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04 Mar 2016 00:00
Finance Minister Pravin Gordhan. (GCIS)
The questions from Hawks boss Berning Ntlemeza to Finance Minister Pravin Gordhan are very poorly drafted. Many permit a “yes” or “no” answer, which, as any investigator will know, doesn’t tell you very much.
Three highlights: questions number four, 14 and 22.
Plus, over the years the investigative and intelligence capacity at the South African Revenue Service (Sars) has gone through a bewildering array of name, structural and reporting-line changes – which the questions appear simply to lump together.
Third, lawyers for Gordhan have pointed out that the basis for the Hawks asking these questions is not clear. The Hawks may only investigate crime, and it is not obvious what criminal offence is contemplated by these questions.
The National Strategic Intelligence Act specifically permits government departments to gather “departmental intelligence” – outside the remit of the national intelligence services – provided they do not do so “in a covert manner”. This restriction is poorly defined and it is by no means apparent that the so-called “rogue unit” fell foul of the provisions of the Act.
Even if it did, as legal commentator Pierre de Vos has pointed out, the Act does not create any criminal offences. It seeks to regulate conduct without criminalising it, making it impermissible for the Hawks legitimately to investigate any alleged contravention of this specific legislation.
Many of the questions seem directed at scoring political points, rather than any criminal liability. See, for instance, question 27.
To get around this, a number of the questions seem to be angled at establishing common law offences such as fraud, or raise issues about the funding and management of the unit (or personnel associated with it) that might give rise to offences under the Public Finance Management Act.
1. Does the minister have any knowledge of the disbandment of the National Research Group (NRG) in 2009 when you were the Sars commissioner, leading to the establishment of the high-risk investigation unit (HRIU) or the “rogue unit”?
This appears aimed at questioning the process by which the NRG was disbanded and the termination of the employment contract of its leader, Skollie van Rensburg.
The initial conception for the unit in 2006-2007 was that it would fall under the then National Intelligence Agency (NIA), but be paid for by Sars. All the players admit that such a capacity for gathering intelligence in the illicit economy is needed, now as then.
The NRG was recruited on that basis, but the factional battles in the NIA in the run-up to the Polokwane conference (which ousted Thabo Mbeki as ANC president) meant that the plan was never implemented.
Sars was left with a unit that needed to operate under its own wing, according to a more restrictive legal mandate.
At the same time, Van Rensburg suffered a double family tragedy and was paid out for the rest of his contract in March 2008. Whether this payout was legitimate or was “to keep him quiet” has been the subject of speculation and innuendo.
2. Were there any inputs you gave for the establishment of the NRG or the HRIU?
This is not a serious question.
3. Who were the stakeholders who would form part of the new unit?
4. Do you still remember yourself as the commissioner of Sars recommending the funding model to the then minister, Trevor Manuel, in February 2007 for “funding of an intelligence capability within National Intelligence Agency (NIA) in support of Sars”?
(Erm … Yes, I remember it fondly.)
Manuel signed approval for the proposal in February 2007. Sars would recruit and train (in tax and customs law) people who would be transferred to the NIA, paid for by Sars. The transfer was never implemented.
5. How were the members of the unit recruited/selected? Were Sars recruitment processes followed?
This might be a matter for debate, but hardly for criminal investigation.
6. How is it possible that you recruit even before funding approval is granted for such a capability to exist?
It appears Sars relied on its own budget and resources to recruit 14 external candidates and transfer 12 existing Sars employees to the new unit.
7. Kindly share with us or provide a copy of the agreement between the NIA and Sars.
It is unlikely that Gordhan would be in possession of such a document. According to former head of investigations Johann van Loggerenberg, memoranda of understanding were signed between Sars and the NIA, the Asset Forfeiture Unit, the National Prosecuting Authority (NPA) and others. Van Loggerenberg states that he was even registered on the NIA system to create a legal mechanism to exchange information between the two institutions.
8. What were the aims and objectives (mandate) of the new unit and subsequent operating environments as it changed its name?
As pointed out already, Sars had a legitimate interest in financial intelligence. Gordhan has publicly stated that the NRG, and subsequent investigative units, have “done commendable work in disrupting activities in the illicit economy and raising revenue from high-risk sectors of the economy”.
9. Who was heading the unit and who was it responsible and accountable to?
(Erm … which unit and when? Special projects unit? National research group? Illicit economy research unit? High-risk investigation unit?)
10. Who were Janse van Rensburg, Johan de Waal, Johann van Loggerenberg and Helgard Lombard at Sars, and what were their positions, roles and responsibilities within the unit?
These are operational questions and have been covered in previous inquiries. If Gordhan knows the answers, they will hardly take the Hawks investigation further.
11. As the commissioner (accounting officer) for Sars at the time, were you briefed about all key strategic operations?
11.1. Do you know anything about operation code-named “Sunday Evenings”? The bugging or installation of sophisticated surveillance equipment at National Prosecuting Authority offices?
11.2. Who authorised it? Is this in line with Sars’s mandate?
11.3. What were its objective and targets?
This, perhaps, is the unspoken heart of the matter, the dirty secret that could be embarrassing for both sides, but more so for President Jacob Zuma. The story goes like this. During the Scorpions investigation into former police commissioner Jackie Selebi, it became apparent that the Scorpions (the now disbanded specialised unit of the NPA) were under heavy surveillance by crime intelligence. It also became clear that the police had recruited assistance from within the NPA – notably, it subsequently emerged, from prosecutor Nomgcobo Jiba.
In response, Scorpions Gauteng boss Gerrie Nel apparently obtained approval for the installation of internal video surveillance cameras in offices at the Scorpions’ Pretoria base. A private company was contracted to install the equipment.
Although Nel was unaware of this, a director of the company was well known to members of the Sars unit. Skollie van Rensburg was informed of the internal surveillance and is said to have regularly obtained copies of the NPA security tapes.
The knowledge and transcription of the material was restricted to a handful of people.
The material Van Rensburg gathered was sifted for information relating to the two politically explosive Scorpions investigations – the Zuma corruption case and the Selebi probe.
Transcripts of recorded conversations by NPA staff were provided to Sars deputy commissioner Ivan Pillay, to whom Van Rensburg reported at that time.
A source sympathetic to Pillay has previously told amaBhungane that the information was handed over to “law enforcement”, but there is circumstantial evidence suggesting that it found its way back to the Zuma camp and informed Zuma’s various efforts to lobby the NPA to withdraw corruption charges against him.
Details of the process could prove embarrassing in the light of the Democratic Alliance’s current legal efforts to have charges against Zuma reinstated.
12. Do you know or still rem-ember the HRIU mandate?
13. Did the minister of intelligence (Ronnie Kasrils) approve the establishment of and identify members of the NIA to work within HRIU? Provide evidence.
It is not clear how Gordhan is expected to know or respond to this question.
14. Were there things at Sars (when you were the commissioner) that would have happened without your knowledge?
(Erm … Ya think? And does that include unknown unknowns?)
15. Did members of HRIU appear on Sars’s normal employees’ payroll? Please explain why some, if not all, unit members had two Sars identification cards [one with fake employee details].
According to Van Loggerenberg, the creation of false identification cards was one of the reasons for Van Rensburg’s departure and the cards were recalled.
16. If this unit was operating legitimately, why were they operating from guesthouses, hotels, restaurants and their private dwellings? Further, why were they not provided with Sars laptops to store confidential information?
The unit did operate semi-undercover. Members were not openly identified with Sars. It is not clear whether this was illegal.
17. How was the funding of the unit’s operations managed? Which cost centres were employed?
These are operational questions.
18. Who was the head of the unit and who was it reporting to?
(Erm … see question nine.)
19. Were there any members of HRIU who did not have personal files at Sars? Can you tell us why, if any?
These are operational questions. Gordhan is unlikely to know.
20. Who authorised the procurement of the surveillance equipment to be utilised during the unit’s operations?
Van Loggerenberg has stated: “None of these units, not the [special projects unit], nor NRG or HRIU, acquired any specialised or listed equipment that could be used for ‘intelligence gathering’.”
It appears the equipment detailed this week in a briefing by the minister of state security was actually obtained by the Sars anti-corruption unit, which was an unrelated entity with powers to investigate and monitor Sars’s own staff members.
21. What were Ivan Pillay’s functions at Sars from the period he started working until he retired? The functions must also include the period he was rehired after submitting an early retirement from Sars. And what are his academic qualifications?
The answers to these questions are presumably in Pillay’s file at Sars.
22. Do you still remember which year Ivan Pillay took an early retirement?
(Erm … not right at this moment, no.)
23-25 Is it normal in terms of treasury or pension fund regulations for any department to accept its employee’s early retirement? Why did you authorise that Sars must pay Ivan Pillay an early retirement penalty to the tune of R1.2‑million? Kindly explain why Sars re-employed Ivan Pillay for three years and then extended his contract to five years. In short, he was offered an additional eight-year employment contract – why?
Gordhan will have to answer these questions – and the answers will probably turn on the need to retain Pillay’s deep institutional knowledge and skills. Pillay is a former ANC underground operative who worked closely with Gordhan during Operation Vula in the late 1980s and early 1990s. He is widely regarded as a significant contributor to Sars’s success.
26. We believe you are aware of the KPMG forensic investigations into the existence of a rogue unit at Sars. Do you perhaps have a clue as to why such an investigation is conducted?
This is not a serious question. Gordhan may be tempted to say this probe was conducted as a witch-hunt to get rid of a unit and individuals whose investigations were a threat to politically exposed persons.
27. Did the minister of finance receive the KPMG report? If yes, have you read it since you took office, or did you request to be briefed about its contents by the deputy minister or the commissioner? Have you made any contact with Judge (Frank) Kroon, the chair of Sars’s advisory board on this matter, who is supposed to advise both yourself and the commissioner?
(Erm … what has this got to do with you, General Ntlemeza?)
The exact legal authority the Hawks relied on in sending the list of 27 questions to Gordhan remains a mystery.
But according to both an experienced police officer as well as a criminal attorney, it is in fact quite clear that the questions posed are devoid of due process and any consideration to Gordhan’s constitutional rights.
Ntlemeza sent Gordhan the controversial questions on February 19, shortly before the minister gave the country’s budget speech.
They relate to an investigation of a so-called “rogue spy unit” that allegedly operated within Sars while Gordhan was commissioner.
amaBhungane’s police source said it was clear from the way the questions were “formulated” that the Hawks were treating Gordhan as a suspect in the investigation.
This is despite Police Minister Nathi Nhleko’s assertion this week that the questions were merely part of an ongoing Hawks investigation into the unit.
Nhleko told a media briefing on Wednesday that it was “common cause” that the questions were “questions of clarity … precisely because they are issues the Hawks are looking at”.
Yet he provided no clarity on what charges or legal authority the questions were guided by.
”If one is a suspect, Section 35 of the Constitution prescribes that a warning must precede questions”
Nhleko said it was “strange” that he had to clarify these matters, “because the police are governed by both the Constitution and the Police Act to do their work”.
While this is technically correct, Gordhan’s rights, like every South African, are protected by the Constitution, a criminal lawyer explained.
He added that the tone of the questions indicated that they were written for a suspect, in which case investigators have to warn Gordhan before he answers anything.
Section 35 of the Constitution protects the rights of an accused and the rights of suspects – those under investigation and those who are suspected of committing an offence.
The section stipulates, amongst other things, that an accused person has the right “not to be compelled to give self-incriminating evidence”.
On his reading, the police source said it was obvious that “there was no legal consultation” in preparing the questions. “Because if there had been, it would be clear if the minister [was] a suspect or an ordinary witness”.
“If one is a suspect, Section 35 of the Constitution prescribes that a warning must precede questions. In this matter there are no cautions that are advanced except to say the minister may consult his legal representatives.
“These questions are crafted in a form of cross-examination, which is designed for suspects,” the police officer said.
“If Gordhan is just a witness, [the Hawks] must say so. Surely, this is not a Section 205 of the Criminal Procedures Act where a recalcitrant witness is compelled to answer by a court?”
”... he is [being treated as] a suspect… ”
The criminal lawyer who preferred not to be named said if Gordhan were his client he would advise him not to answer the questions unless he was subpoenaed.
“If a case docket been registered and if he is a suspect he will answer the questions in terms of a warning statement”. He said that while there was nothing necessarily “unusual in the questions”, the proper channels “for which to do this” have to be followed.
The questions, he said, “insinuate that [Gordhan] is involved in what they ([he Hawks] allege they are investigating. I infer that he is [being treated as] a suspect. He needs to be informed if he is a suspect and that he has rights in terms of Section 35 of the Constitution.
“He needs to ask, ‘Am I a suspect? What am I a suspect in? What is the basis for the questions?’”
Meanwhile, Gordhan’s attorneys have asked what authority the Hawks relied on in “ directing these questions to the Honourable Minister”, and also if the Hawks are investigating an offence. And if they are, what the offence is.
At the same time his lawyers have requested an extension to respond to the questions – Ntlemeza had given Gordhan a March 2 deadline.
... Ntlemeza states that he “deems it fit” to allow Gordhan a “reasonable amount of time” to consult with his lawyers”.
Although Nhleko tried to skirt the issue, an information note Ntlemeza sent to State Security Minister David Mahlobo, provided specific details of the case.
In the note marked “secret” and published by City Press last week, Ntlemeza states that a case of “corruption, fraud and contravention of Regulation of Interception of Communications and Provision of Communications Related Information Act, 2002” was opened after Sars Commissioner Tom Moyane lodged a complaint in May last year.
The Hawks boss added that his unit was “pursuing the investigation into unlawful activities allegedly perpetuated by the Sars disbanded Rogue Unit”.
Despite the availability of this information, none of it is contained in Ntlemeza’s letter to Gordhan – he only references the case number.
While the only hint that the questions are legally significant to Gordhan is where Ntlemeza states that he “deems it fit” to allow Gordhan a “reasonable amount of time” to consult with his lawyers”.
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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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