Testimony before the Nugent commission this week revealed how irregular and unlawful conduct at the South African Revenue Service (Sars) continued, partly because whistle-blowers had limited protection.
The commission, chaired by retired judge Robert Nugent, kicked off its third round of hearings this week. It uncovered that, in addition to the dodgy tender with consulting firm Bain & Company, Sars had entered into a tender contract worth more than R200-million with global advisory firm Gartner that appears to be irregular.
The inquiry is investigating tax administration and governance problems at Sars between April 2014 and March 2018, when Tom Moyane was commissioner. He has been suspended.
A presentation to the commission led by the chief director of supply chain governance at the treasury, Solly Tshitangano, suggests that Gartner was awarded a multiphased tender to review Sars’s information technology strategy and modernisation programme.
This is despite the fact that Gartner was not the first choice for the contract.
The contract, which seems to have been awarded in January 2015, was won in a closed, noncompetitive tender process that did not meet treasury’s regulations for deviations.
Email correspondence between Sars officials and Gartner also indicates that the company was responsible for drafting its own terms of reference on the tender and had appointed subcontractor Rangewave Consulting,a firm that allegedly has links to Moyane,without disclosing this to the treasury. This constituted possible grounds for disqualification.
The contract seems to have been extended and changed on numerous occasions for Gartner’s benefit, and to increase the tender costs.
Tshitangano said a crucial question to ask is: Where were the whistle-blowers when these events were taking place?
He said the problem was that South Africa’s systems do not effectively protect whistle-blowers, which is why no one came forward on time with information that would have led to investigations into these contracts.
“Because it’s only whistle-blowers who would’ve told you and say, ‘but go and check that contract’ and then you will have to check: one, two, three. It’s one area of concern that we obviously we need to look at,” Tshitangano said.
Two senior officials who work in the internal fraud investigations unit, formerly known as the anti-corruption unit, explained how trust had broken down between the corruption-busting division and employees when the names of whistle-blowers were leaked. This would come to be dubbed “the new rogue unit” by the media — was granted access to emails on the Sars server.
The request was made by a member of the task team, Gobi Makhanya, in October 2016. He asked for permission to download the emails on a list of several people outside of Sars, and those of about 10 members from the internal anti-corruption unit. The rationale given for this request was that these people had been linked to cigarette smuggling.
Yousuf Denath, the acting senior manager for fraud investigations — whose email address was on the list — said the effect of the download was “catastrophic”.
“I mean every whistle-blower, every complainant, every person who has reported anything, their details, their information and what they reported, is on my laptop,” said Denath.
Witness X, who asked not to be named, told the commission that it had opened them up to risks because whistle-blowers report cases directly to managers, and two of the people on Makhanya’s list were managers.
“It became a real problem in that one of the whistle-blowers had actually reported something [to a manager] relating to one of the tobacco task team members, [who] had become aware of the report,” said Witness X.
“The whistle-blower was then approached by the tobacco task team member and was under the impression that the manager in our [unit] had actually gone and informed the very suspect that the person had reported, that he had been reported on, so a further breakdown in trust with us,” Witness X added.
Witness X said the task team member further used the emails to defend himself in a separate matter, where he was asked to explain his actions relating to the allegations brought against him.
Witness X said it was a “complete breach of information, security and abuse of power” because he had used the information that he was privy to by virtue of the investigation for his personal gain, instead of following due process.
Tebogo Tshwane is an Adamela Trust business reporter at the Mail & Guardian.