Moyane clings to existence of so-called 'rogue unit' despite KPMG confession
Sars commissioner Tom Moyane has insisted that there is evidence to support the notion of a so-called “rogue unit” in Sars, despite a blow from auditing firm KPMG which withdrew its findings on the unit.
Moyane announced in a press briefing on Monday that the South African Revenue Service is now pursuing legal action against KPMG for the “reputational damage” he says the firm has caused Sars. The Sars commissioner failed to address how recommendations made by Sars’ own legal advisors, Mashiane Moodley and Monama, were copied and pasted into a draft version of the report that was sent to Moyane.
Instead, Moyane has now distanced Sars from KPMG and pursued allegations that the alleged “rogue unit” did exist. Referencing the internal investigation headed by advocate Muzi Sikhakhane and the Kroon report, Moyane said that there was evidence to support the establishment of the so-called “rogue unit”, and that the KPMG report was not the evidence Sars relied on to pursue disciplinary investigations against senior officials such as Ivan Pillay and Johann van Loggerenberg. The Sikhakhane investigation found that Pillay and van Loggerenberg were allegedly implicated in unlawful conduct.
“KPMG report was delivered to Sars in late 2015 and was only made final on the January 26 2016. It, therefore, follows that the disciplinary hearings against the above were not conducted as a result of the KPMG report but on the basis of the Sikhakhane report,” Moyane said.
But Moyane admitted that the KPMG report was handed to the Hawks for their investigation into the so-called “rogue unit”. The Hawks pursued a case against former finance minister Pravin Gordhan, and infamously summoned Gordhan in 2016.
Gordhan was Sars commissioner at the time the alleged “rogue unit” was rumoured to be established.
Both the Kroon report and the Sikhakhane investigation have been criticised. The Kroon Commission was accused of endorsing the Sikhakhane investigation’s findings without properly investigating the allegations, while the Sikhakhane report was criticised for excluding relevant legislation and failed to explain why the actions of accused officials at Sars was found to be “rogue” or “covert”.
“KPMG report gave me goosebumps”
On Friday, two hours before KPMG made its public announcement, its lawyers at Norton Fulbright sent an email to Moyane’s office on behalf of KPMG. They informed Moyane that they were retracting parts of their report into the “rogue unit” and that the standard of work on the report did not live up to the firm’s international expectations.
Moyane was stunned.
“I didn’t find the report as flawed. On the contrary, it gave one goosebumps that what Sikhakhane had found was just the tip of the iceberg,” he said on Monday.
An angry Moyane lashed out at KPMG for not giving Sars an opportunity to respond to the firm’s course of action before it was made public. Moyane said that the KPMG report is the “exclusive property” of Sars and that KPMG had broken its contractual obligations to the revenue service when it agreed to investigate the so-called “rogue unit”.
He suggested that because Sars owns the intellectual property of the report, KPMG can only announce a “purported withdrawal”. Sars and KPMG had signed a service level agreement to govern their relationship.
“Sars sees KPMG’s conduct as nothing else but a dismal attempt to portray Sars, its leadership, and in particular Sars Commissioner as incompetent, corrupt, inefficient and involved in a witch-hunt,” he said.
Moyane has been accused of such a witch-hunt against Gordhan, in part because he laid a criminal complaint against Gordhan with the Hawks in 2015. The Sars commissioner is perceived as a Zuma ally.
In his reaction to the KMPG statement, Gordhan said that the firm had implicated itself in the state capture of Sars.
In distancing the revenue agency from KPMG, Moyane announced that Sars would seek the following action against KPMG:
1. It would report KPMG to Finance Minister Malusi Gigaba so that the firm can be blacklisted and all its work stopped.
2. It would immediately seize all work from KPMG that it commissioned and review the work performed over the last 10 years
3. It would report KPMG to relevant statutory auditing bodies
4. It would report KPMG to Parliament through its standing committee on public accounts and standing committee on finance
Despite KPMG withdrawing the majority of its report, including its findings, Moyane emphasised that parts of the report have not been retracted. He suggested that excerpts from the report can therefore still be considered evidence against the so-called “rogue unit” and that a “disingenuous” campaign was being actioned against Sars.
The commissioner says he “doesn’t have a name” for the people involved in this alleged campaign.