A) KPMG Conduct
SARS notes the media statement which was issued by KPMG international on the 15 September 2017. The statement includes KPMG International’s action pertaining to among other things, the setting aside of the conclusions and recommendations of the ‘Allegations of Irregular and Misconduct’ report, (Report).
SARS received an email from Norton Rose Fulbright acting on behalf of KPMG International on the morning of the 15 September 2017, the content of which is attached to the media statement.
SARS has been completely taken aback by KPMG’s aberrant and unethical conduct. KPMG unilaterally announced the purported withdrawal of its report despite the existence of a service level agreement governing the relationship between the parties.
It is important to note the material terms of the SLA which provides that:
1) All rights, title and interest, including all Intellectual Property Rights, literary works created, written and or presented by KPMG and or its agents and employees, which relate to the service performed by KPMG vest exclusively in SARS;
2) KPMG has irrevocably and in perpetuity transferred, made over and assigned to SARS, all intellectual property rights and which SARS has accepted; and
3) KPMG has waived all its moral rights conferred upon it as an author by the provision of Section 20 of the Copyright Act, 1978.
Accordingly, the above contractual obligations confirms that the report belongs to SARS as KPMG has surrendered all rights to SARS. It follows that the Report is an exclusive property of SARS as it constitutes SARS intellectual property.
SARS sees KPMG’s conduct as nothing else but a dismal attempt to portray SARS, its leadership, and in particular SARS Commissioner as incompetent, corrupt, inefficient and involved in a witch-hunt. This is the same narrative that has been perpetuated for years by some treacherous elements within society and the media.
This abhorrent, unethical, and unprofessional conduct by KPMG has left SARS with no option but to consider the following legal route:
1) Instituting legal proceedings against KPMG for reputational damage to SARS including but not limited to a civil claim;
2) Report KPMG to the relevant statutory audit bodies both locally and internationally;
3) Report KPMG to the Minister of Finance with the aim to blacklist KPMG for its unethical, immoral, unlawful and illegal behaviour.
4) Report KPMG to the Minister of Finance to consider stopping all work currently performed by KPMG in other departments as well as any work in the pipeline until all the work KPMG conducted for the state have been investigated and reviewed for quality and proper auditing quality and expected standards;
5) Immediately seize any work which KPMG is currently performing for SARS and assess the work KPMG has performed in the last 10 years with the aim to determine whether there was a value for money and whether SARS should demand its money back;
6) Report KPMG to Parliament through SCOPA and SCOF with the aim to investigate the immoral conduct of KPMG and determine the appropriate action.
B) Disciplinary cases completed and/or underway
SARS has observed with astonishment some former SARS employees and others who have been criss-crossing different media platforms while making unfounded and baseless conclusions as a result of KPMG’s media statement.
SARS wishes to categorically state that the allegations that KPMG report was used as the basis for disciplinary actions as well as the institution of a criminal offence are at best false and at worse deceitful, and aimed at misleading the people of SA.
The following facts and sequence of events attest to the above statement:
1) During the period August 2014, the then Acting Commissioner for SARS, Mr Ivan Pillay Commissioned an Investigation led by Adv Sikhakhane SC with the mandate to investigate allegations that SARS ran a ‘Rogue Unit’. The information was reported by the media then, in particular Sunday Times and City Press newspapers. The claims were amongst others that SARS had a Unit which was not only established illegally but which was illegally intercepting taxpayer’s information and movements;
2) Upon the appointment of the Commissioner for SARS, Mr Moyane in September 2014, the Sikhakhane Commission delivered a report on the 5 November 2014 with serious conclusions and recommendations. Chief amongst others, the recommendations was that indeed SARS ran an unlawful rogue unit, led by and reporting to Mr Pillay as well as some insidious and gross misconduct committed by both Mr Pete Richer and Mr Loggenberg;
3) On the 28 of February 2015 the then Finance Minister, Mr Nene established a SARS Advisory Board, which was chaired by the retired Judge Kroon with the mandate to look into SARS processes with priority being on the investigation and guidance on the Sikhakhane report. It is common cause that the Kroon Advisory Board found that the establishment of the secret unit within SARS in 2007, which covertly gathered intelligence, was unlawful. The Board went further to instruct SARS to charge employees involved and open criminal charge against those implicated in this act of crime;
4) The three employees interalia Mr Johan Loggerenberg, Mr Ivan Pillay, Mr Pete Richer, were charged as a result of the Sikhakhane report respectfully for the following dates 14 January 2015, 5 February 2015, as well as 02 April 2015 respectively. Instead of facing the hearing and clear their names, all of the three opted to resign, with Mr Loggerenberg resigning in February 2015 and Mr Pillay and Ritcher resigning in May 2015.
KPMG report was delivered to SARS late in 2015 and was only made FINAL on the 26 January 2016. It therefore follows that the disciplinary hearings against the above were not conducted as a result of the KPMG report but on the basis of the Sikhakhane report.
Hence SARS’s assertion that those affected are mainly endeavouring to claim innocence or otherwise on the withdrawal of the KPMG report, with others claiming that their careers and careers of others were destroyed as a result of KPMG either grossly ignorant or outright mischievous and or a concerted but dismal attempt to mislead the South African public.
So SARS is calling on those who are unfairly and unjustly accusing SARS of improper conduct on the basis of the KPMG media statement to desist from such conduct.
C) Criminal Case on Rogue Unit and its Activities (Sunday Evening)
SARS has further observed another set of people who are trying hard to claim that the purported withdrawal of the Report by the KPMG automatically vindicates them from their responsibility to account to the alleged criminal acts. SARS places on record that such malicious and irresponsible claims are either some acts of gross ignorance but at worst, a dismissal attempt to circumvent the law and or to mislead the public.
The following sequence of events and activities will demonstrate the above assertion by SARS:
1) In early May 2015, two employees voluntarily demanded to see Mr Moyane as they wanted to make a confession. The two employees informed Mr Moyane about the existence of the illegal and unlawful Rogue Unit. Included in the confession was that they were instructed by Mr Ivan Pillay to install cameras to 12 offices of both the Police and the Scorpions at the time. Further that, the purchase of the equipment were made through R950 000 (Nine Hundred and Fifty Thousand) in cash which was given to them by Mr Gerrie Nel and his colleague. The two were advised by the Commissioner to confess to the police which as far as SARS is concerned, they did;
2) SARS then sought a legal opinion which advised that in terms of the Prevention and Combatting of Corrupt Activities Act, as a person holding a higher authority, he is legally obliged to open a criminal case, which SARS duly opened in May 2014. The case is in the hands of Hawks and SARS hope that the case will be concluded soonest.
As the above demonstrate, KPMG report was handed over to SARS only in late 2015 and made final on 26 January 2016. As this simply demonstrates, this was long after the criminal case was opened and all the necessary evidence was provided to the Hawks and the SAPS.
Given the above facts, SARS is left with no option but to conclude that those who are claiming exoneration from possible and alleged criminal offences, who are expected to be aware of this public facts, can only be attempting to mislead South Africans which SARS finds quite unfortunate.
From the position of SARS, the criminal case whose details is outlined above is in progress and we hope for its speedy conclusion.
SARS wishes to assure all South Africans, in particular taxpayers and traders that 14000 men and women of SARS continues to work tirelessly and selflessly in ensuring that all revenue due to the state are collected both legally and efficiently whilst protecting our borders and facilitating trade as we take South Africa forward, together.