How cash & carry roundtripped tax goods

2014-07-13 15:00

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Despite allegedly paying millions to former Financial Services Board finance boss Dawood Seedat to quash a tax audit, Edrees Ahmed Hathurani’s assets have been provisionally placed under curatorship until his debt to the taxman has been repaid.

At the North Gauteng High Court on Thursday, Judge Eberhard Bertelsmann appointed Cloete Murray of Sechaba Trust as curator of the Africa Cash and Carry boss’ companies, family trust, property and vehicles.

Hathurani was joined by two of his family members – who are also co-owners of Africa Cash and Carry – and a business partner.

Together, they owe the SA Revenue Service (Sars) just more than R1.2?billion in income tax and VAT, which the taxman says they evaded over the seven years to 2009.

“The order was sought to prevent the possible dissipation of assets held by Africa Cash and Carry and 18 other respondents,” said Marika Muller, the deputy spokesperson for the tax collector. “It was served on

all the respondents on Friday morning.”

Muller said the respondents were disputing the R1.2?billion tax assessment before the tax court.

“Sars sought the order to preserve to prevent a dissipation of assets whilst the outstanding tax debt is in dispute. Importantly, under the authority of the curator, the business entities will be allowed to continue with commercial trade.”

Sechaba Trust is a specialist company dealing in insolvencies, liquidations and administration of estates, and Murray previously handled Dave King and Julius Malema’s affairs when they had run-ins with the taxman.

The order has given Murray control over Africa Cash and Carry’s fleet of 20 vehicles, its two properties worth a collective R2.9?million, and other assets of unknown value. It has also given him control over Hathurani and other director’s properties worth R6.6?million.

Hathurani and his associates have until August 28 to make representations to the court as to why the provisional order should not be made final.

Hathurani’s lawyer, Saleem Ebrahim, said Africa Cash and Carry would oppose the order.

He confirmed that two properties, vehicles belonging to the family trusts and the business partner, and bank accounts belonging to companies within the Africa Cash and Carry group were attached on Friday.

City Press has seen a sworn statement from an insider, showing how Hathurani cheated the taxman through a practice called “ooplang”, where cash is removed from the business without being accounted for tax purposes.

“If the cash was a small amount, it would be put into an envelope,” said the insider, who cannot be named due to threats on his life. “If a large amount, it would be put in a box. Before it was put into a box or envelope, it would be double-checked to make sure there was no mistake.”

He said the process to collect the cash worked like this: Hathurani would phone the cash office and order a certain amount of cash. The office would tell him if there was cash available, or ask for time to make it up because cash was “always flowing through in large volumes”.

The insider and his colleagues would then make out a “slip” on a plain piece of paper and deliver the cash to Hathurani, who would sign the slip.

This slip would then be taken back to the office to balance the cash book.

Forensic investigator Paul O’Sullivan, who has been investigating Hathurani since last year and handed dockets over to Sars along with other state institutions, said Hathurani cheated Sars out of VAT by claiming millions in fake VAT refunds.

He did this through “roundtripping of goods”, which he pretended to export but sold locally after claiming the VAT, said O’Sullivan.

He said the goods were ostensibly exported to Zambia and Zimbabwe, but never left South Africa.

“They simply pretended that they did.”

Hathurani and his company are also accused of creating fake VAT invoices to cover the cash he withdrew from his company amounting to millions of rands each month and falsely claiming the VAT back on these fake invoices.

Ebrahim dismissed the claims, blaming the transactions on Hathurani’s business partner.

“[The business partner] is the person who Sars has gone after,” he said. “He was the CEO, chief financial officer and is the public officer and chartered accountant. Edrees has never been a director.”

Last week, Sars acting commissioner Ivan Pillay told Parliament’s standing committee on finance that its lawyers sent letters to all its staff members implicated in recent news reports in the Seedat scandal to afford them a reasonable opportunity to make representations about the allegations against them, according to Muller.

“Once Sars has received representations from such parties and has tested the veracity of all the allegations, Sars will be guided by sound legal advice as to how to proceed on the matter,” he said.

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