Clash of the Titans: Sars vs Busi




There is a line in Edward Kieswetter’s court affidavit that reveals what lies at the heart of this week’s stand-off between the South African Revenue Service (Sars) and the public protector, Busisiwe Mkhwebane.

“If the information demanded in this case is produced, the public protector will doubtless consider herself free to make similar demands, at will, in other cases too,” said the Sars commissioner in his affidavit to the Pretoria high court.

On Monday, Business Day reported that Kieswetter had gone urgently to court over a subpoena from the public protector, requiring him to deliver information related to the tax records of former president Jacob Zuma. Kieswetter said that if he gave Mkhwebane the information, he would be in breach of the Tax Administration Act and his oath, both requiring him to keep taxpayers’ information confidential.

Then Zuma weighed in — via Twitter: “If the @PublicProtector wants to see my SARS records she is free to do so … if she wants my records, she must have them.”

By Wednesday, Sars and the public protector had agreed to wait until the court had decided whether, in law, the public protector was entitled to subpoena the information in the way that she did.

But this case is about much more than Zuma’s tax records. Taxpayer confidence in the revenue collection system is crucial, said the Sars commissioner: “Recourse to this court is necessary to prevent prejudice to the efficient collection of revenue in the national interest; to contain the escalation of conflict fomented by the public protector against Sars; and to uphold the rule of law … against abuse of public power by the public protector.”

In heads of argument, Kieswetter’s counsel, Jeremy Gauntlett SC QC, said: “Permitting such disclosure, despite the Tax Administration Act’s strong in-principle protection, risks introducing far-reaching legal consequences. Consistency requires that all taxpayers will be similarly exposed … the sanctity of taxpayer information would be lost.”

The public protector is yet to file her answering court papers, but may argue that the Constitutional Court has emphasised the importance of her office and how wide its powers are. The Public Protector Act allows her to subpoena any person and any document and this may only be refused if there is “just cause”.

Kieswetter revealed that the power struggle between the two offices has been ongoing for over a year.

In his affidavit, Kieswetter describes how the subpoena was the second issued by Mkhwebane for the same information. One in almost identical terms was issued over a year ago to his predecessor Mark Kingon.

After the first subpoena, there had been a meeting, in November 2018, between Sars and the public protector. Kieswetter said Sars’s Wayne Broughton told Mkhwebane that the Tax Administration Act precluded the agency from producing the information without a court order.

But Mkhwebane “repudiated” this interpretation of the law, he said, prompting Sars to suggest that she seek a court order “confirming her contrary construction”.

The public protector countered by invoking financial constraints, contending that her office was financially under-resourced, Kieswetter said.

So, Sars suggested that they jointly obtain the advice of senior counsel, with Sars footing the bill. Hamilton Maenetje SC and Nick Ferreira were briefed. Their opinion was not attached to the court papers, but a letter from their instructing attorneys Cliffe Decker Hofmeyr summarised the opinion as follows: “In their opinion, there is no conflict between the Public Protector Act and the Tax Administration Act … The Tax Administration Act is not an absolute bar against access to taxpayer information, but provides mechanisms through which to obtain the information, either by consent of the taxpayer or by applying to court … ”

In a subsequent letter from the public protector to Sars, Mkhwebane said she did not agree with its “reasons and conclusions”.

“I still maintain that I am not precluded by any law from obtaining or subpoenaing taxpayer information from Sars.” She added that the opinion made it “patently clear” that she had “access to the information that I sought from you”. She would also be seeking the opinion of a second senior counsel, said the letter.

Kieswetter said this was “flatly rejecting” Maenetje’s view, adding that Sars was not invited to participate in this second opinion or told what it contained.

“It does not appear that any such opinion exists, or if it does, that it supports the public protector’s intransigent stance,” he said.

Kieswetter also referred to a media statement from Mkhwebane in April about her investigation into allegations that there was a “rogue” investigative unit at Sars.

In it, she said she would subpoena Sars records and threatened contempt proceedings if she didn’t get them. In her latest subpoena, she similarly threatened contempt.

Kieswetter said Mkhwebane’s willingness to “ride roughshod over independent legal advice” and her threats to hold him in contempt gave rise to a “clear inference”. “This is that the public protector, in her insistence on access to whatever taxpayer information she chooses, acts not only in excess of her powers, irrationally and unreasonably, but pursues extraneous or ulterior objectives.”

Mkhwebane’s spokesperson Oupa Segalwe said these claims would be addressed in an answering affidavit.

What Mkhwebane wants from revenue office

In her subpoena to the South African Revenue Service (Sars), dated October 21 2019, the public protector has asked for the following documents:

  • A detailed statement providing an explanation on whether it has been established by Sars that a monthly salary of R1-million was paid to former president Jacob Zuma by Royal Security CC during the first months of his presidency in 2009. If so, a copy of the document containing such findings to the public protector;
  • A detailed statement providing an explanation on whether the tax compliance check of Royal Security CC by Sars for the 2009-10 year established that Zuma failed to pay income tax on the income received by Royal Security. If so, a copy of the document containing such findings;
  • A detailed statement providing an explanation on whether Sars is conducting an investigation into possible failure by Zuma to pay income tax on the “salary” earned from Royal Security CC and a copy of the investigation report or progress report on the ongoing investigation; and
  • Any other relevant document. 

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Franny Rabkin
Franny Rabkin
Franny is the legal reporter at the Mail & Guardian

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