Rogue report under siege

ALL WILL BE REVEALED The essential new outcome is that Pravin Gordhan didn’t know of the so-called rogue unit.

The latest spat between KPMG and Sars is escalating. The KMPG report, which was apparently final, but not well edited, and allegedly contained “legal opinions” from another party, was sold to Sars. Now KPMG wants it back, or wants to distance itself from parts of it.

It obviously contains some precious information that’s of absolute importance/value to Sars. Perhaps that explains the R23million paid for the report: R100000 for the investigation and R22 900 000 for the intellectual property.

Last week, KPMG issued a statement that it did “not properly grasp the new risks associated” with the amendment of the initial brief that the report must contain “conclusions, recommendations and legal opinions”. The report wasn’t reviewed by another partner – a glaring transgression – and contained opinions which weren’t that of the auditing firm. This led to different interpretations. The essential new outcome is that Pravin Gordhan didn’t know of the rogue unit.

Sars came out guns blazing. It declared KPMG had “irrevocably and in perpetuity transferred, made over and assigned to Sars, all intellectual property rights” and that “all rights, title and interest, including all intellectual property rights, literary works created, written and or presented by KPMG” regarding this report vest in Sars.

Sars says the report and all it contains, is its own. No one may tamper with it or say it’s flawed or that they actually meant something else.

Without knowing what’s in the report, it’s difficult to understand what element is considered intellectual property under the Copyright Act. It would be a creative interpretation of intellectual property if the element that cannot be tampered with is an incorrect (nonfactual) allegation that “Gordhan knew of the rogue unit”. I don’t understand the next tangential leap that “Sars sees KPMG’s conduct as nothing else but a dismal attempt to portray Sars, its leadership, and in particular, Sars commissioner, as incompetent, corrupt, inefficient and involved in a witch-hunt”.

Perhaps Sars can throw light on this. The KPMG report has caused damage; its action now in “withdrawing” a report that it, according to Sars, has no further rights in, is indeed a fascinating turn of events.

The stand against KPMG by Sars is to be commended. I wish Sars success in “instituting legal proceedings against KPMG for reputational damage” caused by attempting to withdraw the report. In court, all will be revealed. I can’t wait.

Barbara Curson, CA (SA) and tax specialist, dedicated 20 years to unravelling tax avoidance structures at Sars.

Sars says the report and all it contains, is its own.