Nugent shows the way to rebuild Sars after Moyane’s destructive reign

The image of SA Revenue Service (Sars) veteran Mark Kingon carefully removing his spectacles to rub the tears from his eyes is one I will never forget. The acting commissioner, who has served in various roles at the institution for more than three decades, told the Sars commission of inquiry horror stories of fear, mistrust and instability.

There was one moment when, apologising for his predecessor’s role in the demolition of Sars, Kingon’s voice began to lower. He paused, removed his spectacles, and used his thumb and index finger to shoo away the tears that had glazed his eyes.

Four months of public testimony by ordinary staff at Robert Nugent’s commission of inquiry into tax administration and governance seemed to culminate in those few brief seconds, an embodiment of the effects of four years under Tom Moyane’s destructive leadership.

Much has been publicised about the consequences of Moyane’s wholesale restructuring of Sars: billions in revenue shortfalls, the relentless downsizing of key divisions and investigative units, and the dismantling of governance and internal infrastructure.

The revenue shortfall for 2016/17 was the fourth in a series of increasing shortfalls under Moyane. The shortfall for 2014/15 was R7.33bn; for 2015/16 it was R11.29bn; and for 2016/2017, R30.70bn.

Tax buoyancy (a measure of the efficiency of revenue collection against economic growth) dropped, taxpayer compliance slipped drastically, the debt book grew from about R85bn to about R135bn, and the credit book moved from R40bn in 2013 to R70bn.

The decline of Sars as a well-oiled machine came as result of the fragmentation of key units like the Large Business Centre, for example, which dealt with the tax affairs of big business and addressed offshore illicit trading‚ base erosion and profit shifting, and trade mispricing.

Compliance and investigation divisions also suffered as units tasked with investigating organised crime and high-profile, sensitive or complex taxpayer affairs were disbanded.

But it is the human element behind the financial figures and the shifting of Sars’s organogram that tell the real story.

Moyane’s restructuring, with the help of global consulting companies like Bain and Gartner, displaced some 200 managerial staff from their jobs, with many other skilled employees resigning in the years that followed.

A significant number were rejected for alternative management posts, and found themselves appointed to what Nugent calls “supernumerary posts” that had no job description and required them to do little, if anything, while at work.

I recall former transfer pricing unit manager Nishana Gosai’s chilling testimony in August, in which she said her staff were left “broken”.

“I think a lot of people have suffered. It’s left the organisation, and I’m using the words of people that I still speak to that are still within the organisation today, it’s left them broken. It’s broken people and it’s broken the organisation and people need healing, that’s the word I’ve been told. That people need to heal from this,” she said.

Many described the climate of fear under Moyane and his righthand-man, Jonas Makwakwa. Both ruled Sars with an iron first.

Staff in other units took Sars to the Commission for Conciliation, Mediation and Arbitration over exhausting working hours and told the commission cameras were installed in their offices so Moyane could keep an eagle eye on them.

Moyane reigned over the revenue collector like a ruthless dictator, and a paranoid one at that. He infiltrated the executive committee and senior management, using the remodelling as a tool to consolidate power and give the boot to anyone in his way.

As Nugent puts it in his final report: “Moyane arrived without integrity and then dismantled the elements of governance one by one. This was more than mere mismanagement. It was seizing control of Sars as if it was his to have.”

And still he neither shows remorse nor accepts responsibility. Sars is in the process of cleaning up his mess. Nugent has recommended amendments to the Sars Act to ensure additional oversight and enhance governance. The retired judge and his panel asked Ramaphosa to make provision for the appointment of an inspector-general of Sars and award it powers comparable to those of a commission of inquiry to investigate matters of governance.

Nugent also recommends the presidency be granted more powers in the removal of a commissioner, and that the appointing of a commissioner be done via a transparent process. The commission recommends the re-establishment of the Large Business Centre and other units, an evaluation of supernumerary posts, a review of Sars’s exco, and the recruitment of former employees to their original jobs.

It is believed that Moyane’s tenure set Sars back at least a decade. Nugent’s recommendations, both legislative and practical, provide only a foundation on which Sars can be rebuilt. The task of reforming the institution will be left to the new commissioner once he or she is appointed.

One can only hope Ramaphosa makes the correct choice in this regard, lest SA’s most vital institution is thrown into further disarray and the tears of career women and men like Kingon continue to flow.