Pretoria, 5 December 2014: There have been media allegations against some of the Senior Officials within South African Revenue Service (SARS). The allegations were initially levelled against Mr. Johan Van Loggerenberg. After these allegations surfaced, Mr. Ivan Pillay, who was the Acting Commissioner, appointed a panel to investigate the existence and truthfulness of the allegations, and Advocate Muzi Sikhakhane SC, together with his panel of senior advocates were accordingly tasked to investigate the allegations.
In the midst of the investigation, further allegations were made by the media about illegal activities of a covert unit, which were published in a Sunday newspaper on 12 October 2014.
The terms of reference for the panel were:
(a) Whether there was any breach of the confidentiality provisions contained in Chapter 6 of the Tax Administration Act 28 of 2011, as amended (the “TAA”) relating to the breach of the SARS oath of secrecy;
(b) Whether there was any breach of section 7(a) and/or (b) of the TAA, as amended, relating to conflict of interest;
(c) Any possible breach by Mr. Van Loggerenberg of any law arising from the unlawful interception of information;
(d) Any engagement in corrupt activities; and
(e) Any act of impropriety in general or in terms of any law as well as any allegation that may come to light in the course of the investigation.
I received the report on 5 November 2014, which I made available to the Minister of Finance, and the members of the SARS Executive Committee.
The Panel made the following observation, and I quote: “The panel expressed its disappointment that the existence of this (covert) unit was not volunteered to the panel in the early stages of its investigation. Even when the panel later confirmed its existence through other sources, some of the relevant witnesses within SARS management presented what seemed like a rehearsed narrative, whose object may have been first to mislead the panel, and second, to present the existence of such a unit in the positive and lawful light. This narrative, ignored one simple legal imperative – that SARS cannot and should not engage in the intelligence or investigate functions which reside in other agencies of the state”.
I consulted relevant stakeholders about the findings of the report. Informed by those consultations, and having received advice from independent attorneys, assisted by Senior Counsel, I, as an accounting officer of SARS and in terms of the powers afforded to me by the SARS Act, concluded to suspend and cause disciplinary proceedings to be undertaken against those employees who have been implicated in the report.
Based on the findings and recommendations as set out below, I have therefore decided to suspend the following two senior executives pending a disciplinary process in terms of the SARS disciplinary code and procedure, and applicable labour laws including the Labour Relations Act:
a. Mr Ivan Pillay, Deputy Commissioner of SARS
b. Mr Peter Richer, Group Executive: Strategic Planning and Risk
The Panel’s findings are as follows:
(a) While SARS remains an efficient and effective organisation, the unlawful establishment of a unit that operated ostensibly in a covert manner, has created a climate of intrigue, fear and subterfuge within the organisation;
(b) The establishment of the unit without having the requisite statutory authority was indeed unlawful;
(c) There is prima facie evidence that the unit may have abused its power and resources by engaging in activities that reside in the other agencies of Government, and which it had no lawful authority to perform;
(d) There is prima facie evidence that the recruitment, funding and practices of the unit were in violation of SARS’s own Human resources policy;
(e) There is prima facie evidence that the existence of this unit had the real possibility of undermining the work of those agencies tasked with the investigation of organised crime and the collection of intelligence; and
(f) There is prima facie evidence suggesting that the activities of the Special projects Unit may have included rogue behaviour that had the potential to damage the reputation of SARS as an organ of state.
In light of these findings, the Panel’s recommendations are as follows:
(a) SARS should clearly develop formal operational relations with state agencies authorised to gather intelligence and investigate organised crime. In this regard, SARS in cooperation with the relevant organs should develop clear guidelines for cooperation in respect of SARS’ own mandate.
(b) SARS should conduct a forensic investigation into all the settlements concluded with taxpayers that had been under investigation since 2005.
(c) The Commissioner must move speedily to put in place a process to ensure that the NRG or HRIU are truly disbanded, persons involved are debriefed, protected from intimidation and are reintegrated into SARS’ official and civilian structures
In addition, I will take the following further steps:
1) Refer the findings on the possible breach of intelligence and associated legislation to the Inspector General of Intelligence
2) Disband the covert unit and conduct a forensic investigation to ensure that the alleged unit and its activities cease to exist in its entirety.
I would like to reassure South Africans that the SARS management team and employees are committed to:
The highest level of integrity;
Best service to South Africans; and
Fair implementation of tax and customs laws.
The South African Revenue Service is one of the key pillars of our democratic government. It is an institution built on trust and integrity. It is therefore critical that SARS employees, especially senior officials, behave in a manner that is above reproach.