Pravin Gordhan hits out at SARS

Minister Pravin Gordhan breaks his silence on the Sars saga.
Minister Pravin Gordhan breaks his silence on the Sars saga.

Johannesburg - Minister Pravin Gordhan has finally broken his silence over the SA Revenue Service (SARS) scandal, insisting that the establishment of the so-called rogue spy unit was entirely above board, and he did nothing wrong when he was commissioner of the institution.

In a toughly worded statement that was scheduled for release on Sunday, Gordhan, now the minister of cooperative governance, launched a thinly veiled attack on the current SARS leadership, saying: “Some have seen it necessary to cast unwarranted aspersions on my integrity and record of public service.

“This is unacceptable and must not go unchallenged,” he wrote.

Gordhan’s comments come after City Press broke the news last week that he would soon receive a letter from SARS’ lawyers insisting he testify at the disciplinary hearings of his former deputy, Ivan Pillay, and SARS’ strategic planning head, Peter Richer, which were to be presided over by former chief justice Sandile Ngcobo.

On Wednesday, SARS’ lawyers indeed sent Gordhan a scathing letter, asking that he help them prepare for Pillay and Richer’s disciplinary hearings.

They also advised Gordhan they would discuss his role in the establishment and recruitment of the so-called spy unit and Pillay’s early retirement package, which he had approved.

If Gordhan failed to respond by close of business on Friday, the lawyers wrote, they had been instructed to go to court to nullify Pillay’s extended contract and “institute criminal and civil proceedings to recoup any tax that was due” in respect of the early retirement agreement.

They added that they had been instructed to “ensure that all steps are taken against you [Gordhan], including sequestration of your estate in order to recover the settlement amount as well as the tax liability”.

In his statement, Gordhan insists he has done nothing wrong in permitting Pillay “access to his pension benefits and extending his contract – this is acceptable practice in the public service”.

However, Gordhan no longer has to respond after a settlement was reached between Pillay and SARS commissioner Tom Moyane on Wednesday – after two days of tense negotiations.

After City Press’ report last Sunday, Moyane was summoned to an urgent meeting in Cape Town by Deputy Finance Minister Mcebisi Jonas. On the agenda was the need to reach an exit settlement for Pillay and Richer to stop the negative publicity surrounding SARS.

Two senior SARS sources told City Press that Jonas, Moyane and Pillay held a meeting from Tuesday morning until late into the night, but failed to reach an agreement. Moyane, City Press was told, continued to insist that Pillay and Richer’s disciplinary hearings proceed, along with the civil case in which SARS was claiming R110m from Pillay for “staff costs” for the “spy unit”.

On Wednesday, the three met again, and it was only after “political pressure” was exerted later in the day that Moyane gave in, according to a senior SARS source.

Pillay, who had asked for a R10m settlement package, walked away with R3.75m, or 18 months’ salary. Richer received R3m.

On Thursday, SARS announced that Pillay and Richer’s resignations had been accepted and the “parting of ways was amicable”.

“SARS acknowledges and appreciates the contribution of Mr Pillay and Mr Richer during their years of service and wishes them all the best in their future endeavours,” announced the revenue collector.

“All charges and related investigations have been withdrawn.”

However, the senior SARS source said that, although the disciplinary hearing and R110m civil suit had been dropped, the case was not over.

He said SARS still intended to comply with Judge Frank Kroon’s recommendations that Pillay and Richer face criminal charges for their roles in the formation of the allegedly illegal unit.

Finance Minister Nhlanhla Nene set up the Kroon panel to look into the goings-on at SARS.

There is also a parallel investigation by forensic auditors at financial services company KPMG, which Moyane commissioned, which has uncovered other alleged incidents of wrongdoing among senior management at SARS.

Last week, City Press reported that Pillay had nine further charges added for his disciplinary hearing.

Among those was his alleged protection of a senior manager, whose name is known to City Press, who was the subject of an internal investigation concerning his alleged acceptance of a fully paid weekend away at the five-star Palace at the Lost City in Sun City. The trip was allegedly paid for by a businessman SARS had sequestrated – and was alleged to be a bribe.

The manager faces suspension this week.

But sources close to Pillay deny this allegation and accuse Moyane of having ulterior motives against Pillay and the other senior SARS employees who have resigned or been fired.

SARS spokesperson Luther Lebelo declined to elaborate on the statement released on Thursday.

In his statement, Gordhan said he was “pleased that this matter has now been settled on a mutually acceptable basis between the parties concerned.”

“SARS remains a vital fiscal institution whose independence and credibility are crucial to providing the revenue required by government to continue providing social and economic services to all sections of society, especially poor communities,” he said.

“If the legitimacy of SARS is undermined in the eyes of the citizens, this will have dire consequences for the country,” he warned.

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