R4.2bn – were blocked.
In March 2008, he was given permission to transfer R1.5bn of his blocked assets.
In 2009, he decided to transfer the remaining blocked assets, which was granted, subject to the payment of a 10 percent levy. He instructed Standard Bank to do so, although under protest.
Marcus said if Shuttleworth had waited a year, he would not have had to paid the levy as this requirement fell away in 2010.
The Reserve Bank defended its actions by stating the levy was in accordance with its policy, as set out in a circular, based on a 2003 budget speech by then finance minister Trevor Manuel to Parliament.
Marcus on Monday told Judge Legodi that a circular is not regarded as law.
He said the system of exchange control in this country was not governed by laws, but by the dictates of an organ of State, which are not accessible to the public.
Marcus said the Reserve Bank understood itself to be bound to implement the then policy of the finance minister. But, he argued, this was a revenue-raising mechanism in terms of which R2.9bn was, since the exit levy was introduced and up to its termination in 2010, transferred to the fiscus.
When the Reserve Bank imposed the 10 percent levy on the transfer of Shuttleworth’s capital, it deprived him of his property and his client was entitled to get his R250m back, he argued.
Arguments on behalf of the Reserve Bank and the government will be presented today.