Fareed Khan, the executive responsible for compliance in enforcement, told the Nugent Commission on Thursday that units capacity had been stalled and decreased over the past four years. (Oupa Nkosi/M&G)
Finance Minister Pravin Gordhan vs President Jacob Zuma vs the Hawks vs state owned enterprises vs the South African Revenue Service (Sars) vs the whole damn country. It’s a messy web of politics, money and ruthless allegations and despite the length of time the saga has been playing out, very few questions have been answered with facts. So how do we go about untangling the web?
1. The very beginning, a very good place to start
In 2007, Gordhan was commissioner of Sars when he oversaw the formation of an investigative unit called the National Research Group (NRG).
“The unit did not initially have a name but was later successively known as the Special Projects Unit, the National Research Group and the High-Risk Investigations Unit. I participated in the decision to establish the unit in February 2007,” Gordhan said in a statement.
The unit, Gordhan said, was established to make sure taxpayers complied with tax laws. It had a broad scope, from cases where tax returns weren’t paid to tax evasion and drug trafficking. At the centre of it all was organised crime.
“It became apparent to Sars that it had to enhance its capacity to gather intelligence (departmental intelligence) and investigate organised crime related to tax and customs legislation (for example cigarette smuggling),” Gordhan said.
Sound good, right. So what’s the problem?
2. The so-called “rogue unit”
Even the term “rogue unit” sounds spooky – and it’s meant to be. Belinda Walter, an attorney in Pretoria and alleged spy for the State Security Agency (SSA) who worked for British American Tabacco (BAT) and had a relationship that ended badly with one of the Sars accused, was one of the most prominent people to get alarm bells ringing over Sars’ rogue problem.
BAT has been linked to the Sars mess as it sought to protect its interests through allegedly hiring SSA agents to watch its competitors. The Sars unit is believed to have begun investigating these allegations when everything went up in smokescreens.
The Sunday Times perked up when the allegations of a rogue unit were made and began digging. They would subsequently be forced to retract and apologise for the 30 stories they published between 2014 to 2016 that confirmed an illegal unit existed within Sars, because they did not have the evidence to turn fiction into fact.
The paper was instrumental in propelling the idea that a “rogue unit” exists, but it was also not alone. The Hawks, despite having little to go on, are still pursuing the case.
3. Ah, the Hawks.
When Gordhan stepped up as finance minister after Nhlanhla Nene was dismissed, the Hawk’s came knocking with 27 questions about the unit. Gordhan responded but when he asked why the Hawks were interested in him, there was no response.
“The Hawks declined to answer my questions seeking clarity on what offence they were investigating and by what authority they were acting. They merely referred me to the powers conferred to them by chapter 6A of the South African Police Service Act 68 of 1995. None of the provisions of chapter 6A entitle the Hawks to demand answers, set deadlines and threaten me with retaliation if I fail to respond. The deadlines and threats of retaliation were accordingly unlawful,” Gordhan said.
Officially, nobody knows what the Hawks are up to and charges have yet to be pressed against Gordhan or any of the former senior Sars officials, who include Ivan Pillay and Johan van Loggerenberg, accused alongside him.
A whole lot of people think the Hawks are part of Zuma’s alleged plan to capture the state and the national treasury.
4. State capture and the politics
By discrediting Gordhan, the presidency might be able to hand the finance ministry to someone who could turn a blind eye to shady Gupta deals and what’s going on in state-owned enterprises. Earlier this week, Zuma was named as the chairperson of a co-ordinating committee that will have oversight over state-owned enterprises.
Gordhan has been seen as an obstacle that is thwarting any attempt to corrupt the treasury. Notably, he has tried to block intereference in the SAA probe, which is chaired by Dudu Myeni, a personal friend of Zuma’s.
When the letters demanding that Gordhan and other senior Sars officials present themselves to the Hawks were sent this week, state capture was one of the elements seen as a motive behind the Hawks investigation into Gordhan.
5. The NRG and the investigations into it
The NRG no longer exists. When allegations first emerged of the “rogue unit”, four investigations took place – the Kroon Commission, the Kanyane Panel, the Sikhakhane Panel and the KPMG report (which is gathering dust and yet to see the light of day).
The Sikhakhane Panel found that the group used illegal methods to get information. Intercepting phone calls and emails, bugs and surveillance were allegedly used on taxpayers.
However, the Hawks can’t produce any charges relating to this because they don’t have the evidence to back it up.
Some are still waiting for the KPMG report to be released (after all, it has been eight months since the thing was completed). But BAT is one of KPMG’s clients and the company also formerly did auditing for the Guptas. KPMG failed to disclose its link to BAT, which has aroused suspicion that the report may be compromised.
With all these investigations, nothing has been found to prove that a rogue unit existed under Gordhan’s leadership at Sars. The finance minister has been resolute in saying he has done nothing wrong and on Wednesday made a statement that went viral: “Let me do my job”.
6. The NPA charges against Gordhan
The penny dropped when National Prosecuting Authority head, Shaun Abrahams, announced that the NPA is charging Pillay, former Sars commissioner Oupa Magashule and Gordhan with fraud in relation to their authorisation of Pillay’s early retirement in 2010, which saw him receive full benefits.
Gordhan has said that he did not financially benefit from Pillay’s early retirement and everything was handled above board. It’s still unclear exactly how Gordhan, Pillay or Magashule were involved in fraud, as all three would have to have benefitted from an act they committed under false identity in order for the charges to stick.
With suspicious timing, the charges may very well be Zuma’s last stand as Madonsela – who found the president guilty of wrongdoing in her investigation into the Nkandla homestead – bows out of office and Gordhan is set to appear before the courts in November. The charges were also announced days before Madonsela is set to release her report on the public protector’s probe into Zuma and state capture.
The rand took a knock after the news came that Gordhan has a date with the courts – investors tend to get nervous when the minister of a nation’s entire economy is in a risky situation – but all eyes are on Zuma vs Gordhan to see who will be the last man standing, and if the economy will hang in there while the battle goes on.