SPOOKS AND RACE HAUNT SARS

An in­tel­li­gence re­port, se­cret agents and ra­cial ten­sion all con­trib­uted to the rev­enue ser­vice’s woes. And it was all planned long ago, writes Fe­rial Haf­fa­jee

CityPress - - News -

As with former fi­nance min­is­ter Pravin Gord­han and his former deputy Mce­bisi Jonas at Trea­sury, the trou­ble at the SA Rev­enue Ser­vice (Sars) started with an anony­mous in­tel­li­gence dossier. But what our in­ves­ti­ga­tion has also re­vealed is that race re­la­tions at Sars have al­ways been brit­tle, and they also ex­plain what has taken this world­class in­sti­tu­tion into tur­bu­lent ter­ri­tory.

Pres­i­dent Ja­cob Zuma said he fired Gord­han and Jonas be­cause of an ir­re­triev­able break­down of their re­la­tion­ship, but ac­cord­ing to re­ports, it was be­cause he be­lieved a dossier al­leg­ing the two were back-brief­ing in­vestors and rat­ings agen­cies against him while in Lon­don on a global road­show two weeks ago.

At Sars, the pat­tern was sim­i­lar. A dossier called Bro­ken Ar­row was cir­cu­lated in sev­eral it­er­a­tions to al­lege that an in­ves­ti­ga­tion unit at the com­mis­sion had gone rogue and that racism was ram­pant.

It is now widely be­lieved the doc­u­ments were drawn up by Mike Peega, a former Sars man who was fired af­ter he moon­lighted as a rhino poacher (see case re­port).

As the list of Sars’ ac­tions shows, the desta­bil­i­sa­tion of Sars could have come from many sources, given that the in­sti­tu­tion had in­fil­trated and up­set syn­di­cates in elec­tron­ics, cus­toms, to­bacco and min­ing, and even the gang worlds of Cape Town and Dur­ban.

But what is now be­com­ing clear is that the clear-out (or cap­ture) of Sars was planned years ahead.

A pho­to­graph of at­tor­ney Belinda Wal­ter with in­tel­li­gence agent Ferdi Fryer was taken on July 20 2014 at a restau­rant in Brook­lyn, Pre­to­ria (see pic­ture).

In emails at the time, Wal­ter said Fryer had told her he “rep­re­sented per­sons who wished to re­place the lead­er­ship of Sars and the min­is­ter of fi­nance”.

No­body took it se­ri­ously, but three years on, his words, as re­counted by Wal­ter, have come true. Wal­ter was an in­tel­li­gence agent who worked for the State Se­cu­rity Agency as well as for in­tel­li­gence agents work­ing for big to­bacco.

Her af­fair with Sars in­tel­li­gence boss Jo­hann van Log­geren­berg blew up and in the course of its frac­ture, she re­vealed the ex­tent of the in­fil­tra­tion of in­tel­li­gence ser­vices by pri­vate in­ter­ests. These in­tel­li­gence ser­vices clashed with Sars.

This week, Wal­ter said it wasn’t true and there had been no grand con­spir­acy to oust the pre­vi­ous Sars lead­er­ship.

RACE TROUBLES

On Mon­day, when newly minted Fi­nance Min­is­ter Malusi Gi­gaba vis­ited Sars for the first time, mem­bers of the Na­tional Health, Education and Al­lied Work­ers’ Union and other pro­fes­sional staff mobbed him ex­cit­edly.

When he and Sars com­mis­sioner Tom Moy­ane briefed an al­most all-black se­nior ex­ec­u­tive team with the me­dia, the staff ap­plauded re­peat­edly when he spoke.

For black ex­ec­u­tives who felt iso­lated by the pre­vi­ous Sars es­tab­lish­ment, Moy­ane has been like manna from heaven. His pro­gramme for the African­i­sa­tion of lead­er­ship is pop­u­lar be­cause it feels like a hege­monic trans­for­ma­tion.

When Pravin Gord­han took over Sars in 1999, “he found him­self in charge of an or­gan­i­sa­tion whose le­git­i­macy had been eroded from both in­side and out­side. Un­der the apartheid gov­ern­ment, tax eva­sion be­came a form of protest, cutting into the col­lec­tion of rev­enue”, ac­cord­ing to a Prince­ton Uni­ver­sity case study of Sars, pub­lished in 2010.

In ad­di­tion, there were al­most no black se­nior or man­age­rial staff.

In­ter­viewed at the time, former act­ing Sars com­mis­sioner Ivan Pil­lay said that: “The pre­vail­ing cul­ture was typ­i­cal of a govern­men­tal de­part­ment of the time. It was very white and Afrikaans.” The new Sars bosses cre­ated par­al­lel, in­for­mal, black man­age­ment lay­ers to cre­ate skills trans­fer.

“I cre­ated a man­age­ment team be­low the ex­ist­ing ex­ec­u­tive team that would al­low for more par­tic­i­pa­tion by black man­agers, al­though not with for­mal power, but at least with some in­for­mal in­flu­ence,” Gord­han is quoted in the Prince­ton study.

This was part of a mas­sive mod­erni­sa­tion of Sars, which turned the lum­ber­ing and cor­rupt old Sars into the ma­chine that fed the young de­vel­op­ing state with its huge poverty prob­lem. Tax guru Michael Katz has writ­ten that Gord­han cre­ated Sars with an ac­tivist’s eye. “[His] vi­sion of how tax fits into broader so­ci­ety is in­spir­ing and won the con­fi­dence of all stake­hold­ers of the tax sys­tem and those af­fected by it. Its suc­cess has been spec­tac­u­lar and has en­abled South Africa to un­der­take the de­vel­op­men­tal jour­ney it des­per­ately needs.”

The tax net was grown from 2.6 mil­lion South Africans to 4.1 mil­lion be­tween 1999 and 2009 and to 13 mil­lion in 2011. E-fil­ing was in­tro­duced and an ef­fec­tive mar­ket­ing drive al­most made pay­ing tax a ser­vice, and not a bur­den.

But in­side the or­gan­i­sa­tion, frag­ile race re­la­tions were not ef­fec­tively re­solved. Black staff who made up the in­for­mal man­age­ment layer felt stymied.

The flat­ten­ing of hu­man re­source hi­er­ar­chies had the un­in­tended ef­fect of cau­ter­is­ing am­bi­tion: peo­ple wanted to be man­agers or bosses, but the new, mod­ernist struc­tures left fewer grades avail­able for pro­mo­tion than be­fore.

Money and who got paid what, was a prob­lem. One way Gord­han re­shaped Sars was by the tac­ti­cal use of bonuses for meet­ing tar­gets, but how these were dis­trib­uted has caused some con­flict in the rev­enue ser­vice and that of­ten cut across ra­cial lines.

And, one key rea­son that the Sars in­tel­li­gence unit flamed was be­cause a ma­jor­ity of white in­ves­ti­ga­tors earned the high­est salaries.

While this was fixed, it gen­er­ated sig­nif­i­cant heat, per­haps hot enough to make the or­gan­i­sa­tion ex­plode.

SPY VS SPY Belinda Wal­ter meet­ing with Ferdie Fryer in 2014

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