Illicit tobacco trade team targeted fellow Sars employees
The Nugent commission of inquiry into tax administration and governance has heard how a task team — ostensibly established to investigate syndicates in the illicit tobacco trade — instead focused its powers on internal investigations on fellow South African Revenue Service (Sars) officials.
This is according to testimony by a senior member of Sars’ fraud investigations unit — formerly its anti-corruption unit — who asked commissioner and retired judge Robert Nugent not to be identified due to the sensitive nature of her work involving criminal inquiries.
Witness X testified on Wednesday that the task team used “the umbrella of cigarette smuggling syndicates as their mandate to investigate” internal employees.
“If you go into any of those cases none of them deal with their suspects being a part of big syndicated and cigarette smuggling. In fact a lot of them had to do with behavioural issues [of Sars employees],” said Witness X.
It is not clear when exactly the task team was set up, but is understood to be during the course of 2016.
In an investigation that cost taxpayers R3-million, Sars’ acting senior manager of fraud investigations Yousuf Denath was one of the officials who was targeted by the task team after he was accused of colluding with British American Tobacco and undermining Amalgamated Tobacco Manufacturing’s Yusuf Kajee and his associate Edward Zuma, the eldest son of former president Jacob Zuma.
Denath told the commission how he was placed on suspension for one year and three months over allegations that were found on Twitter.
The investigation against him was found to be a “sham” by the presiding officer in his disciplinary hearing and he was reinstated.
One of the charges against him which he called “nonsensical” dated back to an incident in 2011 where he apparently did not produce his Sars identification card in an exchange with Kajee. This despite the fact that the cards were only introduced in 2012.
“I was being targeted because they needed to take over this post and control fraud investigations. This was Sars capture,” Denath told the commission.
“It was driven by commissioner Tom Moyane and supported by chief officers Hlengani Mathebula, his name is all over this, and by employment relations group executive Luther Lebelo, the designer and spokesperson for the new operating model… it was driven at the very top,” he said.
Witness X also told the commision that the fraud investigations unit, which was previously known as the anti-corruption unit, and investigated syndicates operating outside of Sars in collusion with Sars officials was broken down and relegated to investigating fraudulent sick notes and travel details when Moyane’s operating model came into effect.
Once the new operating model was rolled out, the unit, which should have reported to the office of the commissioner as a “first line of defence”, was incorrectly placed within the internal audit department.
Witness X said she made several submissions that the unit should be an independent structure reporting to the head of the organisation and that by being placed within internal audit, reporting lines became muddled, creating a problem for the function and responsibility of internal audit
Witness X said all these submissions were dismissed and at a later stage it was co-located to the Tobacco Task Team that was branded as the “new rogue unit” in media reports.
When asked by commission advisor, Professor Michael Katz, how these changes had affected the unit’s operations Witness X said their operations were severely impacted and they were allocated “rats and mice” cases on behavioural issues, sick leave notes, and travel claims.
“I would definitely say we were not combating corruption with the same capability that we had in the past. If syndicates were operating, we were no longer getting those cases and we were not investigating them”.
“If you understand Sars, it’s a bank. It is probably the biggest bank in Africa. The amount of money that goes through the Sars accounts is huge, trillions that pass through. It’s not as if syndicates will stop targeting those accounts. It’s constantly under threat”.