Third time lucky: Malema strikes deal with Sars
Julius Malema twice tried to reach a settlement with the South African Revenue Service (Sars), even as the Economic Freedom Fighters (EFF) leader claimed that the taxman was acting on instructions from the ANC.
On Monday, it emerged that Malema’s third attempt had succeeded, and while the full terms of the agreement are not public, Malema has apologised for his previous statements and agreed to disclose his financial position to Sars in full.
The “compromise agreement” with Sars prevents a court declaring him insolvent for now. But Malema could still be declared insolvent by the court and lose his seat in Parliament if he fails to comply with the terms of the agreement.
The high court in Pretoria granted Sars a provisional sequestration order against Malema in February, and the EFF leader had until Monday to tell the court why the sequestration order should not be made final.
At the time, Malema insisted he would oppose the application. But it has since emerged that he entered into negotiations with Sars to reach a settlement agreement.
On Monday, Sars said that Malema could still be sequestrated if it is found that he either failed to disclose a material fact relating to his settlement; if it is found that he gave Sars incorrect information; or if he fails to comply with any other parts of the agreement.
Section 204 of the Tax Administration Act allows for a settlement between the tax debtor and Sars. In terms of this signed agreement, the debtor, in this case Malema, must agree to pay back the money owed to the state in a manner prescribed by Sars. With the interest accrued on his tax debt, Malema owes Sars about R18-million.
Adrian Lackay, a spokesperson for Sars, said the revenue service welcomed the fact that Malema had acknowledged his failure to comply with his tax obligations. Malema issued a statement on Monday apologising for previous statements, which accused Sars of pursuing a political agenda against him.
In a statement released on behalf of Malema’s EFF in February, spokesperson Mbuyiseni Ndlozi called the case against Malema an “onslaught” which sought to prevent him from going to Parliament.
“The South African Revenue Services continues to be used by those in the ruling party who fear to meet EFF and the commander-in-chief [Malema] in particular on the ballot, and now want to use courts to take the inevitable electoral victory of the EFF led by the CIC out of the race. The EFF and CIC must be met in elections and rejected by the electorate, not by Sars or the courts,” said Ndlozi.
At the time, Malema intended opposing attempts to sequestrate him in court. But this sentiment changed drastically by Monday. “When my difficulty with Sars became public knowledge, I accepted and acted on advice from persons, which in hindsight, I should not have,” Malema said on Monday.
“It is so that at times I was very frustrated with the process and I may have said things publicly that reflected negatively on the reputation of Sars and some of its officials. Where I may have made public utterances that may have suggested bias or wrongdoing on the side of Sars, I unreservedly apologise. I accept the bona fides of Sars and its officials who have dealt with the matter.”
Lackay said Sars welcomed Malema’s new positition. “Sars accepts Mr Malema’s commitment to ensure that he remains compliant in the future and views the process as ongoing, in respect of Mr Malema’s acceptance that further assessments for tax years 2011 and 2012 will follow. The sentiments and apology expressed in the public statement released by Mr Malema are also welcomed.”
Malema’s tax woes began in September 2012, when Sars obtained a judgment in the Pretoria high court against him, confirming an outstanding tax debt of R16.2-million. Provisional sequestration was then granted in February this year.
Lackay said since then, Malema made two compromise offers that failed as they did not reach Sars’s requirements. “Mr Malema had to meet a number of statutory requirements in order for the compromise to be considered favourably, including making a full and verifiable disclosure in respect of his assets and liabilities and sources of income,” Lackay said.
The provisional sequestration order and the court appointed curator will remain in place until Malema has met the requirements set out in the new compromise agreement, he added.