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30 May 2016 18:22 (South Africa)
South Africa

SARS Wars: KPMG, SARS, and Mashiane Moodley and Monama – who's telling the truth?

  • Marianne Thamm
    Marianne-Thamm-new.jpg
    Marianne Thamm
  • South Africa
MarianneKPMGletter.jpg

While KPMG CEO Trevor Hoole publicly claimed this week that the firm's report on an investigation into an alleged illegal covert unit in SARS was a “draft” and that KPMG had been mandated merely to “undertake a documentary review”, a letter by SARS lawyers written in November last year suggests otherwise. In the letter, legal firm Mashiane Moodley and Monama, state that their client, SARS, views the KPMG investigation as “forensic” with the express intention of “of pursuing criminal charges”. Somebody is not telling the truth here. By MARIANNE THAMM.

On 4 December last year KPMG sent its report on an alleged SARS covert unit to Commissioner Tom Moyane with a strange disclaimer that the document was not to be used for the resolution or disposition of any disputes or controversies thereto and is not to be disclosed, quoted or referenced, in whole or in part”, a statement, it has now come to light, that apparently directly contradicts the opinion of SARS' own lawyers, Mashiane Moodley and Monama.

In a letter dated 30 November 2015, David Maphakela, on behalf of Mashiane Moodley and Monama, unequivocally informs the legal team representing a former SARS official who has been implicated in the scandal that “further and as part of the forensic investigation, KMPG was mandated to advise SARS on any criminal or civil litigation to be pursued against any SARS official or 3rd party.”

There is not an iota of doubt that SARS is fully armed with the necessary legislative and constitutional competence to conduct such investigation to promote and maintain the high standard of professionalism and ethics within the institution so as to foster public confidence,” the letter reads.

It further states that KMPG was appointed on 23 December 2014 to conduct “a forensic investigation pertaining to various allegations which include but not limited to the establishment and operation of a rogue and covert intelligence unit within SARS with particularity to activities such as the procurement of equipment with interception capacity and any acts of impropriety against SARS officials.”

The confident tone of the Mashiane Moodley and Monama 30 November 2015 missive is not surprising considering only three months earlier, on 21 August 2015, the firm had sent a letter to KPMG director, Johan van der Walt, recommending that specific findings be made in their report against former deputy Commissioner Ivan Pillay and group executive Johan van Loggerenberg, as well as suggesting that Pravin Gordhan, who was SARS Commissioner between 1999 and 2009, should also be investigated.

The letter suggests undue interference by the client, SARS, in a purported “independent” investigation by KPMG that a specific findings be made without a single witness being called or any of the evidence or claims being tested or interrogated.

In a statement this week, Hoole, addressing Minister of Finance Pravin Gordhan's concerns that KMPG had not interviewed him nor any of the officials, maintained that “limitations” had been placed on KPMG's mandate which was "to undertake a documentary review and did not include interviewing individuals named in the report, nor were they given sight of our findings by us. This is not unusual for assignments of this nature."

Hoole added that “any report, first draft or otherwise” remained that “until the client confirms to us that all matters have been addressed and that the report has been through the entity’s governance processes and is ready to be issued. A report may well be considered by KPMG to be complete or final but prior to being issued the client needs to notify us that it has been accepted by them. In most instances the board, audit committee, other senior governance body or regulatory authority would sanction the release of such a report, particularly if it were regarded as being potentially sensitive,” said Mr Hoole.

Calls are now mounting for the controversial report – at the centre of what appears to be an orchestrated campaign to rid SARS of senior officials and using the Sunday Times as a blunt instrument – to be made public.

Several senior SARS officials were suspended as a direct result of the Sunday Times stories. The paper later apologised to Gordhan, who had complained to the Press Ombudsman. Pillay and Van Loggerenberg also complained but the paper has not yet apologised to the men and is appealing the Press Ombud's ruling.

The scandal has pitted Gordhan as a newly reappointed Minister of Finance against SARS Commissioner Tom Moyane in a duel that threatens to destabilise the country's revenue service. Moyane has reportedly taken legal advice on whether he is able to ignore Gordhan's directive that he immediately halt a major restructuring of the institution.

There is still much suspicion and too many questions surrounding the entire SARS Wars scandal which has seen the exodus of senior management including Pillay, Van Loggerenberg, SARS strategic planning and risk head, Peter Richter as well as its spokesperson Adrian Lakay.

The overarching narrative involving spies, double agents, honey traps, rhino poachers and a cocaine snorting journalist, has deflected attention from what appears to be a sinister “black propaganda” campaign aimed at capturing SARS or at least ridding it of senior management by as yet unseen forces.

Was the unit flying too close to the flame?

Were they investigating people close to political power and who wanted it shut down?

We might never know.

Four inquiries including the Kanyane Report, an internal SARS investigation; the Sikhakhane Report, commissioned by Pillay before his suspension; the Kroon Commission, established by former Minister of Finance Nhlanhla Nene, and now the KPMG report, have all been challenged by those fingered and who were not called to give evidence or refute claims.

The Kanyane report found – in relation Belinda Walter a double agent who was working for the State Security Agency as well as British American Tobacco and who had had an affair with Van Loggerenberg – it was “unable to conclude that the evidentiary material presented by Walter was credible or reliable.

The Sikhakhane report made no findings of fact but concluded that the unit had been established “unlawfully” as the NIA had ultimately not co-operated in its establishment as originally agreed. The Sikhakhane report recommended that the Inspector General Of Intelligence or a judicial commission investigate further.

The third inquiry, the Kroon Commission, headed by retired Judge Franklyn Kroon, essentially endorsed the Sikhakhane report. The controversy regarding the Kroon Commission is that one of its members was Advocate Rudolf Mastenbroek, former head of the SARS crime intelligence unit as well as the ex-husband of Sunday Times editor Phylicia Oppelt. It was also Mastenbroek, according to investigative journalist Pearlie Joubert, who had been a source for the Sunday Times stories on the alleged“rogue unit”.

Other Sunday Times sources included a version of the KPMG report which had been leaked to the paper's journalists.

The National Research Group NRG, a legal SARS investigative unit which Van Loggerenberg was appointed to head in 2008, was established in 2007. The unit was not covert and its members were all on the SARS payroll. Almost every revenue service in functioning democracies across the world possess the capacity to investigate matters of organised crime and tax dodging.

The NRG was established after the Ministers of Finance (then Trevor Manuel) and Intelligence Services (Ronnie Kasrils) agreed to establish a division within the National Intelligence Agency that would support SARS in investigating high-risk cases. The arrangement saw the salaries and personnel costs of the unit being paid by SARS but members as employees of NIA. SARS appointed 26 staff to the unit but internal squabbling in the NIA resulted in the agreement remaining unsigned.

The unit was originally headed by Andre “Skollie” Janse van Rensburg who, according to the newly appointed NPA Shaun Abrahams, will soon to face criminal charges relating to the bugging of the NPA offices in 2007 and Jacob Zuma's home in 2006.

It should be borne in mind that the National Research Group (NRG) did not exist in 2006 and so Van Loggerenberg could have had no hand in this. Van Loggerenberg's appointment by Pillay in 2008 was to ensure that that NRG was fully above board and complied SARS policies.

The NRG was responsible for raking in around R10 billion in unpaid taxes and also investigated high-profile cases including Dave King, Radovan Krejcir, Christo Wiese, Glen Agliotti and Julius Malema.

Much of the confusion surrounding the NRG originates in an “intelligence dossier” complied by a discredited former SARS employee, Michael Peega, who was a special investigator with the NPG until he was caught Rhino poaching while on leave in 2008. Peega was found guilty of gross misconduct and fired but his“dossier” eventually found its way to Julius Malema, as well as the Sunday Times.

The Sunday Times, as the investigative magazine Noseweek has pointed out, has consistently confused the legally-constituted NRG for another unit in SARS, the Anti-corruption and Security Unit formerly headed by Clifford Collings.

This unit was set up to investigate matters of security within SARS as well as spy on staff. It was Helgard Lombard, Manager of Technical Security in the Anti-corruption and Security Unit, who was named in a Wikileaks document relating to this unit's attempt at buying illegal surveillance equipment from Hacking Team, which sells “offensive intrusion and surveillance capabilities to governments, law enforcement agencies and corporations.”

The Sunday Times legal editor, Susan Smuts, told Noseweek that the paper's journalists had used this Wikileaks document to confirm some of their stories relating to the “rogue unit” headed by Van Loggerenberg.

The current SARS wars, which has been dragging on for over a year, is a matter of far greater significance than Nkandlagate. If the country's once highly efficient revenue service has been captured – as has been the NPA, Crime Intelligence and the SAPS – South Africa is in deep trouble.

The November letter by SARS lawyers stating that KPMG was mandated to advise SARS on the institution of criminal charges, as well an earlier letter telling the firm what findings to make, should be enough evidence that we need to start from scratch and that the entire matter needs to be re-examined by a new and independent judicial commission of enquiry. DM

  • Marianne Thamm
    Marianne-Thamm-new.jpg
    Marianne Thamm
  • South Africa

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