Attempts to reform the embattled South African Revenue Service (Sars) are being thwarted by former commissioner Tom Moyane loyalists.
President Cyril Ramaphosa on Wednesday appointed former Sars deputy commissioner Edward Kieswetter as the commissioner of the tax authority from May 1 for a five-year term.
But he will enter an agency in a state of limbo, with low morale and continuing factional battles — and staff embarking on a full-blown strike. The strike is seen as part of the fightback by Moyane’s allies, who are allegedly manipulating the unions for their own purposes. Outside Sars’s headquarters in Brooklyn, Pretoria, on Thursday, workers held placards saying “Bring Moyane back”.
The political battles largely centre on some of the senior leadership appointed by Moyane and who have remained in place since his departure last year.
The Mail & Guardian has established from staff within the organisation, who wished to remain anonymous, that the tax agency is in a “very precarious state”, with the Moyane faction still largely in control.
Resource constraints have also resulted in a freeze on appointments, which follows the massive exodus of skilled personnel during Moyane’s ruinous restructuring, which hamstrung the tax agency.
A number of Sars staffers, who were allegedly sidelined by Moyane and his cohorts for threatening powerful interests, like that of the illicit tobacco trade, are currently appearing before the Commission for Conciliation, Mediation and Arbitration (CCMA).
The continued instability at Sars comes months after the Nugent commission of inquiry into governance and administration at the tax agency wrapped up its work and more than a year since the departure of Moyane, who was found to have orchestrated the destruction of Sars along with Boston-based consultancy Bain & Company.
The aim of the commission, chaired by retired Supreme Court of Appeal Judge Robert Nugent, was to uncover why Sars had failed to meet its revenue targets for four consecutive years under Moyane and to return the institution to optimal functioning.
A revenue collection hole of R142-billion over the past five years has had a negative impact on the fiscus and a turnaround at the tax agency is critical to stabilise government finances. Coupled with finding money to fund free higher education, the shortfall in revenue contributed to the treasury’s decision to increase value-added tax last year.
Sars told the M&G that, given the state of the economy, revenue collection, consumer spending and other factors, cost-cutting measures had been implemented throughout the government.
“The cost-cutting theme impacts the whole of government and is evident in the reduction of the grant that Sars receives from national treasury,” the tax agency said.
The Nugent commission found that the restructuring conducted by Bain & Company had displaced 200 managers, many of whom ended up in posts with no role or job descriptions, and, as a result, many had left “in exasperation”.
The situation remained pretty much the same, said a senior official in the organisation, with those placed in “supernumerary” posts remaining there, despite the need for their skills elsewhere in the institution.
Another said the “Moyane clan” continued to run things and were “still pulling the strings”. Despite Moyane’s departure, the Sars executive committee remained packed with his loyalists.
Sources said acting commissioner Mark Kingon had effected some “cosmetic changes” but that he lacked the courage to act against Moyane loyalists.
“The entire organisation seems to have come to a standstill,” one source said.
The information technology department lacks leadership and strategic direction. The controversial Sars head of IT, Mmamathe Makhekhe-Mokhuane, who the Nugent inquiry heard was ill-equipped to run the critical division, has been placed on leave.
IT is critical to its turnaround. The inquiry revealed that Sars’s e-filing system could collapse by 2020 if key upgrades are not made.
A senior official in the IT department said little has been done to rectify the problems. Another source said many employees were despairing because of the inaction.
Sars said it had initiated internal processes against certain senior officials but it could not provide details because of employee-employer confidentiality.
It said there was still much to be done in terms of succession planning and counselling of staff who were affected by the restructuring, but this was being addressed.
Since the beginning of the year, a number of staff members have approached the CCMA after Sars had failed to restore them to their posts.
Trade union Solidarity’s head of legal, Anton van der Bijl, who represented former Sars head of internal investigations Yousef Denath at the CCMA and won, confirmed that the union has received several requests for assistance from Sars staff.
Denath was suspended from the tax agency on trumped-up charges by a unit appointed by Moyane that targeted investigators working on sensitive illicit tobacco trade investigations.
Van der Bijl said many of the staff members who hadapproached him had had similar experiences to that of Denath. He said most of them were “cleared out of Sars because they did not conform to the political agenda” of those in charge.
Despite the Nugent inquiry recommending that disciplinary action be taken against Luther Lebelo, a key Moyane lieutenant who drove his agenda, no action had been taken by Kingon.
“There is so much evidence against Lebelo but nothing was done,” said an insider.
Sars said it had embarked on a journey over the past year to
stabilise the institution with the re-establishment of a compliance strategy unit, a large business centre, an illicit economy unit and an internal anti-corruption unit.
Kieswetter said he believed, with inspirational leadership at the helm, the situation could be turned around. He said he was “emotionally ready” to take on the challenge.
At a briefing on Thursday, he said he would “start working immediately to identify those who are like-minded and aligned” in the organisation. He would begin by going after those who do not pay their taxes.
Meanwhile, the strike at Sars entered its second day on Friday, with the agency sticking to its 7% offer and unions demanding 11.4%.
In a statement on the strike, Sars said it had disclosed its financial woes to labour “down to general ledger level”. It confirmed putting in place budgetary cuts and cost-containing measures and has not made provisions for bonus payments and external bursaries because of its financial situation.
“Sars has explained to organised labour that it has a bigger responsibility than only considering the current salary increases. It needs to also consider the organisation’s financial wellbeing for the next three years, especially considering the weak economic conditions and Sars’s current and projected budgetary deficits.”
Labour is not backing down.
Sars has approached the CCMA to intervene in the matter. It has appealed to the public for patience, because the strike is likely to affect its service centres and border posts.