The South African Revenue Service (Sars) appears to be ratcheting up its bid to punish its suspended deputy commissioner, Ivan Pillay, and group executive Peter Richer.
An advisory committee appointed by Finance Minister Nhlanhla Nene this week in effect torpedoed political efforts to reach a settlement with the two men.
The committee, chaired by retired Judge Franklyn Kroon, issued a statement this week, delivering a finding on the so-called Sars “rogue unit”.
It labelled the establishment of this intelligence unit within Sars as unlawful and recommended that the disciplinary proceedings against Pillay and Richer “should be finalised as a matter of urgency”.
Its finding appears to be based almost exclusively on the Sikhakhane report, although it refers to other reports, which are not named.
The illegal spying claims were based on leaks from Sars and were first published in the Sunday Times in October and November last year, appearing under the headlines “Sars bugged Zuma” and “Taxman’s rogue unit ran brothel”.
The claims were purportedly confirmed subsequently by an investigation panel appointed by Sars under the leadership of advocate Muzi Sikhakhane.
Committee bolsters ‘false narrative’
The Kroon committee statement appears to have put paid to the efforts involving ANC deputy secretary general Jessie Duarte and Deputy President Cyril Ramaphosa to broker an exit deal for Pillay and Richer with President Jacob Zuma’s hand-picked Sars commissioner, Tom Moyane.
Three independent sources confirmed that Moyane appeared resistant to any deal.
His hard line may have solidified in the face of a public disclosure by the former Sars spokesperson, Adrian Lackay, who in effect accused Moyane of lying and being part of an informal conspiracy to promote what he termed a false “narrative” concerning a “rogue spy unit”.
He alleged the “stories” were considered convenient by Moyane “as a basis to effectively muzzle, frustrate, victimise and suspend key officials in Sars”.
There has been an exodus of senior personnel since Moyane was appointed in September last year.
Lackay wrote on March?24 to Parliament’s committees on finance and intelligence giving a detailed rebuttal of the “rogue unit” claims.
His letter was only made public on April?21, when it was published by the Democratic Alliance on their website after the committee chairperson, Yunus Carrim, refused to allow the DA to table the letter formally, along with the Sikhahkane report to which it referred.
Instead, the issue was referred to the intelligence committee, which meets behind closed doors.
No evidence suggests a “rogue spy unit”
Lackay, who resigned in February after 11 years at Sars, said there was no “rogue unit”.
He wrote: “Facts to my knowledge suggest the units [there were three permutations of the units over time] were formal Sars units and set up, managed and functioned in a manner no different from any other unit.
“The only distinction between these units and others investigative units in Sars was that members were given leeway to work from home and their activities were kept discreet in order to ensure operational security, and the safety of the respective officials and families over time.”
In particular, he claimed, there was no evidence that the unit bugged Zuma, ran a brothel or conducted illegal intelligence operations.
It is significant that, in March, Moyane himself declined to release the Sikhakhane report, which he had kept under wraps since receiving it November last year, telling the finance committee it was “preliminary and inconclusive”.
This was despite the fact that, in December last year, Moyane had explicitly relied on the Sikhakhane findings when announcing his decision to suspend Pillay and Richer and to disband what remained of the original 27-strong team – the six-member high-risk investigation unit.
This week, acting on the recommendation of the minister’s advisory committee, Sars published the Sikhakhane report on its website.
A stretch of the imagination
It is easy to see why Moyane was hesitant about disclosing the basis on which he took several drastic steps, which included disbanding the Sars executive committee and taking disciplinary action against Pillay and Richer.
To begin with, the terms of reference did not refer to the “spy unit” at all but to the conduct of Johann van Loggerenberg, Sars’s group executive: projects, evidence management and technical support.
The Sikhakhane panel was appointed as a result of a complaint by Van Loggerenberg’s estranged lover, lawyer and self-confessed State Security Agency agent, Belinda Walter.
Initially, the panel was primarily concerned about allegations that Van Loggerenberg had made himself guilty of a conflict of interests and of improper disclosures of taxpayer information regarding Walter, particularly given her position as a representative of small tobacco companies, most of which were under investigation by Sars.
But the panel’s focus shifted dramatically following the Sunday Times’s sensational October 12 report that Sars had bugged Zuma.
In a passage quoted by Moyane when he announced Pillay and Richer’s suspension, the Sikhakhane panel states: “The panel expressed its disappointment that the existence of this [covert] unit was not volunteered to the panel in the early stages of its investigation.
“Even when the panel later confirmed its existence through other sources, some of the relevant witnesses within Sars management presented what seemed like a rehearsed narrative, whose object may have been first to mislead the panel and, second, to present the existence of such a unit in the positive and lawful light.
“This narrative ignored one simple legal imperative – that Sars cannot and should not engage in the intelligence or investigative functions which reside in other agencies of the state.”
But the source of this supposed “legal imperative” is not revealed.
Where is the ‘legal imperative’?
The Sikhakhane panel fails to quote a single line of relevant legislation, except for noting that the National Strategic Intelligence Act prohibits the conducting of covert intelligence gathering by structures other than the South African National Defence Force, the South African Police Service and the State Security Agency.
But the Act specifically provides for “the establishment of any intelligence service by any department of state for the purpose of performing its departmental intelligence functions” and empowers any state department to “gather departmental intelligence”, provided that it does not do so “in a covert manner”.
The Act defines “covert collection” as “the acquisition of information which cannot be obtained by overt means and for which complete and continuous secrecy is a requirement”.
Nowhere does Sikhakhane discuss whether what the Sars unit actually did could be categorised as “covert collection”.
Indeed, regarding Van Loggerenberg, the panel states: “There is no direct evidence linking him to any illegal interception of conversations of Ms Walter or any other taxpayer.”
And elsewhere Sikhakhane accepts as a general rule “that the unit did not have the required equipment to carry out such electronic surveillance or interceptions”, though he suggests this should be investigated further.
Instead, Sikhakhane appears fixated on the idea that the unit itself was kept relatively confidential within Sars, “a unit whose features were that of a covert one”.
The panel appears to accept that the unit’s method of dealing with organised crime was covert “because of the dangers associated with hunting down people who do not play by the rules”.
But the panel, which neither questioned witnesses under oath nor permitted them to be cross-examined, appears to have allowed itself to be carried away by gossip about the tiny unit, based on the intelligence background of some of its members.
“With all their requisite and usually helpful skills, they can alter the very nature, culture and operation of an otherwise civilian structure,” it states.
“It may have the effect of turning a civilian structure into a command and control theatre of intrigue and subterfuge.”
Ironically, given that there is an alternative narrative that suggests Pillay and company became a problem when they began stepping on the toes of President Jacob Zuma, his friends and his party, the Sikhakhane report itself appears to have become a tool in a much wider theatre of intrigue and subterfuge.
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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.