Moyane, Makwakwa boycott Sars inquiry

The two key protagonists mentioned in the Nugent Commission of Inquiry into the SA Revenue Service (SARS) have so far stayed away from testifying, despite a wave of damning allegations about events at the tax collector that damaged its reputation and constrained its ability to do its work.

The interim SARS inquiry report is due by the end of next month, so suspended SARS commissioner Tom Moyane and former SARS chief of business and individual taxes Jonas Makwakwa haven’t got much time to rebut what has been said about them before the interim report is issued.

A final report needs to be submitted by the end of November.

A team from Treasury, led by National Treasury Head of Tax and Financial Sector Policy Ismail Momoniat, will testify on Wednesday.

Former finance minister Malusi Gigaba, Finance Minister Nhlanhla Nene and Judge Dennis Davis will also testify on Friday.

In addition, Moyane and Makwakwa might not be forced to appear by the SARS inquiry to face the music as Justice Robert Nugent this week said: “I’m not going to force anyone to come and tell us anything. If they want to tell us, they’ll tell us and if they don’t want to tell us, well, that’s it – we’ll deal with what we’ve got.” The inquiry can direct witnesses to appear.

City Press asked the SARS inquiry via email whether this comment applied to Moyane and Makwakwa.

In his reply, Nugent said that he was not willing to discuss the work of the commission with individual members of the media.

Inquiry 'not properly constituted'

Moyane’s lawyer Eric Mabuza said that he had written to Nugent to say that they couldn’t make a decision about testifying before the SARS inquiry until they had consulted with Moyane.

“The inquiry is not properly constituted so we can’t participate until the issue is sorted out,” Mabuza said.

Another key objection that Moyane has with the inquiry is the inclusion of ENSafrica chairperson Michael Katz as an assistant.

Moyane also faces a disciplinary hearing chaired by advocate Azhar Bham and was supposed to file a responding affidavit to the disciplinary charges against him by Monday. However, by Friday, Moyane had still failed to submit the documents.

Like Moyane has done, Makwakwa questioned the ‘fairness’ and ‘independence’ of the SARS inquiry. Although he said this week that he had volunteered to appear before the inquiry, he has questioned the legal process.

The SARS inquiry had informed him that the process of him appearing at the commission required him to first meet with the inquiry’s legal team and they would decide whether he would appear. “How can that be?” Makwakwa said.

He alleged that the inquiry was being orchestrated.

Makwakwa said he hadn’t received the evidence he was seeking either from the Nugent inquiry or from acting SARS commissioner Mark Kingon. The Nugent inquiry had invited him for a meeting ‘despite my request for information’, he said. On the other hand, Makwakwa said his reputation had been tarnished by the inquiry and what he said was “hearsay” from witnesses at the proceedings. Given the above, City Press asked Makwakwa whether he would be participating in the Nugent inquiry. “I’m discussing with my lawyers, but based on my observations, I don’t think I will participate, but I’m considering other avenues,” he said.

The destruction that was wrought on the tax collector was again laid bare this week during the testimony at the inquiry.

A second group of up to 19 witnesses were set to testify at the inquiry following the initial public hearings at the end of June.

The key focus of this week’s hearings was on the disruption and inefficiency of the new operating model that Moyane and Makwakwa, who was the key man who implemented the structure, imposed on largely unsuspecting Sars staff, the vast majority of whom were neither consulted nor informed about the nature of the new model, according to testimony this week.

Makwakwa said this week that the inquiry largely spoke to people who “didn’t benefit” from the restructuring and would be unhappy about losing their positions in the organisation, which he said mainly took place at the management level at SARS.

“A lot of people are happy about the restructuring,” Makwakwa said.

The restructuring resulted in key units of SARS being summarily disbanded, resulting in some people losing their jobs or having no work to do for weeks and even months.

The operating structure also resulted in work that was done on an integrated basis being put into silos, which fragmented functions. The knock-on effect was that SARS’ ability to collect tax was compromised.

Over the course of the four tax years Moyane was in charge of the entity, SARS missed its revenue targets by close to R100 billion.

Not only that, but the work that management consultants Bain & Company did on the operating model at a cost reported to be about R200 million proved to be a waste of money as the four structuring options that Bain proposed were ignored and another model was implemented.

On Friday, SARS officially announced that it was re-establishing the large business unit, which collected money from big business and wealthy people. It also plans to re-establish the illicit economy team.

Damning submissions

In one of the most damming submissions this week, Keith Hendrickse, the former head of SARS national projects in the Western Cape, claimed that Moyane effectively aided one of the biggest crime bosses in South Africa who owed R400 million in tax.

Hendrickse said he was approached by “an auditor” who said he had come to fetch the audit files related to the crime boss. The auditor alleged the instruction to collect the files came from Moyane, Hendrickse said.

“We found out afterwards that the auditor in Cape Town had been instructed to write to the taxpayer and tell him that they were doing an audit review. That prevented SARS from collecting any money for two years. To date, that taxpayer has not paid one cent … to my mind, [this was] a deliberate attempt to derail that process,” Hendrickse said during the inquiry.

Advocate Carol Steinberg, counsel to Nugent, said the new operating model allegedly “broke” the tax collector. She was speaking about the evidence she had collected and what she had heard from witnesses during her work for the inquiry.

Randall Carolissen, SARS group executive: tax, customs and exercise institute, said management consulting company Bain was apparently brought in by Moyane because governance wasn’t up to scratch.

Nugent said last week that Bain would appear before the inquiry this week.

Bain spokesperson Marlynie Moodley said: “We take seriously any questionable assertions raised against our reputation, and are eager to present the facts and evidence that will support the efficacy of our work, as well as the transparency and professionalism with which we approach every client engagement, SARS included.”

Bain is set to testify on Thursday and Friday.

SARS customs official Mpho Mashaba said he was approached in 2014 and asked to “sort of” provide oversight on Bain on the work it was doing on the customs side.

“My major concern is why start something and spend money on something and you don’t implement it? That is incorrect,” he said.

Steinberg said: “I know Mr Mashaba, he said beforehand it’s a white elephant. It didn’t get implemented.”

Rae Vivier, who has 33 years of experience in the customs at SARS, said that Bain had not consulted directly with her, but Mashaba had interacted with her instead. “The diagnostic is fraught with misleading or inaccurate statements,” Vivier said.

Steinberg, quoting from an affidavit from Baz Theron, now the acting chief officer for customs, said: “The lack of consultation meant that even where Bain correctly identified a problem with the current operations, their proposed solution was inappropriate.”

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