By Lehlohonolo Lehana.
Caption: The South African Reserve Bank (SARB) is investigating Kastelo, the fintech chaired by DA finance chair Dr Mark Burke, over claims it moved R4 billion offshore in breach of exchange controls.
The Democratic Alliance (DA) has removed its federal chairperson of finance, Dr Mark Burke from parliamentary finance committees amid the SA Reserve Bank (SARB) ongoing investigation in Kastelo.
Burke co-founded Cape Town-based Kastelo in 2018, with the company formally registered in South Africa as Kastelo (Proprietary) Limited in 2020.
Kastelo provides all-in-one digital money application featuring mobile wallet services, international stock investing, payments, algorithmic trading, and a mobile network service called Kastelo GIGS that offers non-expiring data.
Parliamentary disclosures show that he has business interests and directorships in entities within the Kastelo network, including Kastelo, Kastelo Global, and Kastelo Arg.
Burke served as Kastelo’s CEO until June 2024, handing the reins to Nicholas Burke after being called to Parliament following the 2024 national elections, while remaining on as chairman.
Fullview understands Kastelo used clients’ single discretionary allowances and foreign investment allowances without their full knowledge, opened offshore bank accounts in their names, and misrepresented its activities in compliance declarations to the central bank.
The allegations include the use of third parties’ foreign investment and discretionary allowances to externalise funds, transactions allegedly conducted without clients’ knowledge or participation, and misrepresentation of Kastelo’s activities in compliance declarations submitted to the Reserve Bank.
The Reserve Bank has already frozen a portion of Kastelo’s funds held at Access Bank, and a broader investigation is underway.
The central bank alleged that Kastelo breached rules applicable to Treasury Outsourcing Companies, including by buying and selling foreign currency for its own account, acting as a principal rather than an intermediary and conducting transactions without clients’ knowledge or participation.
Kastelo has defended its business model, saying it allows clients to benefit from price differences between domestic and international cryptocurrency markets.
On Tuesday, Burke clarified that he was no longer the chairman of the Kastelo group of companies, having resigned two years ago when he chose to pursue a political career.
Burke has said the High Court judgment did not make any finding of wrongdoing against him or constitute a finding that exchange-control contraventions had been proven.
His political position makes the allegations particularly damaging. He sits on the DA’s federal executive as finance chairperson, responsible for internal financial controls and accountability, and serves in Parliament on committees overseeing national appropriations and finance.
DA Parliamentary Leader George announced on Wednesday afternoon that Burke has been removed from Parliament’s finance committees as a precautionary measure.
Michalakis said the decision was taken after consultation with Burke and was intended to avoid any perception of a conflict of interest.
“After consultation with Dr Mark Burke, we have decided that out of an abundance of caution, and to avoid any perceptions of a conflict of interest, he will no longer serve on the finance committee or in the finance cluster while a company he is a beneficiary of is the subject of an inquiry by the SARB. We have now effected that change.”
MP Kingsley Wakelin will now take over the responsibility.
Burke maintained that he has consistently acted ethically, taking extensive proactive steps since entering Parliament to avoid any potential conflicts of interest regarding his former business ties.