Makwakwa must face music over fiasco
Finance minister Tito Mboweni made it clear in his mediumterm budget policy statement on Wednesday that the leadership of the SA Revenue Service (Sars) has to be strengthened. The focus up to now has been on suspended Sars commissioner Tom Moyane, with his right-hand man and key lieutenant, Jonas Makwakwa, managing to slip under the radar, which is curious.
It was, after all, fresh allegations of conflicts of interest against Makwakwa, culminating in his sudden resignation on the cusp of being suspended for a second time, that led to Moyane’s suspension by President Cyril Ramaphosa.
To date, however, Makwakwa has been silent, despite damning evidence against him emerging at the Sars commission of inquiry, chaired by retired judge Robert Nugent. This includes evidence heard early in the public hearings of attempts to influence the unit at Sars focusing on VIPs to process certain refunds or meddle in the cases of high-profile individuals.
Makwakwa’s role in the restructuring of the Sars operating model by Bain & Company is also well documented, and he played a key role in assigning positions to Sars employees.
Evidence showed that he somehow managed to sideline the best and appoint to key posts those who could be counted on to do as they were told. These are matters Makwakwa has opted not to answer to at the Nugent inquiry.
However, the most glaring unanswered questions around Makwakwa remain those that form part of Moyane’s disciplinary case, as contained in the Financial Intelligence Report (FIC), on about 76 transactions totalling about R1.2m into his personal bank account and that of his girlfriend, Kelly-Ann Elskie. Moyane’s handling of the FIC report is among the main charges against him in the disciplinary process, chaired by advocate Azhar Bham.
The Sunday Times reported on the transactions in September 2016, but it emerged that Moyane was alerted to them as early as May and had done little about them other than hand the report to Makwakwa and his attorneys.
It was only once the media reported on the FIC report that Moyane acted. At the time, he made a point of emphasising that he had appointed an “independent legal firm”, Hogan Lovells, to investigate the matter. He repeated this refrain before parliament and to the public. But it has emerged in Hogan Lovells’s submission to the Nugent inquiry which the judge is unlikely to address as it forms part of Moyane’s disciplinary hearing that Moyane did not ask the law firm to investigate the FIC report. In its submission, Hogan Lovells says: “Any impression created that Hogan Lovells was instructed to investigate the FIC report as an entity independent of Sars is wrong.”
Hogan Lovells claims it has repeatedly said it was not asked to investigate the FIC report but this was the impression created by Moyane in public statements and in a media statement by Sars in 2016.
After being accused of playing a sinister role in clearing Makwakwa of all charges, which culminated in Moyane allowing him to return to work in November 2017 after a yearlong suspension, Hogan Lovells has repeatedly claimed it is bound by confidentiality.
The law firm, which has come under fire for its role in the “Makwakwa investigation whitewash”, appears now to be throwing Moyane under the bus.
Mboweni’s desire for a leadership change at Sars is an obvious conclusion given the recent interim report by Nugent, which recommended that Moyane be removed forthwith and replaced.
It was also an obvious conclusion given Mboweni’s comments indicating that the latest estimates suggest that full-year tax collections are set to fall short of expectations by R27.4bn. “We expect revenue shortfalls of R24.7bn in 2019/20 and R33bn in 2020/21, relative to the 2018 budget,” Mboweni said.
Moyane has until Friday to respond to Nugent’s recommendation to Ramaphosa that he be removed from the post.
There is unlikely to be a substantial response from Moyane to Nugent’s recommendation given that the matter of the legality of the commission is being challenged by the embattled tax boss before the courts.
Ramaphosa knows what he has to do. Moyane’s time is clearly up. The focus should now shift to characters such as Makwakwa, who have been escaping accountability and have failed to answer critical questions about their conduct during the height of Moyane’s power at the tax agency.
The Makwakwa matter should also be adequately ventilated if the credibility of Sars is to be restored.
EVIDENCE SHOWED THAT HE SOMEHOW MANAGED TO SIDELINE THE BEST AND APPOINT TO KEY POSTS THOSE WHO COULD BE COUNTED ON TO DO AS THEY WERE TOLD