Makwakwa has legal right to return — SARS
The South African Revenue Service has defended its decision to allow senior executive Jonas Makwakwa, to return to work despite facing serious allegations of tax evasion and money laundering.
The South African Revenue Service (SARS) has defended its decision to allow its senior executive, Jonas Makwakwa, to return to work despite facing serious allegations of tax evasion and money laundering.
Briefing Parliament’s standing committee on finance on Tuesday, SARS officials — led by commissioner Tom Moyane — said according to the legal advice they had received, there was no legal basis to keep Makwakwa on suspension until investigations into his affairs were completed. Keeping him on suspension would violate his rights, said Refiloe Mokoena, SARS’s chief officer of legal counsel.
ANC MP Derek Hanekom pointed out that there were many instances where individuals were suspended pending the conclusion of a probe. He asked why Makwakwa had been reinstated despite the fact that investigations against him had not yet been concluded.
The Makwakwa matter has added pressure to the embattled tax authority, which has recently courted bad publicity. SARS is also facing a R50bn deficit in revenue collection.
Makwakwa, who is the chief director for business and individual taxes at SARS and is considered to be the second-incommand, was suspended in September 2016 along with his partner and fellow SARS employee, Kelly-Ann Elskie.
This was after the Financial Intelligence Centre (FIC) had flagged deposits into their bank accounts. The FIC identified 75 unusual and suspicious cash deposits, totalling R1.2m, into the accounts between March 2010 and January 2016.
Makwakwa said at the time the money was from a taxi and stokvel business. SARS then contracted law firm Hogan Lovells to investigate whether Makwakwa and Elskie had contravened any internal policies and/or the Public Finance Management Act.
Auditing and tax advisory firm PwC was asked to probe the tax-related matters, while the Hawks were to probe any alleged criminal aspects of Makwakwa’s transactions. An internal disciplinary hearing chaired by advocate Terry Motau was also conducted. In October, after the hearing, SARS announced that Makwakwa had been cleared of wrongdoing and would return to work.
However, Hogan Lovells chairman Lavery Modise told MPs on Tuesday the firm had advised SARS that should the probes by the Hawks and PwC find Makwakwa and Elskie guilty of any offence, that would constitute misconduct, which the firm would pursue against them at the appropriate stage.
“I hasten to add, therefore, that any suggestion that Hogan Lovells decided not to investigate any aspect contained in the FIC report is fallacious. To the contrary, Hogan Lovells recommended that investigations be conducted by the bodies that enjoy statutory powers and the expertise to do so,” said Modise.
PwC was instructed to probe the source of funds for each of the transactions and, in a report provided to Hogan Lovells, PwC concluded that it was unable to confirm that the source and nature of the funds for the majority of the transactions were improper, Modise said.
“Allegations under this heading were put to Makwakwa during our investigation. However, Makwakwa challenged Hogan Lovells’ jurisdiction to question him further, seeing that PwC had not provided a defini- tive report,” said Modise. “On the basis of that report and the information that was available to us at the time, we advised that a prima facie case of misconduct could not be made out in relation to the transactions.”
Moyane told MPs the Hawks probe was progressing.
DA MP and finance spokesman David Maynier asked Moyane whether reinstating an executive who was under investigation would build confidence in the tax authority.
“We have no idea if there has been any tax offence. Until this [the investigation] is complete, then we can speak about what you are saying,” said Moyane.
Committee chairman Yunus Carrim said the matter was not about Makwakwa and his tax affairs, but about SARS’s handling of the allegations. Makwakwa was not merely an ordinary taxpayer and therefore had to be seen to be above reproach, Carrim said.
The committee will continue with the matter early in 2018.
THE FIC IDENTIFIED 75 UNUSUAL AND SUSPICIOUS CASH DEPOSITS TOTALLING R1.2M YUNUS CARRIM SAID THE MATTER WAS ABOUT SARS’S HANDLING OF THE ALLEGATIONS