Former finance minister Pravin Gordhan is alleged to have effectively signed off on creating a R2-million job for the wife of financial consultant Robert Head as part of a deal to secure his services at the South African Revenue Service (Sars).
Head and his then partner Elizabeth Hargreaves were employed at a combined salary of R5-million a year as a result of a letter of motivation for the pair’s appointment from former Sars commissioner Oupa Magashula to Gordhan. The letter is signed as “approved” by both Magashula and Gordhan. The salaries are also significantly higher than the maximum remuneration for their respective employment bands.
The revelations regarding Head’s employment at Sars are seen as a shot across the bow from backers of embattled Sars commissioner Tom Moyane against Gordhan. The former finance minister has accused Moyane of running the institution into the ground.
Moyane’s supporters intend to use the information in retired judge Robert Nugent’s commission of inquiry into Sars.
Gordhan has denied a hand in the employment of Head, saying the decision was made by Sars management, and the commissioner and the minister were only informed for administrative purposes.
Sars employed Head’s wife, Hargreaves, in 2012 to “manage its website”, paying her R2-million a year, because Head wanted her at his side while he lived in South Africa, a source close to the negotiations told the Mail & Guardian. Head denied this.
Head was appointed special adviser to the former Sars commissioner on an annual package of R3-million on a three-year contract.
The M&G understands the submissions will seek to bring into focus Gordhan’s and Magashula’s role and involvement in the appointment of Head — which has been branded irregular by Moyane’s defenders.
“His [Head’s] position was special adviser to Magashula. Sars did not have such a position then and does not have it now, [it] was created for Mr Head by Mr Gordhan and Magashula,” said a Sars insider sympathetic to Moyane.
Since the start of the Nugent commission of inquiry into tax administration and governance between April 2014 and March 2018, the suspended commissioner has found his tenure at the taxman scrutinised and a dominant narrative of how Sars has become weakened since his appointment in 2014 has emerged.
Gordhan and Moyane have been locked in a long-running war in which the public enterprises minister accused the former commissioner of running Sars into the ground, whereas Moyane has accused Gordhan of undermining his leadership.
After this week’s failed bid to halt the disciplinary hearing against him, Moyane’s team warned: “This fight is about to begin.”
Critically, Moyane was asking for an affidavit deposed by Gordhan to be ruled inadmissable.
Head, 60, recently moved back to South Africa to take up an interim position at broke state airline SAA at financial terms that have been described as excessive.
His appointment, at a package of R5.2-million over six months, was questioned by one SAA board member, who claimed the board never resolved on it.
The M&G has learnt from at least two sources that Head had negotiated with Magashula, who at the time did not have the budget to appoint Head, for Hargreaves’s employment as a rider to his own. A single letter between Magashula and Gordhan motivated for both appointments.
For Hargreaves’s newly created role, the letter states that her appointment would help more taxpayers to move towards e-filing and alleviate pressure at branch level.
On the pair, the letter says Sars sought to strengthen its “strategic human capital capabilities and therefore wanted to create the new posts”.
“Both individuals have vast international experience with sought-after credentials,” reads Magashula’s motivation.
Hargreaves was appointed as an “executive: usability management”, a position that had not existed until she was hired, and was scrapped after she left.
One insider said Hargreaves managed Sars’s website, a situation that was described as “ridiculous” by one senior Sars executive.
The documentation shows Hargreaves’s proposed salary fell outside the acceptable range for the position, which is graded 8B, by more than R200 000. The maximum pay for employees in that grade is R1.72-million.
“Usability management will address the perceptions and experiences as highlighted above and also increase the ease of use and learnability of Sars-made systems.”
The insider, who asked to remain anonymous, said Hargreaves’s work was nothing more than managing the Sars e-filing website. “Consider the fact that this person, as an executive, had to have several people reporting to her but not really be responsible for anything because this position was created.”
When approached for comment this week, Magashula referred all queries to Sars, saying that as a former commissioner he was precluded from speaking about anything that happened at the revenue collector.
“When you get appointed as a commissioner you have access to information about everything and everybody and they make it very clear that everything you know is acquired through your position … They [Sars] are the owners of this proprietary information in your mind, and one does not speak about it when one leaves,” he said.
Sars spokesperson Sandile Memela was also coy, saying the tax authority did not comment on details of internal processes and employee information because its human resources policies precluded it.
“With respect to your enquiries about Robert Head and his then-wife Elizabeth Hargreaves’ contracts with Sars, we can confirm that they are no longer with the organisation. Kindly note that the details of their contracts were confidential, and deemed an internal matter,” said Memela.
Gordhan’s office said the decision to appoint executives at Head’s level was taken by Sars management and the commissioner. “If Mr Pravin Gordhan, as minister of the time, was informed of this appointment in the form of a ministerial memo, this was for administrative requirements governing the appointment of executives.
“Mr Gordhan had no role in determining the conditions of service of Mr Head at Sars, including … how these related to members of his family. That was done by the employer: Sars. Mr Gordhan had no relations with Mr Head prior to his appointment at Sars.”
At the time Head, a chartered accountant who has founded and successfully ran two banks in the United Kingdom, had done a stint as chief executive of Old Mutual’s wealth management business, which he successfully turned around. He is also credited with the turnaround at Nedbank, where he was CFO, which was facing dire straits in 2004.
His duties as support to the commissioner included guiding and assisting Sars’s policy direction in support of differentiated services, and providing strategic advice from a subject matter point of view.
At the end of 2013 Head was appointed as interim Chief Financial Officer following the expiration of Trix Coetzer’s contract in December that year.
He then left Sars in 2015 after Moyane’s appointment, and said in a radio interview this year that he was on his way to an Alexander Forbes board meeting in South Africa when he was called by SAA board member Martin Kingston and informed about the job at the national carrier.
Hargreaves, who founded and ran marketing and research consultancy Hargreaves Holdings Lts, had been a lecturer and course leader at Lancaster University’s Management School. Head’s latest appointment, part of a series of questionable decisions by SAA’s management highlighted by the M&G, has been criticised and labelled as “excessive” by the Democratic Alliance.
Other questionable decisions have included costly consultants and executives in Chief Executive Vuyani Jarana and chief restructuring officer Peter Davies’ offices, as well as other expenditure, all while SAA was struggling to make ends meet.
Head insisted his and his wife’s appointments were approved by Gordhan and that she added value to the organisation. “We though about her working elsewhere because someone could make a Sars story out of nothing … Her role only disappeared because it was split into two — research is still done and the web site is also still done — just separately.”
“I did not ask for her to come to Sars. Sars thought it was a good idea. I went through a different process. In addition, we always had different reporting lines as you could expect that only came together at the commissioner.” Hargreaves could not be reached for comment at the time of going to print.