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Hogan Lovells did not act unprofessionally in Makwakwa report, Law Society finds

Nov 15 2018 06:45
Carin Smith and Jan Cronje, Fin24

Law firm Hogan Lovells South Africa has been found by the Investigative Committee of the Law Society of the Northern Provinces of SA to not have acted unprofessionally in its investigation for the SA Revenue Service into the agency's former chief operations officer Jonas Makwakwa. 

The society is a statutory body that governs the attorneys profession in the provinces of Gauteng, Mpumalanga, North West and Limpopo,

Wessel Badenhorst, a partner at Hogan Lovells SA, told Fin24 on Wednesday that the society made a unanimous ruling on October 25 this year following a meeting attended by Hogan Lovells SA's former chair, Lavery Modise.

The London-headquartered law firm was hired by axed Sars head Tom Moyane to investigate Makwakwa in late 2016. This after the Financial Intelligence Centre flagged suspicious transactions into Makwakwa's bank account and that of his partner, which allegedly amounted to R1.7m over six years.

The law firm submitted its report to Sars in June 2017.

Makwakwa, who consistently denied any wrongdoing, was subsequently found not guilty in an internal Sars disciplinary hearing and returned to work in early November 2017. After coming under sustained pressure, he resigned for good in mid-March 2018, still claiming to have done nothing wrong.

'Serious deviation'

The work Hogan Lovells did for Sars was cast into the spotlight after British politician and Labour party peer Peter Hain alleged in mid-January that the firm was complicit in state capture. 

Hain, a former anti-apartheid campaigner, said Hogan Lovells had failed to include evidence from a separate inquiry by PwC, and another by the Hawks, in the report they submitted to Sars. "That meant that Makwakwa has answered to only a fraction of the allegations levelled against him - a serious deviation from Hogan Lovells' mandate," Hain told the House of Lords earlier this year.

The law firm, meanwhile, maintained it was never meant to investigate the suspicious financial transactions, and had done nothing wrong.

"We have never advised and have not been asked to advise on whether Jonas Makwakwa is guilty of any criminal/tax offences and have not exonerated him of any," said Modise in a statement in January in response to Hain. 

While Hain wanted the firm investigated by the UK's Solicitors Regulation Authority, SRA, Hogan Lovells maintained that the appropriate oversight body was the Law Society of the Northern Provinces of South Africa.

No jurisdiction

According to Badenhorst, Hogan Lovells SA proactively kept the law society informed of allegations made by Hain.

The SRA ruled it had no jurisdiction in SA, said Badenhorst, as it found that while the SA practice of Hogan Lovells was a connected practice to the London practice, but not a controlled practice. This meant the UK authorities do not have jurisdiction here.

Badenhorst said Hogan Lovells had consistently rejected allegations of misconduct regarding its work done for Sars, and had accounted for that work to both Parliament and the Nugent Commission of Inquiry. He said the unanimous decision by the las society confirms what it has consistently said.

"The focus should now be on the work undertaken by the Hawks and others and their actions. We recognise and fully support the need for transparency in this matter and restate our willingness to liaise with any appropriate and qualified regulatory body in relation to our work," Hogan Lovells said in a statement earlier on Wednesday.

"Since we had kept the LSNP informed throughout, we submitted to it comprehensive information. The LSNP then decided to investigate the allegations without a complaint having been laid," Badenhorst told Fin24.

'Vindicated'

"Pursuant to the meeting with the Investigating Committee of the LSNP, they unanimously found no prima facie evidence of any unprofessional or unworthy conduct on the part of Hogan Lovells or any of its directors.

"It means what we have been saying from the beginning, that we had taken instruction and done what was correct and expected from us. We have now been vindicated that we did so professionally and did what we were supposed to," said Badenhorst.

"We were not part of any corruption. Ultimately, the recommendation we made to Sars was that further investigation needed to be done into Mr Makwakwa. It means we did what we were expected to do."

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hogan lovells  |  sars  |  peter hain  |  jonas makwakwa  |  sa economy
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