Finance Minister Pravin Gordhan came out firing on Friday in his tense showdown with SA Revenue Service (Sars) commissioner Tom Moyane, and by extension President Jacob Zuma, over the so-called rogue Sars spy unit. “There is a group of people not interested in the economic stability of this country and the welfare of its people,” he said in a statement.
“It seems they are interested in disrupting institutions and destroying reputations.”
He threatened legal action to protect himself and “National Treasury from whatever elements are seeking to discredit me, the institution and its integrity”.
He said he could “categorically state that the Hawks have no reason to investigate me”.
Gordhan pointed out that he had not referred to the Sars difficulties in his budget speech.
The key source of tension between Gordhan, Zuma and Moyane is the alleged Sars “rogue unit”, which is accused of using illegal methods to gather information.
A KPMG report, commissioned by Moyane, alleged Gordhan was responsible for a unit that allegedly probed Zuma and his allies.
Gordhan on Friday confirmed in a statement that he had been approached by the Hawks. He said the Sars unit in question – officially known as the National Research Group – and subsequent investigative units, had been legally constituted and approved at ministerial level. Between 2007 and 2013, these units assisted law enforcement agencies in combating crime, seizing illegal tobacco and drugs, clamping down on outstanding customs duties, raising tax assessments on defaulting taxpayers and preserving assets. The value of these activities amounted to about R2.8 billion.
The finance minister at the time was Trevor Manuel. He was quoted on Friday as saying that he would fire Moyane were he still finance minister.
Zuma issued an ambiguous statement, saying he had full confidence in Gordhan and “rumours and gossip which insinuate some conspiracy against Minister Gordhan ... [are] baseless”.
He also said he would not comment on matters relating to Sars, as they were being handled by law agencies.
What was evident this week was that there is no love lost between Gordhan and Moyane.
It has been reported that Gordhan has threatened to resign if Moyane does not leave.
Moyane was absent from Gordhan’s budget
om Moyane is the incumbent commissioner of the SA Revenue Service (Sars). He has held the position since September 2014. Prior to his appointment as the Sars boss he was an adviser on the turnaround and security strategies of the State Information Technology Agency. He is a former national commissioner for the department of correctional services and has also served as chief executive of the government printing works.
He was previously the managing director of Engen Mozambique. Moyane has also worked for the department of trade and industry. He was the chief director for industry and enterprise development there.
WHAT WILL KEEP HIM IN HIS POSITION:
His relationship with Zuma. He is known as a Zuma loyalist. As a result, the president may side with Moyane, regardless of the consequences.
WHAT MIGHT GET HIM FIRED:
is likely to miss the revenue-collection target for the 2016 fiscal year. The projected total tax revenue for the year was R1.081 trillion, but the revised estimate is R11.6 billion short of that total.
Government’s tax revenue is vital, given the slowdown in the economy and the risk of a credit rating downgrade – ratings agencies are particularly concerned about the state’s revenue-collection plans. 2His
tenure at Sars has been marked by the purge of a number of top Sars officials, which has disrupted the running of the unit. 3What
also counts against him is that while he was head of correctional services, the department was censured by the Auditor-General. speech media conference and, when asked about Moyane’s absence, Gordhan, without mentioning the commissioner’s name, said Sars had issues that needed to be resolved and he had confidence in the 14 000 Sars employees, but made no reference to Moyane.
Mike Schussler, from economists.co.za, said: “Pravin has to stay. We have no choice as a country. We saw how the markets reacted to the changes in National Treasury in December. Right now the whole country needs stability.”
The rand on Friday weakened to above R16 to the dollar for the first time since February 9.
Nazrien Kader, head of Deloitte Africa Tax Services, warned that if Gordhan followed through with his reported threat to resign unless Moyane was removed, it would be “disastrous” for the country as a whole.
“Sars has been stable, with a good strategy, and they continue to collect tax and enforce compliance, but we have not seen the results of Moyane’s turnaround strategy, whether good or bad. It would be important for the sake of the country to keep that reputation of Sars intact, and at this stage it’s only logical that Gordhan cannot leave,” she added.
Keith Engel, CEO of the SA Institute of Tax Professionals, said: “I don’t think Gordhan will go. Moyane might get replaced, or he might not.” Engel said the shenanigans were tarnishing Sars’ reputation as a “squeaky clean” organisation and could breed taxpayer unhappiness.
The chopping and changing of finance ministers in December resulted in the rand weakening to a record low against the US dollar. JSE stocks lost tens of billions of rands in value.
A senior Sars insider said the main battle between Gordhan and Moyane heated up soon after the former was reappointed Moyane’s boss.
The insider said: “Moyane feels he can’t be seen as cowering to his new boss now after the KPMG report, commissioned by Sars, alleged that Gordhan knew about the ‘illegal actions’ of the spy unit. Gordhan has made it clear he disagrees with that report’s allegations. If Moyane were to be seen to be taking a softer approach against Gordhan now, it would look like he is trying to save himself. Moyane is standing his ground and he is that type of person.”
These events all keep the country’s credit rating at risk of being downgraded to junk status this year.
Moyane kept quiet this week about his clash with Gordhan. He declined to comment when City Press phoned him.
Moyane may feel secure on the basis that he is a strong Zuma ally.
Sars spokesperson Sandile Memela referred all questions sent to him to Gordhan’s office.