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Moyane wants KPMG blacklisted for 'unethical, immoral, unlawful and illegal behaviour' - as it happened

2017-09-18 09:40

SARS Commissioner Tom Moyane says the tax authority was taken aback by the aberrant and unethical conduct of KPMG. The taxman is considering legal action.


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Last Updated at 20:56
18 Sep 12:20

WATCH: Full briefing (SABC)

18 Sep 12:17
Asked if Pravin Gordhan should have known about this investigation unit, Moyane said: An investigation is taking place. I cannot judge conclusively. It is the investigation that is taking place as to whether he ought or not to have known about the investigative unit.

18 Sep 12:09
KPMG has messaged SARS during its press briefing to clarify that it did not retract the SARS report, but only its findings and recommendations.

18 Sep 12:03
Moyane: The KPMG report is not flawed. It confirmed the Sikhakhane report was the tip of the iceberg.

18 Sep 12:02

Tom Moyane's full statement:

A) KPMG Conduct

SARS notes the media statement which was issued by KPMG international on the 15 September 2017. The statement includes KPMG International’s action pertaining to among other things, the setting aside of the conclusions and recommendations of the ‘Allegations of Irregular and Misconduct’ report, (Report).    

SARS received an email from Norton Rose Fulbright acting on behalf of KPMG International on the morning of the 15 September 2017, the content of which is attached to the media statement. SARS has been completely taken aback by KPMG’s aberrant and unethical conduct. KPMG unilaterally announced the purported withdrawal of its report despite the existence of a service level agreement governing the relationship between the parties.  

It is important to note the material terms of the SLA which provides that:

1) All rights, title and interest, including all Intellectual Property Rights, literary works created, written and or presented by KPMG and or its agents and employees, which relate to the service performed by KPMG vest exclusively in SARS;

2) KPMG has irrevocably and in perpetuity transferred, made over and assigned to SARS, all intellectual property rights and which SARS has accepted; and

3) KPMG has waived all its moral rights conferred upon it as an author by the provision of Section 20 of the Copyright Act, 1978.  

Accordingly, the above contractual obligations confirms that the report belongs to SARS as KPMG has surrendered all rights to SARS. It follows that the Report is an exclusive property of SARS as it constitutes SARS intellectual property. SARS sees KPMG’s conduct as nothing else but a dismal attempt to portray SARS, its leadership, and in particular SARS Commissioner as incompetent, corrupt, inefficient and involved in a witch-hunt.

This is the same narrative that has been perpetuated for years by some treacherous elements within society and the media.  

This abhorrent, unethical, and unprofessional conduct by KPMG has left SARS with no option but to consider the following legal route:

1) Instituting legal proceedings against KPMG for reputational damage to SARS including but not limited to a civil claim;

2) Report KPMG to the relevant statutory audit bodies both locally and internationally;

3) Report KPMG to the Minister of Finance with the aim to blacklist KPMG for its unethical, immoral, unlawful and illegal behaviour.

4) Report KPMG to the Minister of Finance to consider stopping all work currently performed by KPMG in other departments as well as any work in the pipeline until all the work KPMG conducted for the state have been investigated and reviewed for quality and proper auditing quality and expected standards;

5) Immediately seize any work which KPMG is currently performing for SARS and assess the work KPMG has performed in the last 10 years with the aim to determine whether there was a value for money and whether SARS should demand its money back;

6) Report KPMG to Parliament through SCOPA and SCOF with the aim to investigate the immoral conduct of KPMG and determine the appropriate action.    

B) Disciplinary cases completed and/or underway

SARS has observed with astonishment some former SARS employees and others who have been criss-crossing different media platforms while making unfounded and baseless conclusions as a result of KPMG’s media statement.

SARS wishes to categorically state that the allegations that KPMG report was used as the basis for disciplinary actions as well as the institution of a criminal offence are at best false and at worse deceitful, and aimed at misleading the people of SA.  

The following facts and sequence of events attest to the above statement:  

1) During the period August 2014, the then Acting Commissioner for SARS, Mr Ivan Pillay Commissioned an Investigation led by Adv Sikhakhane SC with the mandate to investigate allegations that SARS ran a ‘Rogue Unit’. The information was reported by the media then, in particular Sunday Times and City Press newspapers. The claims were amongst others that SARS had a Unit which was not only established illegally but which was illegally intercepting taxpayer’s information and movements;

2) Upon the appointment of the Commissioner for SARS, Mr Moyane in September 2014, the Sikhakhane Commission delivered a report on the 5 November 2014 with serious conclusions and recommendations. Chief amongst others, the recommendations was that indeed SARS ran an unlawful rogue unit, led by and reporting to Mr Pillay as well as some insidious and gross misconduct committed by both Mr Pete Richer and Mr Loggenberg;

3) On the 28 of February 2015 the then Finance Minister, Mr Nene established a SARS Advisory Board, which was chaired by the retired Judge Kroon with the mandate to look into SARS processes with priority being on the investigation and guidance on the Sikhakhane report. It is common cause that the Kroon Advisory Board found that the establishment of the secret unit within SARS in 2007, which covertly gathered intelligence, was unlawful. The Board went further to instruct SARS to charge employees involved and open criminal charge against those implicated in this act of crime;

4) The three employees interalia Mr Johan Loggerenberg, Mr Ivan Pillay, Mr Pete Richer, were charged as a result of the Sikhakhane report respectfully for the following dates 14 January 2015, 5 February 2015, as well as 02 April 2015 respectively. Instead of facing the hearing and clear their names, all of the three opted to resign, with Mr Loggerenberg resigning in February 2015 and Mr Pillay and Ritcher resigning in May 2015.  

KPMG report was delivered to SARS late in 2015 and was only made FINAL on the 26 January 2016. It therefore follows that the disciplinary hearings against the above were not conducted as a result of the KPMG report but on the basis of the Sikhakhane report.  

Hence SARS’s assertion that those affected are mainly endeavouring to claim innocence or otherwise on the withdrawal of the KPMG report, with others claiming that their careers and careers of others were destroyed as a result of KPMG either grossly ignorant or outright mischievous and or a concerted but dismal attempt to mislead the South African public.

So SARS is calling on those who are unfairly and unjustly accusing SARS of improper conduct on the basis of the KPMG media statement to desist from such conduct.  

C) Criminal Case on Rogue Unit and its Activities (Sunday Evening)  

SARS has further observed another set of people who are trying hard to claim that the purported withdrawal of the Report by the KPMG automatically vindicates them from their responsibility to account to the alleged criminal acts.

SARS places on record that such malicious and irresponsible claims are either some acts of gross ignorance but at worst, a dismissal attempt to circumvent the law and or to mislead the public. The following sequence of events and activities will demonstrate the above assertion by SARS.

1) In early May 2015, two employees voluntarily demanded to see Mr Moyane as they wanted to make a confession. The two employees informed Mr Moyane about the existence of the illegal and unlawful Rogue Unit. Included in the confession was that they were instructed by Mr Ivan Pillay to install cameras to 12 offices of both the Police and the Scorpions at the time. Further that, the purchase of the equipment were made through R950 000 (Nine Hundred and Fifty Thousand) in cash which was given to them by Mr Gerrie Nel and his colleague. The two were advised by the Commissioner to confess to the police which as far as SARS is concerned, they did;

2) SARS then sought a legal opinion which advised that in terms of the Prevention and Combatting of Corrupt Activities Act, as a person holding a higher authority, he is legally obliged to open a criminal case, which SARS duly opened in May 2014. The case is in the hands of Hawks and SARS hope that the case will be concluded soonest.  

As the above demonstrate, KPMG report was handed over to SARS only in late 2015 and made final on 26 January 2016.

As this simply demonstrates, this was long after the criminal case was opened and all the necessary evidence was provided to the Hawks and the SAPS. Given the above facts, SARS is left with no option but to conclude that those who are claiming exoneration from possible and alleged criminal offences, who are expected to be aware of this public facts, can only be attempting to mislead South Africans which SARS finds quite unfortunate.

From the position of SARS, the criminal case whose details is outlined above is in progress and we hope for its speedy conclusion. SARS wishes to assure all South Africans, in particular taxpayers and traders that 14000 men and women of SARS continues to work tirelessly and selflessly in ensuring that all revenue due to the state are collected both legally and efficiently whilst protecting our borders and facilitating trade as we take South Africa forward, together.

18 Sep 11:53

Who is attacking SARS?

Moyane said that reports in media create uncertainty and instability. “People feel we have an institution that is unable to run its affairs.” But he could not name who is behind the “agenda” to attack the institution.

“I do not have a particular name or persons. The agenda is clear to cast aspersion.”

He said it is the responsibility of government authorities to conclude who is behind the agenda. “I do not have the requisite skills within SARS to do an agenda searching process.”

“My ability is to make a team strong and able to collect all revenues due, and create a climate where South Africans can trust the organisation.”

He defended the 14 000 SARS employees and said SARS at no point had failed South Africans. “We do our work without fear or favour.”

18 Sep 11:48
Moyane says he became seriously ill at a hotel in Paris and a doctor was called to urgently see him. "You never know if your life is at stake," he said. He told parliament last week that he thinks he may have been poisoned.

18 Sep 11:42
Moyane says he doesn't have names of the people who are behind an agenda against SARS. "There is a clear agenda to cast aspersion over the tax authority."

18 Sep 11:36
Moyane: For KPMG to say that the final report it submitted a year and a half ago is inconclusive is disingenuous. This brings into question other reports KPMG had submitted. This thing did not happen overnight. They knew about it. They should have come to us earlier.

18 Sep 11:36
Moyane on Sikhakhane report: I inherited that report without contaminating it.

18 Sep 11:35

18 Sep 11:34

Statement by Tom Moyane:

18 Sep 11:28
Moyane: KPMG report was delivered to SARS late in 2015 and was only made final on the 26 January 2016. It therefore follows that the disciplinary hearings against the above were not conducted as a result of the KPMG report, but on the basis of the Sikhakhane report.

18 Sep 11:24
Moyane: Those claiming exoneration from the alleged criminal offences are attempting to mislead South Africans.

18 Sep 11:24
Moyane: The withdrawal of the report does not vindicate those who have been implicated.

18 Sep 11:24
Moyane: SARS calls on those unfairly and unjustly accusing SARS of improper conduct on the basis of the KPMG statement to desist.

18 Sep 11:19

KPMG’s conduct an attempt to make SARS look incompetent

Speaking at a briefing on Monday, SARS Commissioner Tom Moyane said that the tax authority was taken aback by the aberrant and unethical conduct of KPMG.

He called KPMG’s actions a “dismal attempt” to portray SARS and its leadership, including the Commissioner, as incompetent, corrupt, inefficient and involved in a witch-hunt.

SARS is taking legal action against KPMG, for reputational damage to the tax authority. SARS will report KPMG to the relevant statutory bodies, locally and international.

SARS will report KPMG to the minister of finance to consider stopping all work performed by KPMG. SARS will also have work KPMG is performing for the tax authority stopped, and SARS will evaluate the work it did in the past 10 years to see if the tax authority has received value for money.

KPMG will also be reported to Parliament, to investigate the “immoral conduct” of KPMG and determine appropriate action.

18 Sep 11:14
Moyane has announced a range of measures including legal action against KPMG after it retracted its report into the SARS investigative unit.

18 Sep 11:10
Moyane: The service level agreement - all rights, titles and interests - vest exclusively in SARS.

18 Sep 11:09
Moyane says KPMG did not give SARS the due time to give input on its report on Friday.

18 Sep 11:04

Fin24's Lameez Omarjee is reporting live from the SARS headquarters in Pretoria.

18 Sep 10:53

18 Sep 10:52

18 Sep 10:50

While we're waiting, here's how the story unfolded on Friday:

In what was hailed a huge day for South Africa, KPMG South Africa's bosses had resigned following the fallout of work the auditing firm had done for the Gupta family. 

KPMG South Africa CEO Trevor Hoole, chief operating officer Steven Louw, chairperson Ahmed Jaffer and five senior executives all resigned on Friday. 

The auditor also withdrew its South African Revenue Service "rogue unit" report, and even offered to pay back the R23 million fee it received for the report, or "make a donation for the same amount to charity".

READ: KPMG SA CEO, 7 others quit on #GuptaLeaks, SARS rogue unit fallout

Nhlamu Dlomu has been appointed to succeed Hoole, the firm said in a statement on Friday.

FULL STATEMENT: KPMG execs quit over Gupta, SARS report

Economist and chief executive of Pan-African Investment and Research Services Iraj Abedian said that KPMG’s admission of wrongdoing was not the end of the road, and there are still corrective steps that need to be taken against the company.

READ: KPMG must bear the full brunt of their actions - Iraj Abedian

Political analyst Daniel Silke, meanwhile, said the resignation of senior KMPG executives was a lesson the South African government and public sector players could learn from.

READ: SA government should heed major shakeup at KPMG - analyst

18 Sep 10:26

18 Sep 10:25

Sygnia CEO Magda Wierzycka, one of KPMG's fiercest critics and the first to cut ties with the auditors in July over allegations that KMPG SA had not been diligent enough in auditing businesses belonging to the Gupta family, told Fin24 on Friday the top management resignations sent a strong signal that KPMG International was looking to change how the SA firm operated.

KPMG SA CEO Trevor Hoole, along with seven other executives, resigned as a body over KPMG's dealings with Gupta family-owned businesses, and the work it had done for SARS. 

The auditor also withdrew its controversial SARS "rogue unit" report, and even offered to pay back the R23m fee it received for the report, or "make a donation for the same amount to charity".


18 Sep 10:16
The SARS briefing, which was scheduled to start at 10:00, is yet to start.

18 Sep 10:10

KPMG is the latest international company to come under fire for its links to state capture.

British public-relations firm Bell Pottinger applied for administration on September 12 after being expelled from a UK public-relations body for stoking racial tensions in South Africa while working for the Guptas.

South African s, civil rights groups and opposition parties are also targeting US consultancy McKinsey for doing work for businesses tied to the family.

18 Sep 10:03

18 Sep 10:02

Former finance minister Pravin Gordhan told Bloomberg on Sunday that SARS has become a political project and is now run by people who have no idea how to manage a tax administration system.

18 Sep 09:55

Former Finance Minister Pravin Gordhan also called KPMG’s actions “typical colonial arrogance” and said the firm had not done enough.

“One would have expected KPMG to have the courage to admit, in the face of their own investigation, that the establishment of this unit was in fact legal.

This option still remains open to them." KPMG has said it would repay the R23m fee it received from SARS for the work performed, or donate it to charity.

18 Sep 09:53
Economist Thabi Leoka also said that KPMG's actions cost the country dearly.

18 Sep 09:52

Several analysts have welcomed KPMG's decision, while others have called for more corrective action. Economist Iraj Abedian, who has publicly criticised the company, told Fin24 that auditors implicated should have their certification removed by the Independent Regulatory Board of Auditors (IRBA).

He also called for KPMG Global to make compensation to South Africa as the brand is what gave the rogue unit report its credibility.

18 Sep 09:40

Pretoria - SARS will hold a media briefing, following KPMG's withdrawal of the SARS 'Rogue Unit' report, which analysts say cost Pravin Gordhan his job and ultimately led to the credit downgrade.

On Friday KMPG announced that its CEO and several executives would resign and would withdraw the rogue unit report, after being implicated in the #Guptaleaks.

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