A TOP attorney is being investigated by the SA Reserve Bank for masterminding a potentially fraudulent foreign exchange scheme that has seen more than R350-million spirited into overseas bank accounts.

The scheme is believed to be a means for former SA citizens who have emigrated to remove far more than their allowed R750 000 from the country, potentially in contravention of exchange control regulations.

Charles van Staden, deputy general manager of the Reserve Bank's foreign exchange division, confirmed this week that the bank was investigating a senior partner in a Johannesburg law firm, who is believed to be the kingpin in the scheme.

"We are very close to the end of the investigation and we will then hand it over to the police ," Van Staden said, adding he was speaking for deputy Reserve Bank governor Gill Marcus.

Van Staden said he was prevented by the Reserve Bank Act from commenting further, but when details were put to him by the Sunday Times, he said: "I see you know everything."

Documents in the possession of the Sunday Times show how the scheme works: a person emigrating uses blocked funds - money which cannot be taken out of the country in terms of forex regulations - to buy debentures in a firm listed on the JSE. Debenture certificates are issued to the emigrant.

An offshore company then secures an agreement that cedes it the right to ownership of the debenture and all future income streams. The debenture is ceded and not bought due to foreign exchange laws.

As the registered holder of the debenture, the emigrant must continue to claim the interest payments on the debenture, although these are immediately forwarded to the offshore company. When the foreign exchange laws are repealed, the transfer of the debenture to the offsore company will take place.

In return for this, the emigrant receives 80% of the capital value of the debentures, paid from the trust account of the Johannesburg attorney's brother in London to an offshore bank account elected by the emigrant.

The documents allegedly form part of a prospectus drawn up by the Johannesburg attorney for prospective clients of the scheme. The documents claim the scheme is not a contravention of exchange control regulations "because each step of the transactions is perfectly legitimate".

However, the Reserve Bank apparently believes the scheme's cumulative effect and spirit is in contravention of exhange control regulations.