Crime pays back
How SARS got money out of mobsters
Following the 2016 publication of Rogue: The Inside Story of SARS’s Crime-Busting Unit, co-authored by myself and Adrian Lackay, I was asked by Gareth Cliff in a radio interview which of the cases I’d worked on at SARS was the oddest or most startling. One I related very briefly, and one other — both prime examples of how some tax evaders in our country operate — immediately came to mind.
For many tax evaders, one of their biggest problems is what to do with all the cash acquired by illegal means. Going to the bank is often not an option: if criminals banked all their cash, we at SARS would be able to calculate their ill-gotten gains without any trouble. So what to do?
It was late afternoon some time in the mid-2000s when I, along with a SARS team comprising officials from the then Business Intelligence Unit, Customs and Excise division, Special Investigations and Special Compliance Unit, with some police officials to assist, converged on a certain property. We’d received a tip-off from a whistleblower that the home belonged to a customs clearing agent assisting the Triads — transnational criminal organisations reportedly based in Hong Kong, Taiwan and Singapore — to smuggle goods into South Africa. Our basic checks had revealed that the clearing agent had run into trouble with SARS on many previous occasions, and our next step was to conduct an inspection of the site in terms of the Customs and Excise Act.
On our arrival, we found the gates to the premises locked and high levels of security, including alarm systems, guard dogs and an electric fence. We knew there were people on the premises because someone answered the buzzer; it was only when we announced ourselves as SARS officials that they suddenly fell quiet.
We had to move fast — we were concerned that they would try to destroy evidence while we sat outside the gate.
“Who’s going to scale the fence?” I asked the team. Former soldier Patrick Moeng, a guy who could really take care of himself when the situation demanded, and who would later become like a brother to me in the many investigations we did together, put up his hand. While we kept the guard dogs busy at the gate, Moeng jumped the fence at the back of the property and made his way to the main entrance to open up for us. Within minutes he’d buzzed us in.
Once inside, we identified ourselves to the homeowner. We handed over the legal documents, then started the search of the premises. We began to walk through the house in the presence of the owner, going from one room to the next, peering into every nook and cranny of the palatial mansion. The opulent home had many bedrooms, and was expensively furnished, including with several big-screen televisions.
Some areas were clearly designated as office spaces, and we focused most of our efforts on those, finding and looking through thousands and thousands of documents to determine whether anything seemed strange or suspicious before we could lay seizure to them.
In movies, this kind of exercise is often made out as a dramatic exploit by the hero of the story, but let me tell you, it’s incredibly boring and repetitive, and it takes up much time. It requires constant concentration and an eye for detail. We had to scrutinise each document, trying to find exactly those clues that the evaders were trying to hide from us. In the odd event that we did find potential evidence, we then had to record in an inventory the exact location where we’d found the document, and its details. And once the documents and goods we’d seized had been boxed and sealed, these had to be transported to our offices and packed in an office or storage facility that had security and access control.
Chain of evidence
This process was extremely important because it maintained the chain of evidence: as the state, we had to be able to demonstrate later to a court that we’d found a particular piece of evidence at a particular location, that it was indeed from that location, that it was found in the presence of someone who had control over it, that it was scrutinised in the presence of that same person, and that it was then sealed in a manner that would withstand any legal scrutiny at a later stage. If we failed to do this, the document could be challenged in court as never having been found at the premises, or, worse, having been tampered with or altered after its removal from the premises.
The search ran late into the night. At one point we discovered a safe under a carpet in one room but, alas, it contained documents and items of little use to our case.
Then Moeng noticed something about the staircase in the entrance hall. It had what appeared to be solidwood panelling running all the way to the floor, but closer inspection revealed seams that turned out to be hinges fitted between the panels. There were no obvious handles but we realised that the doors could be opened by pushing lightly on them and getting a grip on the panels. So, with Moeng on one side and me on the other, we opened the “doors” simultaneously — and cash in all sorts of denominations came crashing down on us. There was a proverbial mountain of money stashed away under the stairs.
Because we were there on a customs inspection, which only allowed us to detain goods defined in the Customs and Excise Act, we couldn’t do anything about the cash. But we knew that somebody would have an interesting story to tell about all this money, so we immediately sealed off the area and got the South African Reserve Bank people in.
Many years later, Moeng reminded me of another event that occurred following these discoveries. During the process of our investigations, we were led to another clearing agent’s premises and conducted another search-and-seizure exercise there. The clearing agent called Moeng and me to one side, and we expected him to spill the beans. Instead, he brazenly offered us a bribe of hundreds of thousands of rands; we could name our price, he said, if only we let the matter slide. Of course, we laughed him off but this made us even more determined to find all the evidence we needed.
In the end, we did find the evidence, and we were able to assess and schedule the culprits and collect the due revenue for the fiscus, including penalties and interest — although we never could establish the alleged links to the Triads.
In another case we were approached by the then fairly newly established Asset Forfeiture Unit, whose task was to lay claim to the proceeds of organised crime. Money or property that was suspected to be the proceeds or instrumentalities of organised crime could, once its owner was convicted, be forfeited to the state, going into the Criminal Assets Recovery Account, which in turn used the proceeds to compensate victims or fund other law-enforcement agencies and projects.
In the early years, there was a very good relationship between SARS and the Asset Forfeiture Unit. In one of the first cases they worked on, we were approached by the founder of the unit, Advocate Willie Hofmeyr, himself a struggle hero, accompanied by his then right-hand man, Advocate Rudolf Mastenbroek. Hofmeyr explained to us that they’d been looking closely at a well-known businessman because of his involvement in illegal gambling dens and possible human trafficking, where people got caught up in prostitution rings. The businessman was very rich and had many law-enforcement officials in his pocket — the reason, apparently, why he hadn’t yet been brought to book.
Mastenbroek was in charge of the matter and I instinctively liked him; we got along well in those years. The Asset Forfeiture Unit had collected sufficient evidence to justify executing a provisional preservation order, which would enable them to lay claim to many of the assets they had identified as possible proceeds of crime, and they wanted us to assist them from a customs point of view, because the man was also involved in the import and export of almost everything imaginable.
I met the Asset Forfeiture Unit representatives and discussed the plan, which called for SARS to assist the unit on the day that they executed their provisional preservation order, to conduct inspections on site at a number of identified premises and see if we could find anything amiss: according to their information, the man had been involved in smuggling, in particular illegal gambling machines.
The day came and by then we on the SARS team had done our homework and were ready with our own preliminary findings. The searches, which covered many premises at various locations throughout the city and outskirts, started very early in the morning and lasted the entire day, and involved a combination of Asset Forfeiture Unit staff, local police officials and our SARS teams. I oversaw several of the inspection groups.
I couldn’t believe my eyes
We were required to inspect a large warehouse in one area, and a number of shops in the city area and on its fringes. When we entered the warehouse, I couldn’t believe my eyes. The multistorey building was a little longer than the average sports field, and on floor after floor we encountered an enormous hotchpotch of goods stacked to the ceilings. You name it, it was there: old army boots, clothing, wind-up toys, canned food that was so out of date that the cans were rusted right through . . . It was physically impossible to make an inventory of the items, there was just so much there.
Deciding that there was nothing significant from our point of view in the warehouse, we moved to the identified shops in the city centre — general-dealertype outlets of the kind that sell household cleaning materials, cheap clothing, appliances and bric-à-brac. And again, when we entered the first store, I couldn’t believe my eyes — although this time for a different reason. Lying in aisle after aisle were huge piles of rand notes in cash. In some cases, the money had been there for so long that a layer of dust and grime had settled on it.
And this was the case in store after store. They were all in an equal state of disarray but virtually without fail each had heaps of rand notes piled up in the aisles. I asked a proprietor at one point how it was possible for them to keep that amount of cash just lying around in the shop. How would they know that it wouldn’t get stolen?
The shopkeeper wasn’t really in the mood to chat with me, but he looked me in the eye and without any glimmer of facial expression very seriously said: “If anybody took any of our cash, they know what would happen to them . . .”
We expected him to spill the beans. Instead, he brazenly offered us a bribe of hundreds of thousands of rands; we could name our price, he said, if only we let the matter slide
For many tax evaders, one of their biggest problems is what to do with all the cash acquired by illegal means. Going to the bank is often not an option: if criminals banked all their cash, we at SARS would be able to calculate their ill-gotten gains without any trouble. So what to do?