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The pay agent company who received the Gupta VAT payout by the SA Revenue Service was not registered with the Payment Association of South Africa, which means the transaction may have broken financial laws.
It was revealed in October last year during Oakbay’s court case against the Bank of Baroda that the pay agent, Terbium Financial Services, was not registered with PASA.
The association is a payment system management body recognised by the SA Reserve Bank under its National Payment Systems Act, which states that all third-party payment providers must be registered with it.
The legal foundation for the National Payment System is derived from the South African Reserve Bank Act and is one of the laws implemented to help curb money laundering.
At the time of the court case it was not known that Terbium had received the VAT refund from SARS on behalf of Oakbay, even though News24 had reported earlier in the year that suspended SARS commissioner Tom Moyane had allegedly been personally involved in a VAT payout to Oakbay Resources of R70m.
It was only recently, when the Daily Maverick revealed the process behind the payout, that Terbium was made known to have received the refund payout.
It was also recently revealed by News24 that Terbium is closely connected to Trifecta Capital Collection, a company whose R2.2bn contract with SARS was cancelled in 2016 because one of its shareholders was Moyane's nephew.
But questions may now be raised over whether compliance was done by SARS in checking whether Terbium was registered with PASA before making the VAT payment to it as a third party - and whether in receiving the payment any laws were broken.
Last year when Terbium Financial Services made headlines for being Oakbay’s paying agent during their attempts in court to get the Bank of Baroda to stay in the country, Business Day disclosed that the company was not registered with PASA.
PASA communications manager Leticia Mentz told the paper in October 2017 that all third party payment providers need to be registered with them by the bank of the provider. If they are not registered, it would be a contravention of section 12 of the National Payment System Act which, if guilty, could mean the company was liable for a fine up to R1 million or five years imprisonment, or both.
Then MD of Terbium Andre van der Zee told Business Day they had consulted with lawyers and there was some confusion about the interpretation and the terms of the Act.
'Possible irregularities'
The company’s director, Timothy Marshall, in a statement to the media two weeks ago said he developed concerns regarding Terbium and this resulted in litigation against Van der Zee. Marshall said the company was undergoing an investigation, particularly with its contract involving the Gupta family, and he would come forward to the authorities if any wrong doing was found.
“The possible irregularities I have identified thus far include possible contraventions of banking legislation, stock exchange legislation, the Financial Intelligence Centre Act (FICA), fraud, money-laundering, corruption and racketeering,” Marshall said.
“The evidence thus far suggests that Terbium and I were victims of these alleged crimes, in that other parties seemingly abused our systems, misled and defrauded us and engaged in corrupt practices. In some instances, officials of the state have also been implicated.”
Marshall also said that where Terbium may have failed to comply with statutory registration obligations, such as PASA, they would take the appropriate remedial actions and where applicable would file reports to the Financial Services Board and Financial Intelligence Centre.
SARS told News24 that when making the VAT refunds the opinion requested from SARS Legal Counsel pertained to whether or not it was lawful to make a VAT refund payment into the nominated banking account of a third party other than the taxpayer’s banking account under the Value Added Tax Act.
“In this situation the third party would be acting as an agent in receiving the funds on behalf of the taxpayer. Terbium was not acting on SARS' behalf in receiving the payment. Legal Counsel restricted itself and its advices to the opinion sought,” SARS said.
The revenue service said that the National Payment System Act deals with the management, administration, operation, regulation and supervision of payment, clearing and settlement systems in South Africa and in the ordinary course a third party does not have to be registered with PASA to receive payment as a third party.
“To the extent that the National Payment System Act 78 of 1998 deals with payments to third parties, section 7 of the Act addresses situations where third parties accept monies on behalf of persons for purposes of making payments to other third parties on behalf of the person to whom the monies were originally due.
“In expressing its opinion, legal counsel was not presented with any evidence that this was indeed the case in this instance. We again reiterate that Terbium was not acting on SARS' behalf in receiving the payment, but that of the taxpayer,” SARS said.
CEO of PASA Walter Volker confirmed that Terbium Financial Services was not registered with PASA. He said that entities that make payments to third persons are called TPPPs and these companies are governed by the SARB Directive 1 of 2007 issued under the NPS Acct.
“Therefore, a company that does not register as it should, could be in contravention of the NPS Act,” Volker said.
