Sars wants to ban state-capture firms
Consultants Bain, Gartner and law firm Hogan Lovells are linked to axed commissioner Moyane
The SA Revenue Service (Sars) wants international companies found to have been complicit in its near destruction during the years of state capture to be banned from doing business with the state.
Global consultants Bain & Co, Gartner and Hogan Lovells, a law firm with US and European roots, emerged as among the most high-profile companies whose reputations were damaged by association with Sars when it was run by Tom Moyane, the former commissioner. Moyane was fired by President Cyril Ramaphosa in 2018.
The government is reviewing whether it should continue using the companies and others such as McKinsey. The US company eventually paid back about R1bn gained from lucrative contracts at state-owned power utility Eskom alongside a firm linked to the Gupta family, friends of former president Jacob Zuma who have been placed at the centre of state capture by witnesses at the Zondo commission.
Sars recommended to the Treasury that it consider placing the companies on a restricted suppliers list. The government also plans to follow up with foreign governments to see if they have broken the laws of their home countries, Treasury deputy director-general Ismail Momoniat told parliament ’ s finance committee on Tuesday.
Bain was responsible for drawing up a new operating model for Sars, which seriously hobbled it. This contributed to revenue shortfalls for the government that eventually led to the country ’ s poorest being punished with a first VAT increase in more than two decades.
Retired judge Robert Nugent, who led a commission of inquiry into governance failures at Sars, said the Boston-based firm acted “without integrity ” after Moyane gave it a contract to reorganise the agency in 2014.
“Owing to the way in which these companies conducted their business activities, consideration should be given to placing them on a restricted suppliers list, which if approved means they will not be able to do business with the government,” Sars commissioner Edward Kieswetter told MPs on Tuesday. Kieswetter was appointed in 2019 with the brief to revive the once world-class institution.
While Bain has paid back R217m to Sars, IT consultant firm Gartner declined to do the same
despite much discussion, Kieswetter said. Gartner rejected the Sars view that the tax authority did not get value for money from the work it had done.
In a December 2018 statement reacting to Nugent ’ s final report, Bain admitted to serious failures at Sars and conceded that it should have “walked away ” when it became clear that Moyane had a “different agenda ” to what it had been hired for.
Momoniat said international consultancies and legal firms legitimised the seizure of Sars and other state-owned entities, which included the firing of officials and writing “independent ” reports to protect those implicated in criminal activities.
The government wants to draw up protocols or minimum standards for the use of international consultancies by state entities, he said.
Momoniat has previously dismissed Bain ’ s attempts at apology and on Tuesday reiterated that he was “absolutely convinced that Bain must be charged ”.
Sars has referred both Bain and Gartner to the Hawks, the specialised unit that targets organised crime, economic crime, corruption, and other serious crimes.
Kieswetter said Sars has made progress in implementing the recommendations of the Nugent commission. A performance review of executive committee members, as required by the commission, is under way and disciplinary proceedings have been instituted after which executives have been suspended. All benefits of executive committee members and appointments without ministerial approval have been submitted to finance minister Tito Mboweni for review.
He said a process is under way to recover R2m in legal costs incurred by Moyane in seeking advice on investigations into former senior executive Jonas Makwakwa, his de facto deputy, and on an unauthorised trip to Russia in November 2017.
R2m the amount Sars is in the process of recovering incurred by Moyane in legal costs