Coming out fighting
BUSINESSMAN DAVE KING is turning up the heat in his eight-year tax battle with the South African Revenue Service. At the time of writing, King was planning a 4 November press conference at which he promised to lay bare issues around his long-running and extraordinary tax battle. While the outspoken King has consistently been critical of Revenue, its methods and its commissioner – Pravin Gordhan – he’s also now disclosing details of his dealings with the Scorpions.
But why is he coming out publicly now? Legal costs are probably around a quarter of a billion rand so far and climbing. King says he has spent R125m, while sources suggest Revenue has spent less than that, putting its bill so far at less than R100m.
“My point is that Gordhan isn’t the right person to keep leading Revenue. He’s done a marvellous job of changing the tax culture. He’s made everybody frightened of Revenue. He’s been the enforcer. But it’s time for change,” says King, who shows no sign of toning down his vitriolic criticism of Revenue, which he’s long argued has abused its powers.
“There have been parallel dealings. In private with me they say one thing and their spin-doctors say another thing publicly. It’s time to put the facts on the table and let them speak for themselves. I have documents to prove SARS has used the South African courts for convenience and they have perjured themselves in international courts,” says King, who argues he’s been restrained in his responses to reports with which he’s disagreed or which he regards as flagrantly inaccurate in recent years.
“They must know that from now on each time they say something publicly – or a story is published with inaccuracies – I will respond. The idea behind the press conference is to provide the media with a database as a reference point,” King says. He’s invited Revenue’s commissioner and the head of the Scorpions to attend the press conference and has promised them an opportunity to speak, offering to relax secrecy provisions of the Tax Act should they choose to accept his invitation. At the time of writing, it appeared unlikely that either body would attend.
King confirmed last week he’s been in negotiations with Revenue over what he
owes. It claims he owes more than R3bn in taxes, fines and interest. He denies that quantum, but concedes he did fail to properly disclose the structure of his affairs at the time he controversially sold shares in Specialised Outsourcing for a tidy profit of around R1bn. The listed company was a considerably profitable treasury outsourcing services business that worked primarily for KwaZulu-Natal utility Umgeni Water.
Financial institutions fell over themselves for stock, which King and his fellow directors were only too happy to provide at a time when they were not legally obliged to disclose directors’ dealings on Sens. However, after a report by then Investec Securities’ analyst Andrew Cuffe that challenged the Outsourcing business model and pointed out it was massively overvalued, the stock fell through the floor, hurting institutional and private investors alike.
“Am I squeaky clean? I’m not,” says King, “I’ve always accepted I should have provided better disclosure to Revenue and that I should have informed them of the offshore trusts of which I was a beneficiary. It wouldn’t have changed my tax status but they would have had the information they required.”
King clearly feels he has nothing to lose by going public. He isn’t constrained by the same secrecy provisions that Revenue operates under in terms of SA’s Income Tax Act. Revenue is likely to criticise King’s approach but the businessman is ready to be rebuked.
Says King: “Revenue has made schoolboy errors in its assessments. There have been cases where it has double counted things like share transactions – basic stuff they’ve got wrong. They have the information but won’t change the assessments, as they are the basis for the legal case against me.”
“battle could take another 6 or 7 years.” Dave King