Nhlanhla Nene steps into Sars fray

2014-12-21 15:00

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Embattled SA Revenue Service (Sars) deputy commissioner Ivan Pillay has rubbished a report by Advocate Muzi Sikhakhane, saying that the panel made unlawful and baseless findings, and that its report posed a risk to Sars if published in its current form.

In a 34-page submission, which he prepared for commissioner Tom Moyane, a copy of which is in the possession of City Press, Pillay said the panel had illegally extended its mandate to include a probe into the possible existence of a rogue spy unit within Sars when this was not part of Sikhakhane’s initial brief.

“When extending the mandate, the panel did not inform Sars or any person interviewed of their intention to investigate the legality of the [unit],” he wrote.

Finance Minister Nhlanhla Nene entered the fray on Friday, saying he wanted to “reassure fellow South Africans” he would not “allow the events of recent months to derail Sars”.

“I will do everything within my powers to ensure that Sars remains a model public institution,” he said.

“While Sars and the commissioner are reasonably independent of the minister on operational matters, the South African Revenue Service Act also provides that Sars is ‘under the policy control of the minister’ and ‘subject to any directives and guidelines on policy matters issued by the minister’.

“It is against this background that we must ensure at all times that we protect and enhance the organisational integrity of Sars and its employees.”

Meanwhile, in Pillay’s submission, he says that the intelligence unit – now known as the High Risk Investigation Unit – was conceived around 2006. He said it was a glaring omission by the panel not to call those who were involved in its formation to testify. These included former commissioner Pravin Gordhan, former finance minister Trevor Manuel and Sars executive for risk Peter Richer, who was instrumental in its conception.

The Sikhakhane panel’s recommendations caused a stir after Moyane used them as a basis to suspend Pillay and Richer.

Sars withdrew Richer’s suspension minutes before the matter went to the Johannesburg Labour Court on Wednesday, and Pillay’s suspension was overturned on Thursday.

It has emerged from Pillay’s submission that some members of the alleged spy unit who appeared before Sikhakhane gave dramatic testimony about how the unit spied on top politicians. This included apparent instructions from their “handlers” to pose as drivers for Sports Minister Fikile Mbalula and Economic Freedom Fighters leader Julius Malema as part of the spying mandate. Three of the witnesses told the panel that they were asked to use fake Sars identification cards bearing false names.

Pillay has consistently denied that Sars ran a covert intelligence unit that spied on top politicians. He said the unit is a research group whose members conducted lawful tax-related investigations on behalf of the revenue service. He asserted that those members of the unit who gave testimony to Sikhakhane about having spied on top politicians could have been “on a frolic of their own”.

Pillay acknowledged, however, that fake name cards were indeed issued to some members, saying it was a management oversight and that those managers who were found to have been responsible for issuing them were given written warnings.

The unit’s head, Johann Van Loggerenberg, told City Press that he has not been “given access to the Sikhakhane report” and that he has heard that it is “severely flawed in fact and law”.

“I was not afforded an opportunity to respond to any adverse allegations received by the Sikhakhane panel prior to its report being finalised, despite an undertaking upfront that I would be afforded my right to such at my first appearance,” he said.

“The Sikhakhane panel is the second investigation into allegations against me, of which the first found that despite the ‘evidence’ presented, no prima facie case existed against me. I was the only person who insisted on going under oath in my submission and am now awaiting the next decisions and steps from my employer.

“I have to date not had a fair opportunity to state my case and question those who have accused me, and I welcome the day that I do.”

In his submission, Pillay dismissed many of the panel’s recommendations, including a suggestion that President Jacob Zuma institute a commission of inquiry to probe further the problems at Sars and that a forensic audit be undertaken into all tax settlements entered into since 2005. Moyane announced, when suspending Pillay, that this would be done.

However, Pillay has warned that if the intention of such an audit was to review those settlements, that would be unlawful.

“I need to point out that any consideration to amend or alter a settlement is against the law,” he wrote.

Pillay accused the panel of not understanding tax and customs law after it raised questions about whether Sars had a legal mandate to investigate organised crime.

He said the panel had accepted the testimony of unnamed sources without testing the veracity of their claims.

“The report poses a significant and unwarranted risk for Sars if it were to be published in its present form. The report also has the potential to tarnish not only the reputation of Sars, but also the reputation of those who are implicated by the unfounded opinions and recommendations of the report.”

Pillay said he warned Moyane that any action he took as a result of the panel’s recommendations would be overturned if challenged in court.

In overturning Pillay’s suspension on Thursday, labour court Judge Annelie Basson found that Moyane had breached Sars’ suspensions policy by not considering Pillay’s response to Sikhakhane’s report.

“The commissioner was clearly not interested in even reading [Pillay’s] written report on the findings of the Sikhakhane report, and is on record as saying he will not read the report,” Basson ruled.

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