The big clean-up at the SA Revenue Service (Sars) is imminent. According to sources close to the matter, there are likely to be further far-reaching changes at the tax agency in the wake of President Cyril Ramaphosa’s suspension of commissioner Tom Moyane last week.
Speculation within Sars is rife that moves are afoot to bring former deputy commissioner Ivan Pillay back to the institution. And former deputy finance minister Mcebisi Jonas has been widely touted for the post of interim commissioner.
The Financial Mail understands that the matter is to be put to cabinet at its next meeting.
However, ANC insiders say charges against Pillay complicate his possible return. Earlier this month, Pillay was served with a summons to appear in court over charges linked to the alleged bugging of the National Prosecuting Authority (NPA) offices in 2007.
The charges emanate from the now-discredited KPMG report into the alleged "rogue unit" at Sars. KPMG has since retracted parts of the report and refunded Sars the entire R23m it was paid for producing the document.
Pillay and his co-accused, former Sars officials Johann van Loggerenberg and Andries Janse van Rensburg, have written to NPA boss Shaun Abrahams requesting the opportunity to make representations ahead of their court appearance, which is scheduled for April 9.
Following Moyane’s suspension last week, Mark Kingon was appointed acting commissioner by finance minister Nhlanhla Nene. But insiders say he will not be in the post for long — and the Sars Act stipulates that he can only act in the post for 90 days, unless his appointment is renewed by the minister.
The mechanics of Moyane’s disciplinary process are still being worked out, but sources suggest that he may be contemplating a settlement with Ramaphosa.
Last Sunday, Ramaphosa asked Moyane to resign during a short meeting, but he refused. Moyane then wrote a scathing letter to the president the next day, threatening to take legal action should he be suspended or dismissed.
In his letter, Moyane accused Ramaphosa of bias, saying the president had already made up his mind to remove him and that he had not followed procedure by allowing him an opportunity to respond to the allegations against him.
Moyane also said his removal or suspension would be illegal and unconstitutional, and he asked Ramaphosa to undertake that he would not proceed with such actions. He warned that, should Ramaphosa fail to provide him with such an undertaking by a specified time, he would take him to court.
The president did not take kindly to the threat. On the same day, he replied in writing to Moyane, informing him of his suspension with immediate effect, pending the institution of a disciplinary process against him.
Moyane’s suspension was a key factor in SA’s favour for ratings agency Moody’s, which on Friday announced it would not downgrade the country’s investment rating, and which changed SA’s outlook from negative to stable.
The suspension also comes at a critical time for Sars: it is soon to announce its revenue collection for the year, on the back of a R50bn deficit.
Ramaphosa, in his letter to Moyane, said the work of Sars is critical to enable government to meet its commitments to eradicate poverty, create jobs, build infrastructure and provide services.
"Developments at Sars under your leadership have resulted in a deterioration in public confidence in the institution and in public finances being compromised," Ramaphosa wrote. "For the sake of the country and the economy, this situation cannot be allowed to continue or worsen."
He told Moyane that the public interest is paramount in Sars fulfilling its functions and ensuring its integrity.
"As I made plain to you, I have lost confidence in your ability to lead Sars. Your position is not one of any ordinary employee. Your obligation to be responsible for the performance of Sars and its functions impacts on the public purse and therefore the well-being of the nation as a whole. This is an exceptional circumstance which requires urgent and immediate action."
Moyane’s leadership of Sars has been rocked by controversy from the start. But it was his handling of the saga around his second-in-charge, Jonas Makwakwa, and allegations around his role in Vat refunds that led to his suspension.
Moyane sought to shield Makwakwa — who resigned before his own suspension — after he had been implicated in a Financial Intelligence Centre (FIC) report. The report, handed to Moyane, alerted Sars to R1.2m in unusual and suspicious payments and credits into the bank accounts of Makwakwa and his partner, Kelly-Ann Elskie, who is also a Sars employee.
The report showed that payments into Makwakwa’s account increased by 152% between 2010 and 2015. It recommended further investigation, as increased movement in the account could indicate corruption, money laundering or tax evasion.
The allegations against the second most senior Sars official were damning, yet Moyane took four months to act on them — and he only did so after the Sunday Times reported on the matter. Instead, on receipt of the FIC report, Moyane handed it to Makwakwa, who in turn handed it to his own lawyers.
Makwakwa faced no sanction or proper scrutiny over the allegations. He served a year-long suspension, returning to work after a sham investigation and disciplinary process. During his suspension he received a huge bonus, which was called into question by the auditor-general.
Makwakwa’s eventual resignation two weeks ago followed revelations that a company Sars hired for debt collection, New Integrated Credit Solutions, appeared in the FIC report. It was listed among the companies said to have channelled payments into Makwakwa’s personal bank account.
Moyane told reporters he had been on the verge of suspending Makwakwa again after putting the allegations to him, but Makwakwa had resigned before he could do so.
This was not the first time Moyane had been in the spotlight due to a debt-collection contract. In 2016, it emerged that a company linked to his nephew had received a R220m contract from Sars.
Moyane went to court to get out of the contract with the company, Lekgotla Trifecta Collections, claiming he had been unaware of the family connection.
Interesting, however, is that his nephew’s business partner at the time, Timothy Marshall, also surfaced in reports about a R70m Vat refund to the Gupta family that Moyane allegedly facilitated. The refund was reportedly paid into the account of Terbium Financial Services, a company at which Marshall is a director.
Moyane’s disciplinary process is unprecedented; no commissioner before him has been subjected to one. His predecessor, Oupa Magashula, opted to resign when allegations of impropriety surfaced against him, saying at the time that he did so to protect the integrity of the institution.
The Sars Act is also silent on the mechanics of such a process.
National treasury indicated in response to questions that the disciplinary process would be announced by the presidency.
Nene visited Sars’ Brooklyn headquarters last Thursday to address staff after Moyane’s departure. He warned Moyane’s allies to toe the line or leave, saying their loyalty should be to the institution, not an individual.
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