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Businessman claiming to be 'rogue unit' victim loses court bid

Jul 17 2019 19:05
Jan Cronje and Lameez Omarjee, Fin24

The Johannesburg High Court has ruled against a businessman who sought to have a multi-million-rand tax assessment set aside, in part, on the basis that he was the victim of illegal surveillance by the so-called SARS 'rogue' unit.

Judge Pieter Meyer on Wednesday issued the judgement on the review application filed in 2015 by Martin Wingate-Pearse.

The respondents included the SA Revenue Service, the national director of public prosecutions and the ministers of finance and state security. Wingate-Pearse is a director and shareholder of tobacco manufacturer Carnilinx and, according to the ruling, a member and director of various companies with interests in the clothing industry. 

The case stems from an investigation into Wingate-Pearse's tax affairs by the revenue collection agency that commenced in 2002. After executing a search warrant in April 2005, the SARS estimated that he had grossly under-declared his taxable income between 1998 and 2005. His tax affairs were found to be non-compliant as he did not declare all of his taxable income.

His tax liability increased from R350 000 to R41.7m, which was later reduced to R9.2m after he filed an objection.

Wingate-Pearse then first applied for tax amnesty, and later launched two review applications to have the new assessment set aside. He also submitted a number of supplementary founding affidavits. 

According to Meyer's ruling, Wingate-Pearse initially sought a declaratory order from the court that the so-called SARS 'rogue' unit had been unlawfully established and "abused its power and resources by engaging in activities it had no lawful authority to perform". He later withdrew the request for this order.

In court documents the unit is referred to as the HRIU, which stands for High Risk Investigations Unit. Meyer notes this is the same unit that has come to be known as the 'rogue unit' following a report in the Sunday Times in 2015.

It is this unit that Public Protector Busisiwe Mkhwebane recently found had been established unlawfully. Meyer's judgement does not mention the Public Protector's finding.

Public Enterprises Minister Pravin Gordhan, who was the head of SARS at the time of the HRIU's establishment, is seeking a review of the Public Protector's report. He has argued that Mkhwebane got the "facts and law" wrong, as Fin24 reported previously. He has also on numerous occasions defended the legality of the unit. 

'Covert intelligence unit'

According to Wednesday's judgement, Wingate-Pearse argued he was the victim of the HRIU and claimed the unit had intercepted and monitored his communications, thus infringing on his Constitutional rights.

"He accuses SARS of having employed illegal intelligence gathering measures against him," Meyer noted.

But the judge stated that, when the tax agency conducted its investigation into Wingate-Pearse's tax affairs and carried out its search and seizure warrant, the investigative unit was not yet in existence. It was only established in 2007, two years after the search warrant was executed. 

Wingate-Pearse further argued that the search and seizure warrant from 2005 was illegal, and that all documents obtained after the warrant was executed were illegal and should be discounted. 

As evidence for his contention that a rogue unit within SARS was active, Wingate-Pearse referred to a 2015 report by a panel led by Adv Muzi Sikhakhane regarding the HRIU. He also referred to a statement by SARS advisory board Judge Frank Kroon that the unit's establishment was unlawful.

Meyer pointed out that Judge Robert Nugent, who chaired 2018's commission of inquiry into SARS, found that the Sikhakhane report did not provide evidence as to why the unit was unlawful.

"Nugent made findings in [the] final report that supports SARS' stance that Wingate's allegations about the existence of the rogue unit within the ranks of SARS are without factual basis," the judgment reads.

Meyer added that Wingate-Pearse's allegations of intercepted communications are also "without basis".

In its submission, meanwhile, SARS contended that it acted lawfully throughout the investigation of Wingate-Pearse's tax affairs.

"SARS refutes his claims it was a tainted process, a conspiracy full of malice and bias directed at him," Meyer said.

Meyer dismissed the review application with costs.

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