/ 14 December 2018

Sars breakdown was inevitable with Moyane at the helm — Nugent

Moyane was suspended on March 19 in a letter by Ramaphosa
Tome Moyane’s supporters intend to use the information in retired judge Robert Nugent’s commission of inquiry into Sars (Esa Alexander/The Times)

The breakdown of the South African Revenue Service (Sars) was inevitable the minute Tom Moyane was appointed commissioner, says retired Judge Robert Nugent after six months of investigations into tax governance and administration at the revenue service.

“He arrived without integrity and then dismantled the elements of governance one by one. This was more than mere mismanagement. It was seizing control of Sars as if it was his to have,” Nugent said in the Sars commission of inquiry’s final report.

In the 200-page report published by President Cyril Ramaphosa on the Presidency’s website on Friday, Nugent said governance and integrity failed on a massive scale during Moyane’s era at the helm. 

“Dissent was stamped out by instilling distrust and fear. Accountability to other state authorities was defied. Capacity for investigating corruption was disabled. On the eve of his suspension, Mr Moyane was about to dismantle governance over the settlement of major tax disputes.”

Nugent said Moyane broke down the structures of good governance in Sars to achieve the seizure of the revenue services by driving out and marginalising senior management and replacing them with those who would be more compliant. He also halted the development of Sars’s IT systems, which had its own function of oversight through built-in checks and balances that were “pulled apart”.

Nugent pointed to international consultancy firm Bain & Co. as strategising the “premeditated offensive” for Moyane to take hold of Sars and recommended that the National Director of Public Prosecutions institute criminal proceedings against those who were involved in issuing the tender to Bain.

Moyane appointed Bain in 2014 to restructure Sars’s operating model — a move that resulted in the breakdown of Sars internal and external investigative abilities and the exodus and exclusion of a large number of skilled employees.

The former head of the local office of Bain — Vittorio Massone — previously told the commission he had a meeting with Moyane in October 2013 prior to him being appointed commissioner a year later. The purpose of this meeting was to “advise Mr Moyane on how to achieve his professional goals”.

It is at this meeting where a presentation titled Sars 2.0 was tabled before Moyane and one of the recommendations was to “transform Sars into an innovative revenue and custom agency” — despite the fact that Bain and Moyane had “never set foot in Sars”.

“[Bain] knew nothing of the road Sars had travelled, nor of the vision upon which its organisation had been built, nor of the plans Sars had in place for its development. All it had were figures drawn from public sources,” the report says.

“Mr Moyane’s interest was to take control of SARS. Bain’s interest was to make money,” said Nugent.

According to the report, Bain has repaid Sars the money it received for the restructure with interest, which amounts to just under R217-million.

The report also recommends that global advisory firm Gartner who conducted a multiphased restructure of Sars’s IT system should have their contracts set aside and repay back the money paid where their services “added no value to Sars”.

Nugent said employees who were sidelined and placed in redundant posts should be evaluated and moved to more meaningful positions. In addition positions in the whole institution should be evaluated and where gaps are located former employees need to be recruited to fill those posts.

Performance reviews should also be extended to the current members of the executive committee to assess their competency, while the those who were hired without ministerial approval should be examined, he said.

Nugent said in the process of conducting the inquiry the commission found that there were other areas that warranted inquiry and recommended that Sars appoint an inspector general who will serve a period of five years.

The inspector general would have oversight powers and the ability to intervene when there are signs of governance failure.

“If that recommendation is accepted, the President might wish in the interim to consider re-constituting the commission, in this or some other form, with altered terms of reference, to inquire into other matters of failed governance that could assist a new commissioner to rehabilitate Sars,” said Nugent.