The new commissioner of the South African Revenue Service (Sars), Tom Moyane, has begun what a number of insiders regard as the start of a purge.
On Tuesday he sent a circular to staff announcing he was suspending meetings of Sars’s top management structure: “Exco [executive committee] has been suspended in its capacity as an advisory body to the commissioner,” he wrote.
Moyane, a former ANC exile, was appointed as commissioner by President Jacob Zuma in September. He replaced Ivan Pillay, the deputy commissioner who had acted in the position since mid-2013.
Moyane’s crackdown appears to reflect a broader struggle for control at Sars, a key instrument in former finance minister Pravin Gordhan’s fiscal apparatus.
Moyane tied his executive committee’s suspension explicitly to what appear to be orchestrated leaks to the Sunday Times targeting Sars group investigations executive Johann van Loggerenberg, Pillay’s ally.
Moyane’s circular stated: “I have been at Sars for 45 days. In that time I have developed a deep unease about what the Sunday papers will bring. This week was no exception.”
Last Sunday the newspaper published a front-page story, headlined “Taxman’s rogue unit ran brothel”, based on extracts from leaked statements gathered by an internal Sars investigation and a leaked letter addressed by Van Loggerenberg to Moyane.
Both the statements and the letter flowed from a story in October that alleged “Sars bugged Zuma”. The story gave scant evidence and Van Loggerenberg’s letter disputed the claims.
Sars has denied that the so-called National Research Group – a high-risk investigation unit initiated by Pillay in 2007 – was a “rogue unit” or that it conducted illegal covert intelligence gathering.
The Sunday Times’s own version placed the alleged bugging at the time Zuma “had just been acquitted on a rape charge”, which occurred in May 2006, long before the unit was formed.
The brothel allegation in turn seems to be from a disgruntled source who parlayed a conversation he overheard about a Sars agent privately hiring prostitutes into claims of a full-scale sex business used as a “cover” by the Sars agent.
This appears from an examination of the source’s statement, reproduced by the Sunday Times, and explanations to amaBhungane by sources sympathetic to Van Loggerenberg.
But Moyane told staff: “These stories and the allegations they contain bring Sars into extreme disrepute … I met the minister of finance on Sunday. We agreed that the current climate cannot be allowed to continue.”
Exco no more
Moyane said he had met the executive committee, which consists of Sars’s top eight managers, on Monday and informed them that it would cease to act as an advisory body to the commissioner.
“The scheduled exco today was the last in its current form, to confirm that it is not ‘business as usual’, given the seriousness of the current allegations.”
Moyane said he would seek “independent guidance and advice” and would interact with his top managers “on a one-to-one basis” where necessary. He did not explain how disbanding his executive committee would improve the climate at Sars.
Senior Sars officials sympathetic to Pillay, speaking on condition of anonymity, said he had already been sidelined by Moyane and they expected those executives regarded as close to Pillay to jump or be pushed.
They include chief operations officer Barry Hore and head of strategy Pete Richer.
Pillay, who became acting commissioner when Oupa Magashule resigned in July last year, was a strong supporter of Van Loggerenberg, but was stripped of political support when Zuma removed former finance minister Gordhan and replaced him with Nhlanhla Nene after the elections in May.
Gordhan previously served as commissioner and worked closely with Pillay at Sars and during the liberation struggle.
Threat to Zuma
The sources said there were a number of reasons Pillay might have been perceived as part of a faction that posed a threat to Zuma or his allies.
They pointed to Pillay’s commitment to look into the tax implications of the state-funded development of Zuma’s private Nkandla homestead.
In March the Democratic Alliance alleged that Zuma could owe the taxman as much as R16-million in fringe benefits after the public protector found Zuma and his family had “benefited unduly’’ from the Nkandla “security upgrade”.
In a written response to DA MP Tim Harris, Pillay said the matter would be dealt with “in the normal course” of Sars work.
The Sars sources also pointed to tax investigations of companies indirectly associated with Zuma or his family, including Mpisi Trading 74, an import-export company headed by Chinese-born South African Jen-Chih Robert Huang.
Zuma’s nephew, Khulubuse Zuma, at one time served as Mpisi’s chairperson and in 2011 the company was instrumental in introducing a potential Chinese rescue bid for Khulubuse’s troubled Aurora Empowerment Systems mining company. The relationship with Khulubuse appears to have ended after that deal fell through. Sars launched raids on Mpisi last year.
Also mentioned is a preliminary Sars probe of the group of companies associated with the politically connected Gupta family, though this could not be independently confirmed.
In his circular this week Moyane also announced that he had received reports of the Sikhakhane panel of inquiry and of the inspector general of intelligence. The panel, led by advocate Muzi Sikhakhane, was set up in response to allegations made against Van Loggerenberg by his former lover, attorney Belinda Walter.
After the relationship ended Walter filed a complaint against Van Loggerenberg with Sars in May.
Pillay announced the Sikhakhane probe in September and placed Van Loggerenberg on special leave pending the outcome.
Walter alleged that Van Loggerenberg had shared confidential taxpayers’ information with her. She also claimed that he headed an “illegal covert unit” that had been intercepting her communications and that he had manipulated her in order to gain access to confidential information about her clients in the tobacco industry.
In turn, newspaper reports sympathetic to Van Loggerenberg alleged that agents of the special operations unit of the State Security Agency (SSA) were using Walter to smear Van Loggerenberg and Sars.
Intelligence minister David Mahlobo asked the inspector general of intelligence to investigate.
Walter previously chaired the Fair-Trade Independent Tobacco Association, which represented smaller tobacco firms frequently targeted by the tax authorities.
Cloak and dagger
During this time she was a secret informer or agent for the security agency, as well as for British American Tobacco, the dominant player in the local cigarette market and the direct competitor of the tobacco association members.
Moyane told staff that he wanted to study the two reports “and discuss their recommendations with the minister” before making any comment.
AmaBhungane has established that Pillay delivered a robust defence of Van Loggerenberg in a statement provided to various investigators.
In the statement he strongly defends the Sars unit, which had various names and numbered fewer than 30 people at its height.
“All the units described were, in one way or another, directed to, amongst others, organised crime syndicates. In most cases this was done in conjunction or in parallel with other law enforcement agencies,” Pillay’s statement records.
He insists Sars never had “secret” accounts to fund the units, that they were subjected to auditor general inspections, and that no adverse finding was ever raised. He also denies they were used for “covert” collection of intelligence or to target political factions.
“Sars is confronted by determined opponents who enjoy enormous influence over and within certain institutions, the media and certain political players. Some political players and persons connected to them are on the boards of entities that have long been at loggerheads with Sars.”
He says the allegations of a “rogue unit” have been raised repeatedly since 2009, when former National Research Group member Mike Peega was fired.
Peega then went to the media and state agencies with his allegations that Sars was engaged in the political targeting of Zuma and his allies.
Pillay reveals that in 2010 the intelligence services were invited to investigate the allegations and given access to Sars files and personnel.
“Follow-up letters were addressed by Sars every year following this until 2014 to SSA to seek closure or findings of outcome of above mentioned investigation. No responses were ever received.”
Sars spokesperson Adrian Lackay did not respond to the suggestion that there appeared to be an orchestrated campaign to undermine the service.
Lackay said Moyane and Sars “remain unequivocally committed” to making the findings of the Sikhakane panel publicly available.
He said that Moyane is still studying this and the inspector general of intelligence’s report, “and … must consult the minister of finance on the findings of the respective reports”.
“[Thereafter] the commissioner, with approval from the minister, will determine the most appropriate actions for Sars to take in reaction to the findings of the panel, if required.”
* Got a tip-off for us about this story? Click here.
The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.