Let inquiry at ground zero get a move on
Acommissioner removed under a cloud, a scandal involving an illicit affair between a taxman and a tobacco attorney who turned out to be a spook, an alleged covert unit spying on politicians and taxpayers, spies and politicians playing a harrowing game of Russian roulette with the institution at the heart of the nation’s purse.
This is the recent history of the South African Revenue Service. Roughly a decade ago it was emblematic of distinction in governance — becoming a leader of innovation in the state.
The institution’s critical role in a developmental state such as ours is clear — social grants and services to communities such as clinics and hospitals are all funded by revenue collected by SARS. Yet it became the first site of state capture, with politics and intrigue colluding to dismember it as an institution.
The inquiry set up for this purpose, months in the making and years overdue, must now urgently begin and conclude its work so that this key democratic institution can return to a state of normalcy. This includes exposing the role of multinationals such as Bain, which was involved in the controversial and far-reaching structural overhaul of SARS, and KPMG, which was central in the probe into the alleged “rogue unit”. Then there is Hogan Lovells, for its work in the Jonas Makwakwa matter.
All three played a role in SARS’s decline as an institution — when it was functioning optimally it took on tax-evading politicians and their friends. It blocked attempts to sidestep customs — even by the governing ANC in the case of a shipment of T-shirts for an election campaign. Its success, it could be argued, is what placed it firmly in the crosshairs of the architects of the state-capture project. Acting SARS commissioner Mark Kingon’s candid disclosures in Parliament on Wednesday were a worrying indication that the reform needed to restore SARS as a capable institution is urgent.
He told the standing committee on finance that tax compliance is under “serious threat” and that there are now many instances of individuals “not doing the right thing”.
Kingon admitted that SARS handled the Financial Intelligence Centre (FIC) report on suspicious and unusual transactions into the bank account of former senior official Makwakwa and his partner, Kelly-Ann Elskie, “in the wrong way”. His admission that SARS sidestepped a tax-evasion investigation, an obvious deduction from the FIC report, and opted rather to approach the Makwakwa matter from a “human resource” perspective, is a real indictment.
What is worrying is that while suspended commissioner Tom Moyane is facing a disciplinary inquiry over this, members of his executive committee and those who were party to such decisions remain inside SARS, some in key positions. Makwakwa himself has resigned with full benefits and has yet to adequately answer to the allegations against him.
While KPMG has retracted parts of its report into the alleged rogue unit and refunded the R23m it earned for it, the ramifications linger. Moyane faces a charge in his disciplinary inquiry linked to his ordering a SARS employee to feign illness to avoid being interviewed by KPMG to provide evidence for its investigation. This employee, Helgard Lombaard, is a key witness in the criminal case brought by the National Prosecuting Authority (NPA) against former deputy SARS commissioner Ivan Pillay and officials Johann van Loggerenberg and Andries Janse van Rensburg over the alleged bugging of the NPA offices in 2007. KPMG has yet to explain how an e-mail from Moyane’s attorney suggested that the findings of its investigation were dictated to it by SARS itself.
Lovells has protested its innocence. In a letter to Parliament read out in the committee on Wednesday, Lovells denied that it had “whitewashed” the findings of the Makwakwa probe, saying it was only tasked with assessing whether he had violated the SARS code of conduct, a largely human resource function. It said it was not lawfully entitled to investigate the unusual and suspicious payments to Makwakwa as this was a criminal investigation for the Hawks, while the tax evasion probe was up to SARS itself.
Yet it provided SARS with a final report on Makwakwa without any insight into the findings of these probes.
The SARS restructuring was long in the works before Moyane took over. It was expected to be a rather mundane bureaucratic exercise to bolster its functioning.
However, the overhaul recommended by Bain, the consultants brought in by Moyane, turned the institution on its head. It resulted in a drain of skills, with many seasoned managers and employees jumping ship.
The restructuring should be a central feature of the tax inquiry’s probe. The separate inquiry into the institution’s administration is more urgent because it will allow the architecture Moyane put in place to be broken down.
THE OVERHAUL RECOMMENDED BY BAIN, THE CONSULTANTS BROUGHT IN BY MOYANE, TURNED THE INSTITUTION ON ITS HEAD