Gordhan: SARS remarks ridiculous
Finance Minister Pravin Gordhan has described as “ridiculous” a comment by SARS that reporting to him was an “operational courtesy” not a legal requirement.
Finance Minister Pravin Gordhan has described as “ridiculous” a comment by the South African Revenue Service (SARS) that reporting to him was an “operational courtesy” rather than a legal requirement.
Gordhan’s written reply to a parliamentary question cuts to the heart of the battle between the minister and SARS commissioner Tom Moyane — who on Friday described the relationship as “strained”.
Moyane has asked President Jacob Zuma to appoint a judge to mediate between them.
Gordhan made his comment in reply to a question by DA MP David Maynier about the investigation SARS instituted into the agency’s modernisation programme. The process, undertaken by Grant Thornton, began in February 2015 and has not yet been concluded.
SARS provided a reply to the question about whether it had briefed the minister on the probe. It said Gordhan was not informed, but the investigation arose as a result of a report by consultancy Gartner that was given to former finance minister Nhlanhla Nene “as part of operational courtesy”.
This was “ridiculous to say the least”, Gordhan said.
“In government, there are very categorical prescripts in the Constitution, the Public Finance Management Act and other legislation which require a head of SARS to be accountable to the minister of finance. The concept of ‘operational courtesy’ is ridiculous to say the least. The principles of good governance require that professional accountability and ethical conduct are nonnegotiable.”
According to insiders, the public disagreement between Moyane and Gordhan is strengthening a case for the removal of the minister in a pending Cabinet reshuffle.
The parliamentary reply came to light after Moyane accused Gordhan on Friday of “interfering” with operations at SARS. Moyane claimed that Gordhan sought to usurp some functions conferred on him by the SARS Act. He accused Gordhan of belittling him, of treating him as a “nonentity” and of “shouting and screaming” in meetings with management.
The fight between the two resurfaced last week, when it emerged that the tax agency was behind in its revenue collection target by R30bn, with Gordhan blaming the organisation and its leadership for this.
On Friday, the Mail & Guardian reported on 16 letters between Moyane and Gordhan that it said exposed the deterioration of their relationship.
On the same day, Moyane held a briefing, blaming Gordhan and the Treasury for leaking the letters to the newspaper. He denied that he had paid himself a bonus, as alleged in the letters.
He denied he had opened a criminal case against Gordhan that led to the National Prosecuting Authority charging the minister in 2016. Moyane said he had opened a case relating to the alleged rogue unit at the tax agency, not into the minister.
“An investigation conducted by the SSA [State Security Agency] into the leakage of correspondence within SARS and between SARS and Treasury confirmed there is no leakage from SARS.… I have no alternative but to reasonably suspect that the leakages emanate from the office of the minister,” he said.
IN THE PAST YEAR, THE GROUND HAS BEEN WELL PREPARED FOR GORDHAN’S REMOVAL
It is now clear that the relationship between Finance Minister Pravin Gordhan and South African Revenue Service (SARS) commissioner Tom Moyane has broken down entirely.
For SA, this is a disaster. Without trust and full co-operation between these two important institutions, public finances and the economy are in jeopardy. In the Budget Review, Treasury named uncertainty over the “path of revenue collection” as a key risk. Gordhan said SARS’s anticipated undercollection by R30bn for the year was not due to economic weakness alone and he had concerns about tax administration.
Obviously Moyane does not share Gordhan’s concerns. Despite the shortfall, documents show he signed off on bonuses for himself and other senior management for the year despite Gordhan instructing him not to. (On Friday, Moyane said he had not yet taken the bonus.) The question now is what can be done? Sadly, the answer is that the possibilities for a satisfactory resolution border on nil. The only person with the power to sort out the mess is President Jacob Zuma. He promised Gordhan a year ago he would mediate their relationship.
However, Zuma, who should have the leadership and commitment to his country to sort out the problem, has decided not to. That is because he, Moyane and the rest of their clique – which appears to be run by the Gupta family – are focused solely on advancing and protecting their own interests. This includes gaining control of SARS and Treasury.
Over the past year, the ground has been well prepared for Gordhan’s removal. He has been intimidated and threatened with arrest more than once. It’s possible Zuma thought he would be gone by now.
The latest plaintive appeal by Moyane — that he is treated like a small boy by Gordhan – may again be an attempt to create such an environment.
If it is so patently clear the two cannot work together, the conclusion would have to be that one would have to go.
There are no prizes for guessing who the Guptas and their runners in the ANC believe that should be. With the country on tenterhooks over a reshuffle, we will soon know what Zuma’s decision will be. Firing Gordhan is laden with risks, not just to the country but to Zuma too who will certainly face a backlash inside the ANC.
In the meantime, Moyane has asked Zuma to appoint a retired judge to mediate and provide guidance on his powers, in particular whether the SARS commissioner is accountable to the finance minister.
The basis for this question appears to be in the South African Revenue Service Act, which was amended in 2002 so that the president and not the finance minister would appoint the commissioner.
Moyane was the first commissioner to be appointed by Zuma after the previous commissioner – Oupa Magashula – had his tenure cut short in an incident closely resembling a honey trap.
But while the act changed the appointing agent, Moyane remains accountable to Gordhan under the Public Finance Management Act. It is also the finance minister who must table the SARS strategic plan in Parliament; it is through the finance minister that SARS must account to Parliament.
Factionalism and what has become aptly known as state capture is destroying government institutions. The National Prosecuting Authority, the South African Police Service and the undermining and corrupting of state-owned enterprises have eaten away at the state’s ability to govern and deliver services. These are services used most of all by the poor.
This will all pale into insignificance compared with the hollowing out of SARS.
With the destruction of the government’s capacity to raise revenue, the country will head only in one direction — and it will happen dangerously fast.