Sars pursues millions in undeclared income

According to the charge sheet, Malema is alleged to have received about R4-million as a result of his association with On-Point Engineers.  (Delwyn Verasamy, M&G)

According to the charge sheet, Malema is alleged to have received about R4-million as a result of his association with On-Point Engineers. (Delwyn Verasamy, M&G)

The R16.2-million tax payment demanded by the South African Revenue Service (Sars) from Julius Malema suggests that it has traced about R14-million in undeclared income that accrued to the former ANC Youth League president.

According to the tax judgment obtained by Sars in the North Gauteng High Court on September 11, Malema has been assessed for income tax of about R4.7-million, meaning he would have earned roughly three times that – about R14-million.

However, because he failed to declare the income, Sars has levied an additional tax penalty of twice the outstanding tax – R9.4-million – as well as interest of R2-million.

According to the charge sheet, Malema is alleged to have received about R4-million as a result of his association with On-Point Engineers and its disputed contract with the Limpopo roads and transport department. But other Malema-linked companies are known to have benefited from construction and health contracts in Limpopo as well as from a number of property transactions.

It is understood that Sars took the precaution of notifying Malema's lawyers of its intention to seek the debt judgment, although it is not obliged to do so. Malema did not challenge the assessment, though he may still do so, nor did he make re-presentations to Sars.

His attorney, Nicqui Galaktiou, declined to comment on his tax affairs, but it is understood that the ball is now in Malema's court, failing which Sars will ask the court sheriff to begin attaching his property.

Money laundering
Whether or not Malema is found guilty of money laundering, it is likely there will be an effort to recover the On-Point money paid to him as the proceeds of crime, probably by the Asset Forfeiture Unit. Public Protector Thuli Madonsela's draft report about the On-Point contract recommended such recovery.

Meanwhile, the Limpopo roads and transport department has firmly rebuked Madonsela's draft findings, dismissing her criticism of its officials and arguing that there is no basis for her finding that the contract with On-Point was unlawful and invalid.

Madonsela based her findings on "the fact that the awarding of the contract to On-Point was based on deliberate misrepresentations and noncompliance with procurement precepts". However, the department has taken issue with each of these points, saying that the auditor general also investigated the On-Point contract and did not find it irregular.

For instance, regarding the protector's claim that On-Point was allowed to submit a tax-clearance certificate after the tender deadline, the department has argued that the company submitted a certificate at the time of the bid in the name of a shelf company called Achir Shelf 8. This company was later renamed On-Point Engineers and the department said it later requested a new certificate reflecting the new name, but the bid was in fact compliant.

The department has similar explanations for other decisions it took regarding the tender process, arguing that, although the protector might disagree with them, they were not unlawful. Up to now, there has been no evidence produced that anyone from the department received any gratification for the selection of On-Point.

* Got a tip-off for us about this story? Email amabhungane@mg.co.za

The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.

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