Tax boss's actions under scrutiny

Tom Moyane. (Leon Sadiki)

Tom Moyane. (Leon Sadiki)

New doubts have been cast on the decision by South African Revenue Service (Sars) boss Tom Moyane, recently appointed by President Jacob Zuma, to suspend his deputy, Ivan Pillay, and another key official.

Documents seen by amaBhungane show that allegations that Pillay and Peter Richer presided over a rogue Sars intelligence unit that spied on political luminaries have been recycled – and rebutted by Sars, repeatedly, since 2009.

Richer is the group executive for strategic planning and risk.

Moyane faced an embarrassing climb-down on Wednesday when Sars was forced to agree to revoke Richer’s suspension after the two men challenged the decision in the labour court. On Thursday Judge Annelie Basson ruled Pillay’s suspension was illegal and she ordered Moyane to reinstate him with immediate effect.

The documents include Pillay’s extensive submission to the Sikha­khane panel of inquiry into Sars’s head of investigations, Johann van Loggerenberg, and Pillay’s 34-page response to the panel’s final report.

The documents suggest the claims of a rogue unit only gained purchase after Moyane took over in September and they show that Pillay argued strongly that the allegations were given spurious credibility by the inquiry panel, led by advocate Muzi Sikhakhane.

Moyane suspended Pillay and Richer on December 5, after having received the panel’s report a month before.

Allegations investigated
The Sikhakhane panel was appointed by Pillay himself, who was acting as commissioner before Moyane’s appointment, to investigate allegations made against Van Loggerenberg by his estranged lover, former State Security Agency agent Belinda Walter.

Walter alleged Van Loggerenberg had conducted illegal surveillance of her and others and had disclosed confidential taxpayer information.

But, following media reports about the existence of an alleged rogue unit in Sars, the panel expanded its own mandate to investigate the establishment and legality of the so-called national research group (NRG).

The unit, established by Pillay and Richer in 2007, and later managed by Van Loggerenberg, was intended to investigate high-risk tax and customs offences, particularly relating to organised crime.

The Sikhakhane panel found the establishment of the unit was unlawful and that it “may have abused its power … by engaging in activities that reside in the other agencies of government, and which it had no lawful authority to perform”.

The documents reveal that:

  •   Pillay warned Moyane that Sikhakhane’s report was deeply flawed and that he risked damaging Sars if he acted on its purported findings;
  •   Pillay highlighted the failure to call Richer to appear before the Sikhakhane panel at all, despite the fact that Richer was instrumental in conceiving the unit;
  •   Pillay documented for the Sikhakhane panel how the State Security Agency had investigated substantially the same allegations about a rogue unit as early as 2010, with the co-operation of Sars, but had not come up with any findings;
  • Pillay laid out for the panel how the alleged existence of the unit had been used repeatedly by opponents of Sars since 2009 to try to undermine the organisation and stymie its investigative capacity; and
  •   Pillay had argued the small intelligence-gathering capacity developed by Sars was legal, within its mandate and had played a crucial role in a long list of high-profile cases.

Pillay is scathing about the panel report.

Evidence, he noted, was “not simply allegation, but factual material”. He argued that the panel had relied on unnamed sources, failed to weigh up the veracity of evidence, and had indulged in “facile psychological commentary that should have been avoided”.

He stated: “The panel, for instance, refers to how Sars were ‘hypnotised’ by Van Loggerenberg’s perceived power and charm. It also refers to … entering the world of ‘intrigue, deceit and subterfuge’, and to an atmosphere of fear that the existence of former intelligence operatives induced in Sars. No facts are proffered to support these observations.”

The panel, Pillay disclosed, took a decision to extend its mandate to investigate the unit based on what was reported in the media.

A Sunday Times report claimed that the unit had planted a listening device in Zuma’s Forest Town home in Johannesburg and had illegally carried out covert intelligence gathering.

Despite finding no evidence that Zuma or anyone else had been bugged, the panel ruled its activities were covert and therefore illegal in terms of applicable intelligence laws.

But Pillay argued the panel failed to deal with the factual and legal technicalities of whether Sars could engage in legal intelligence gathering of a “departmental” nature, which the National Strategic Intelligence Act allows.

In his critique, Pillay said: “The report states that the NRG operated as a covert unit or had elements of a covert unit. Nowhere in the report does the panel explain its definition of ‘covert’ …”

Panel mistake
Pillay said, in reaching this conclusion, the panel had probably made three errors. First, it relied on untested allegations. Second, it conflated the unit as planned in 2007, when it was originally to be housed within the National Intelligence Agency, with the unit that was established after the NIA pulled out. Third, the panel did not distinguish between “discreet” investigation of legitimate Sars targets as opposed to the covert gathering of national security intelligence, which was the preserve of the statutory services.

Pillay said it appeared the panel had not taken into regard his extensive main submission about the development of Sars’s investigative capacity, including the unit.

Attempts to reach Sikhakhane were unsuccessful. His voicemail said he could not be contacted until the end of January.

In his affidavit before the Labour Court, Pillay said that, when Moyane suspended him on December 5, Pillay again raised his concerns about the Sikhakhane report.

“I said to him that I had given him my written response to the Sikhakhane report and asked him if he had read it. He told me that he did not read it and that he would not read it, as it was just my opinion.”

If the outcome of the case is any measure, it seems Pillay’s opinion still carries some weight – at least for now.

Van Loggerenberg remains suspended and still faces a disciplinary hearing relating to alleged breaches of Sars regulations flowing from his relationship with Walter.

Asked for comment on Thursday, the Sars spokesperson, Marika Muller, said: “Sars respects the decision of the court. We will only be in a position to comment further once we have studied the full ruling.”

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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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