Moyane plays fast and loose with our trust in SARS

WHEN South African Revenue Service (SARS) commissioner Tom Moyane opened last week’s Tax Indaba, he crowed that at more than 26% of GDP, the tax take was now back at levels last seen at the height of the commodities boom in 2007. That’s disturbing in itself because it simply reflects that the government has narrowed the deficit gap in an economy that has stagnated by extracting ever-more revenue from it, not by cutting expenditure, which has kept rising, albeit more slowly than in the boom years.

Moyane’s self-congratulatory tone is far more disturbing, however, read with reports in the Sunday Times and the Daily Maverick about the somewhat unusual banking habits of his chief revenue extractor, Jonas Makwakwa, chief officer for business and individual taxes and information systems and technology, who is essentially Moyane’s right-hand man.

Makwakwa presumably receives a good salary, deposited electronically into his personal bank account each month. Over and above this, he or his girlfriend or an unknown someone has reportedly made cash deposits into his personal accounts totalling about R1.2m in recent years.

The sum may not seem much in the context of the corruption scandals that hit the headlines these days, but the R1.2m in notes and coins allegedly deposited into ATMs or over the counter, in many cases by Makwakwa himself, raises precisely the red flags banks are supposed to monitor and report to the Financial Intelligence Centre (FIC), in terms of the legislation that has been so controversial recently because of its consequences for the Guptas’ bankability.

Not that we should jump to conclusions, but in Makwakwa’s case financial intelligence reports suggested that suspicious payments into his personal accounts and those of his girlfriend, SARS employee Kelly-Ann Elskie, required investigation — the volume and value of the cash deposits (including some foreign currency) struck the authorities as “highly unusual” for a permanent employee.

The banks and the FIC are required to look closely at any suspicious or unusual cash deposits, especially by people in a position of authority, to check if they are proceeds of crime or money laundering, or involve exchange control contraventions — so that appropriate criminal prosecutions can be launched if they are.

Leaked documents point to a complex trail of payments involving debt collection agencies and information technology companies. In an environment in which SARS has launched a major review of its information technology systems and has newly appointed private debt collection agencies to help it collect outstanding tax debt, the conduct of its senior executives surely needs to be above reproach in relation to any companies operating in these markets.

Moyane’s reported refusal to investigate the transactions — even though they were reported to him in May — casts a different light on his Tax Indaba promises that the tax revenue service is working hard to investigate and combat illicit financial flows. Some but not others, perhaps?

Then there is the unaccountable absence of the Hawks, who by contrast have been avid in their pursuit of former SARS executives such as Ivan Pillay and Peter Richer, and have searched to find reasons, however legally spurious, to charge Finance Minister Pravin Gordhan, a former SARS commissioner.

Any question mark over the integrity of SARS’s leadership is a big problem for the agency. It took years to build its credibility and establish a relationship of trust with taxpayers so that it could keep meeting and even exceeding its revenue targets, in good years and in bad, providing the basis on which SA has managed to hugely expand social spending in a fiscally prudent way. The trust relationship is particularly important in a very weak economy, when corporate and individual taxpayers are under pressure.

Moyane has listed a string of macroeconomic risks to SARS’s ability to deliver on this year’s R1.175-trillion revenue target. And Makwakwa himself has become particularly central to SARS’s relationship with taxpayers and its collection and investigation capacity in terms of the new operating model Moyane has now put in place, against Gordhan’s wishes.

All indications are that SARS officials have become a lot more aggressive in recent years in the pursuit of stretch revenue targets.

Taxpayers might tolerate it up to a point if they believe SARS officials are honest, even-handed and fair, but it wouldn’t take much for large taxpayers with deep pockets to go back to the aggressive litigiousness, avoidance and evasion of the old days.

Any questions over the integrity of SARS’s leadership could drive just such a response, making it even more difficult for Moyane to collect his trillion rand. And putting the government’s fiscal targets at risk.

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Joffe is editor-at-large.