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SARS inquiry: Moyane did not give any reason for diagnostic report, says Bain

Aug 30 2018 13:39
Sibongile Khumalo

There is no clear reason why the SA Revenue Service needed to restructure its working operational model - which has almost brought the tax service to its knees, the Nugent Commission of Inquiry heard on Thursday.

This is according to Bain & Company, the global consulting firm at the centre of the controversial restructuring adopted by the tax agency. 

Bain, which is giving evidence for the first time at the inquiry, faced questions from the panel about why its diagnosis report on SARS treated the entity as if it were "a failing organisation".

In 2014, the global consulting firm conducted a diagnostic for SARS which informed the business restructuring process. The changes were ordered by now suspended SARS chief Tom Moyane, who at the time had only been in the job for four months. 

The new business model resulted in the shutting of the Large Business Centre which was responsible for the collection of tax from big companies and a unit investigating the illicit economy, which includes the illegal tobacco trade. 

The commission previously heard that the tax agency lost millions of rands in unpaid taxes as a result of a decline in the efficiency in its enforcement division.

Old vs. new 

Evidence leader Advocate Carol Steinberg asked Bain Managing Partner Vittorio Massone if the company was made aware of any areas at SARS that warranted a departure from the previous business model, which had won the tax organisation acclaim.

Massone said Bain was never told what was wrong with the old structure.

“The structure, in my opinion, could not have caused all the turmoil,” said Massone

He added that Bain’s involvement was to improve SARS tax collection capacity.

But numerous senior executives at the agency who gave evidence at the commission have lambasted Bain for lacking a deeper understanding of the agency's business. 

Massone stated that Moyane did not reveal any reason for conducting a diagnostic report and Bain did not question the decision.

Bain interviewed only 33 SARS officials over six days during the drafting of the far reaching operational model which, in turn, resulted in the shutting of key enforcement units.

Judge Robert Nugent asked Massone if Bain ever considered getting input from former SARS commissioner Pravin Gordhan, who was instrumental in shaping the successful working model of the tax service.

Massone said he did not know Gordhan and wished they had consulted him. "I wish I had communication with him - Gordhan. I had no communication line with him, I did not know him," he said.

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