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WRAP: Explosive testimony as Bain tells inquiry Moyane reached out to them before appointment

Aug 31 2018 16:53
Tehillah Niselow and Sibongile Khumalo

The final day of the second round of public hearings at the Nugent Commission of Inquiry heard explosive testimony from consulting firm Bain & Company that suspended South African Revenue Service (SARS) Commissioner Tom Moyane approached them for an opinion on the tax service before he was even appointed.

The Inquiry heard that Moyane approached Bain in 2013 while he was still the Commissioner of Correctional Services. He was appointed by former President Jacob Zuma in September 2014.

Evidence leader Carol Steinberg appeared taken aback as Vittorio Massone, the managing partner of Bain & Company's Johannesburg office told the commission that the meeting prior to Moyane's appointment was not unusual.

He said Bain met with people of influence periodically and expressed views on public and private companies all the time. 

"His ambition was to become the commissioner of SARS," said Massone of the meeting.

Massone however could not give the exact date of the meeting, saying Moyane had called them a few days prior and asked Bain to put together a presentation on SARS.  

Implementation wrong

Massone sought to justify Bain & Company’s restructuring model which came under fire from top SARS officials by saying that they would recommend the same structure again.

“It was the right structure," he said.

He referenced the work they did for the Development Bank of Southern Africa (DBSA) which Finance Minister Nhlanhla Nene hailed as a success in his earlier testimony.

Massone claimed that something went wrong in the implementation of their restructuring plan at SARS which the consulting company cannot be held accountable for.

No apology to taxpayers

Massone refused to apologise to taxpayers for the 2015 restructuring process, which according to testimony, is blamed for the slippage in revenue compliance and collection.

Bain was paid R164m in consultancy fees.

Bain didn’t achieve objectives

Nene told the Nugent Commission that he was forced to appoint the SARS advisory committee in March 2015 as Moyane’s attention was focused on the so-called rouge unit, instead of revenue collection.

Nene was finance minister from 2014 until December 2015 when he was axed by Zuma. He was reappointed to the position by President Cyril Ramaphosa in February.

Nene said he was informed by Moyane that the decision to procure Bain & Company’s advisory services in 2015 was to re-launch the SARS brand as the organisation “was in a bit of a difficult state” following the resignation of SARS commissioner Oupa Magashula due to allegations of improper influence in July 2013.

According to Nene, the intentions behind appointing Bain & Company were “noble”, to improve the efficiency of SARS and as it was an operational matter, he only had to endorse the process and it could have gone ahead without his approval.

Nene testified that he was unable to follow the progress of Bain’s restructuring process as he was removed as finance minister in December 2015

He admitted with hindsight that Bain‘s intervention didn’t achieve its intended objective.

No reasons for Russian trip

Moyane’s “suspicious” trip to Russia came under scrutiny on Friday, with former Finance Minister Malusi Gigaba saying he did not know the purpose  of the visit despite approving it in November 2017.

Moyane undertook a trip to Russia from November 18 to November 23, only telling Gigaba that it was urgent.

Gigaba said that he thought Moyane would furnish him with a report upon his return from Russia, but he never did.

Restructuring  plan disastrous  

Judge Dennis Davis who also testified on Friday described Bain’s restructuring process as having “disastrous consequences” for revenue collection.

He said that the Davis Tax Committee, which he chaired, did the work more cheaply than the consulting company and relied on international best practice.

Judge Nugent wrapped up the second round of public hearings saying more work still needed to be done before the next round could proceed, which would likely be in early October. 

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