Testimony in Sars case can be in ‘secret’
SENIOR SA Revenue Services’ (Sars) officials who have insight into the masterminds of the alleged collapse of the revenue authority have been offered the opportunity to give testimony in “secret”.
This was the guarantee given last week by Judge Robert Nugent, chairperson of the commission of inquiry tasked to probe tax administration and governance in Sars during the tenure of suspended commissioner Tom Moyane since September 2014.
The offer came as the commission is expected to hear testimony from Bain Consulting Agency and the National Treasury this week.
Bain is expected to give evidence about its alleged role in restructuring the operations of Sars after Moyane took over.
However, the commission had already heard that Moyane and his team had allegedly rejected all Bain’s recommendations and introduced a new operating model in Sars – “whose mastermind” still remains a mystery to the judge and the commission.
Judge Nugent made the offer to hear other “testimonies in camera” after potential witnesses expressed fear of “paying the ultimate price”.
“I had discussions with some of them. They were reluctant to come and testify before the commission. I am now considering hearing some of their testimonies in camera.
“They have expressed to me that they were afraid of the consequences if they testify,” Judge Nugent said.
He had already indicated during the earlier proceedings that if they agreed to testify, their identity would be protected and the media would not be allowed to take their photographs.
Evidence leader advocate Caroline Steinberg confirmed the commission’s predicament and said some of the witnesses – who made sworn affidavits to her team – made them under the strict condition that their identities be withheld. Due to the serious nature of the threats, Steinberg told the commission some of the statements would not be loaded onto the inquiry’s website.
Since the hearings began in June, the commission heard incriminating evidence of how the advent of Moyane resulted in the alleged dismantling of key institutions in Sars such as the Large Business Centre in October 2015.
The centre was established in 2010 to ensure big corporates doing business in the country were tax compliant and the centre collected more than 30% of the revenue.
Former centre head Sunita Manik testified that she resigned in February 2016 after Moyane and then Sars chief operating officer Jonas Makwakwa began interfering in her job.
Moyane and Makwakwa allegedly made a deal with one of the owners of a multinational company who owed millions of rand to Sars.
“They concluded the deal with one of the owners. The settlement agreement was then referred to the LBC settlement committee which rejected the deal. The committee found that the agreement did not make any sense,” Manik said.
She testified that the centre had robust governance systems which did not allow anyone from having contact with its high network of taxpayers and their refunds.
In her testimony, Manik was adamant that Moyane and Makwakwa wanted to commit “fraud” by targeting companies which had a lot “of money”.
The commission heard how enforcement units tasked to investigate international and local syndicates dealing in illicit economy, drugs, abalone, cigarettes and clothing were also dismantled.
‘They have expressed to me that they were afraid of the consequences if they testify’
The commission heard that the new Sars operating model which was put in place in October 2015 nullified the existence of these units.
According to evidence before the commission, Sars officials were diverted from collecting revenue from big businesses and to instead focus on small businesses.
Testifying, Narcizio Makwakwa – former executive head of small businesses – told the commission that his team was told to pursue more than 2.5 million small businesses that were allegedly defaulting on tax.
“I did not believe it. It was for that reason I assembled a group of researchers in my team to investigate the claim. Our findings were that more than 70% of small businesses were paying tax,” he said.
Makwakwa – not related to Jonas Makwakwa – confirmed that less than 30% of small businesses were not tax compliant but said the majority were “foreign traders”.