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5 things the SARS inquiry heard from high-ranking officials

Aug 31 2018 15:39
Tehillah Niselow and Sibongile Khumalo

Government ministers and a judge on Friday described poor governance challenges that bedevilled SARS under suspended tax boss Tom Moyane, as they gave evidence before the Nugent Commission of Inquiry.

Minister of Finance Nhlanhla Nene, his predecessor Malusi Gigaba, and Judge Dennis Davis were among the high-ranking officials who testified on the final day of the second round of the inquiry.

Below are key elements that emerged.

Moyane was distracted from tax collection

Nene had to appoint the Kroon Advisory Committee in March 2015, as Moyane was focusing too much on the so-called 'rogue unit' and tax collection was slipping.

"I continued to have my reservations from time to time; [I had to] call the commissioner to order to focus," Nene testified.

Moyane is accused in the book The President’s Keepers, by investigative journalist Jacques Pauw, of using evidence of the 'rogue unit' to purge senior SARS officials who were working to recoup taxes owed by criminal and underworld figures. 

Bain & Co didn’t achieve intended outcomes 

Nene revealed that the Bain restructuring process in 2015 was sold to him by Moyane as a method of re-launching the SARS brand, which had been damaged by the resignation of SARS commissioner Oupa Magashula in July 2013 due to allegations of improper dealings.

He said that he never saw the process as an "overhaul", and the intentions were noble - to improve efficiencies at SARS.

But he also said Bain’s strategic advice didn't have its intended outcome, despite the company having previously been used to turnaround the Development Bank of Southern Africa (DBSA).

Why did Moyane go to Russia?

The November 2017 trip by Moyane remains a mystery to Gigaba, despite him approving it after it was justified by the former head of SARS as "urgent".

Gigaba's approval of the trip also cast doubt on his ability to efficiently exercise his executive powers in accordance with the government’s financial regulations.

Moyane did not give Gigaba feedback following his return from Russia, despite Gigaba being his immediate answering authority.

Bain contract flawed?

Treasury director of Compliance Monitoring Solly Tshitangano says the tender process that led to the appointment of Bain & Company was open for only a week, and was not done without Treasury approval.

The unusually short turnaround period for tender went out in mid-December, which is a quiet period for business. The process normally takes 21 days and Treasury never provided with reasons for the shortened period.

Tshitangano argued that Bain may have been already briefed about the scope of work. 

Judge Davis: Bain & Co had disastrous impact on revenue collection 

According to Davis, there were "disastrous consequences" for revenue collection following the 2015 restructuring process by Bain and Company. He said that due to the collapse of the Large Business Centre, there were many problems in collecting corporate taxes.

Davis, who was appointed to chair the Davis Tax Committee in 2014, said that their report, based on international best practice, was "diametrically opposite" to Bain and Company’s.

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