Public Protector finds Gordhan violated Constitution in setting up Sars ‘rogue unit’

Public Enterprises Minister Pravin Gordhan. (Oupa Nkosi/M&G)

Public Enterprises Minister Pravin Gordhan. (Oupa Nkosi/M&G)

Public Protector Busisiwe Mkhwebane has revived the discredited ‘rogue unit’ saga, finding that former South African Revenue Services (Sars) commissioner Pravin Gordhan violated the Constitution in establishing it.

It is likely that the report — issued by Mkhwebane on Friday — will be reviewed and will culminate in yet another showdown with Gordhan before the courts. Gordhan has consistently denied that the unit was illegally established, claiming that its genesis formed part of the fight against the illicit economy.

The so-called Sars rogue unit first surfaced in reports in the Sunday Times in 2014 and has been at the heart of an intense factional battle against Gordhan within the ANC. The paper subsequently apologised for the report and withdrew it. However, it was confirmed in an internal report by former president Jacob Zuma’s lawyer, advocate Muzi Sikhakhane, who found ‘prima facie’ evidence that the establishment of the unit was unlawful and recommended a judicial inquiry into the matter.

The unit was probed by global audition firm KPMG. The company withdrew the findings of its report on the matter and paid Sars back for its work on the matter. It was examined by the Nugent inquiry — which was investigating tax administration and governance at the revenue service — last year and its establishment was found to be lawful. Retired judge Robert Nugent — who chaired the inquiry — acknowledged that individuals in the unit may have conducted themselves unlawfully.

Mkhwebane has ordered President Cyril Ramaphosa to take disciplinary action against Gordhan within 30 days for violating Section 209 of the Constitution in establishing the covert intelligence unit. She said this amounted to maladministration and abuse of power.

Mkhwebane also wants State Security Minister Ayanda Dlodlo to fully implement the recommendations of a 2014 report by the Inspector General Intelligence into the unit.

Mkhwebane’s findings largely mirror those in the Inspector General’s 2014 classified report, which were revealed in the Noseweek magazine in February this year. The report was commissioned by former state security minister David Mahlobo ahead of the Hawks sending Gordhan 27 questions in 2016, also toward its own investigation into the rogue unit.

Further, the public protector would like South African Police Commissioner Khehla Sitole to investigate Gordhan and Pillay for setting up the unit.

Acting on a complaint by Economic Freedom Fighters leader Julius Malema, Mkhwebane probed the legality of the establishment of the unit, whether it procured illegal surveillance equipment, whether it had followed proper processes in recruiting staff for the unit and whether it had bugged prominent persons.

Mkhwebane found that all the allegations against Gordhan were substantiated, saying that Sars “must have signed a memorandum of understanding to utilise the services of state security as and when needed” in order to conduct such intelligence work.

She found that Sars was not an intelligence structure and could work only with other law enforcement agencies through “cooperative governance”. Mkhwebane said Pillay, in his capacity as then deputy Sars commissioner, had established the unit without the involvement of the National Intelligence Agency. This had happened prior to a memorandum which Gordhan had sent to former Finance Minister Trevor Manuel, who authorised the establishment of a unit to look into the illicit economy.

Pillay had at the time reported directly to Gordhan. She said the establishment of the unit violated Section 209 of the Constitution, adding that she has evidence of the existence of surveillance equipment which she says was irregularly procured for the functioning of the unit. Gordhan’s denial of any knowledge of the irregular recruitment of staff was “improbable”, Mkhwebane charged.

“It is unclear why Sars… would keep the procurement of equipment such a guarded secret. I can only come to the conclusion that proper procurement processes were not adhered to… I am of the firm view that the failure and blatant refusal of Sars and its former employees to provide me with records of the procurement to confirm the purchasing of the said equipment and the whereabouts thereof is suspicious and unwarranted and is aimed at perpetuating the narrative that there was no such intelligence unit at Sars,” she explained.

She found that Pilay, along with former Sars officials had bugged the offices of the National Prosecuting Authority without the approval of a judge. That matter is currently before the courts. 

Natasha Marrian

Client Media Releases

Fempreneurs shine during EWP gala event
Might as well face it