NB: Dates are important to bear in mind.

Before June 11, 2014 the notion or the concept of a “rogue unit” had not yet entered the public lexicon or had been used in any media reports pertaining to SARS.

However, behind the scenes, on 28 May, 2014 attorney Belinda Walter – a double agent for the State Security Agency, British American Tobacco (BAT) and who acted as the lawyer to BAT’s competitor Carnilinx – wrote to SARS about her relationship with SARS group executive, Johan van Loggerenberg.

A month later, in June 2014, then acting commissioner, Ivan Pillay, appointed the Kanyane Panel, led by lawyer Moeti Kanyane, to look into Walter’s allegations. The panel concluded its report on 12 August 2014 stating: “We are unable to conclude that the evidentiary material presented by Ms Walter in support of the allegations is credible, especially in circumstances where the allegations are denied by Van Loggerenberg.”

The panel recommended that unless Walter’s allegations were not disputed or corroborated by other information to which it had access “they should not be used as a basis upon which to grant a decision whether or not they disclose a prima facie basis for further investigation…”

It added that in view of this, the panel could not conclude that there was a basis for a formal investigation of Walter’s allegations “unless these allegations are corroborated at a later stage”.

In a media statement yesterday SARS spokesperson Sandile Memela said that “following media coverage of the alleged ‘rogue unit’ on 11 June 2014, the then acting Commissioner, Mr Ivan Pillay, instituted an investigation led by an Attorney, Mr. Moeti Kanyane who recommended further investigations given the limited mandate of his investigation.”

It is clear from the timeline in the saga that there was no coverage of the “rogue unit” until 9 November 2014, when the Sunday Times published a report about an alleged “brothel” that had been set up by the National Research Group. Current Commissioner, Tom Moyane, was appointed on 27 September 2014, about 40 days BEFORE reports on the unit first began to emerge in the media.

Earlier, because of the findings in the Kanyane report, Pillay, while still deputy commissioner, appointed on 5 September 2014, the Sikhakhane Panel, led by Advocate Muzi Sikhakhane, to investigate the matter further.

The mandate of the Sikhakhane report included investigating “and where appropriate, make findings in regard to the multiple allegations of impropriety made against Mr Van Loggerenberg.” The panel was tasked with critically assessing and evaluating all evidence and to determine whether “adverse findings” against Van Loggerenberg, based on Walter’s complaint, could be made.

Further terms of reference for the Sikhakhane panel included whether Van Loggerenberg deliberately set out to establish a relationship with Walter “for the purposes of obtaining incriminating information about her clients, many of whom are suspected of being involved in illicit tobacco trading”, whether there had been “any possible breach by Mr Van Loggerenberg of any law arising from the unlawful interception of information” and also whether “there was any breach of any law or code of conduct by engaging in an intimate relationship with a taxpayer or its representative who was under investigation”.

There is no reference anywhere in the mandate to a “rogue unit”.

The Sikhakhane panel handed the report to Moyane on 5 November, 2014.

On 10 November, after the Sunday Times story about the alleged brothel and the rogue unit had appeared, Moyane suspended the SARS executive committee.

The mandate and the Terms of Reference of the Sikhakane panel were then suddenly extended that month to now include allegations of the “rogue unit” only AFTER reports about its apparent existence had appeared in the Sunday Times.

Paragraph 57 of the report reads: “Shortly after the panel was appointed and commenced its work, the media reports escalated and alleged the existence of a covert unit that had been operating at SARS.”

Current commissioner, Moyane, then met with the panel to confirm the new terms of reference.

By then Pillay, Van Loggerenberg and others had already been interviewed by the panel and had not been given an opportunity to present evidence with regard to the expanded investigation into the “rogue unit”.

At the end of it all Moyane, and not Pillay, as Memela stated in his statement yesterday, received the Sikhakhane report. The Sikhakhane panel report made no findings on Pillay but he was nonetheless suspended on 5 December 2014.

Memela said yesterday that the Sikhakhane report had also advised that Moyane institute a more detailed investigation which had resulted in the appointment of KPMG in December 2014 to conduct a “forensic investigation” with “Advocate Martin Bressey to work with the auditing firm in “capturing the oral evidence.”

What is not mentioned – and it is an important aside here – is that British American Toboacco (BAT), one of the entities drawn into the saga, had appointed KPMG as it’s preferred auditing firm in March 2015 , ditching PricewaterhouseCoopers after 17 years. So, in essence, KPMG was tasked with investigating allegations relating to one of its biggest multinational clients while being in the employ of that client. It is not known at this stage whether KPMG had declared this conflict of interest to SARS.

While Memela states that KPMG had interviewed more than 30 people, Pillay, Van Loggerenberg, strategic planning and risk head, Peter Richer and SARS official, Yolisa Pike, were not among these.

However, KPMG had said it was conducting a “documentary review” which did not require interviews of subjects, a September 2015 report states “…individuals or persons affected by this report were not provided with a copy for comment as it was not considered necessary, explanations were given on prior occasions in meetings of which minutes were recorded and in our possession, affidavits, statements and correspondence…”

A statement by KPMG CEO, Trevor Hoole, that the firm was contracted by SARS not to engage with subjects of the investigation also seems to contradict contradict Memela’s statement.

And while the KPMG report was issued with the proviso that it may not be used for the “resolution or disposition of disputes or any controversy associated thereto…”, a SARS legal letter to one of the subjects states the purpose of the investigation was to “inform civil and criminal proceedings.”

In relation to media leaks, Memela said that since the appointment of Moyane, “major controls and processes have been instituted to curb information leaks from SARS” and that this had been done to protect the integrity of the organisation.

“We reject any insinuation that suggests that SARS has been leaking confidential information,” said Memela.

He added that the media “is encouraged to uphold its code of ethics and standards when it comes to dealing with leaked confidential documents.”

The leaks to the media can be tracked to the Sunday Times first reports on the “rogue unit” many of which contained confidential taxpayer and employee information which appear to have been leaked from within SARS. At the time it does not appear as if Moyane made any effort to investigate these leaks, particularly in relation to a draft of the KPMG report which was used in many of the Sunday Times reports.

Only a few people received a copy of the KPMG report. These include Moyane, the former Chief Officer of Human Resources, members of the Kroon Board (the panel set up and lead by former Judge Kroon. One of the panelists was former SARS official, Advocate Rudolf Mastenbroek, former husband of Sunday Times editor Phylicia Opelt), SARS lawyers as well as the Minister and Deputy-Ministers of Finance.

With regard to the new “operating model” currently being initiated by Moyane and which Gordhan has requested him to halt, Memela said that a notion had been created “that Commissioner Moyane has used the implementation of the current operating model for other motives other than enhancing SARS effectiveness and efficiency is rather unfortunate and a deliberate attempt to discredit SARS and its Commissioner.”

He added that it should be noted that the current operating model process was not a first for SARS and that prior to Moyane’s appointment, SARS had undergone several Operating Model changes under various Commissioners, including the current Minister.

Memela said that the decision to embark on current operating model “was taken by the previous acting Commissioner, Mr Ivan Pillay” and had been presented and endorsed by Parliament when SARS, under Pillay, had tabled the SARS 2014/15 Annual Performance Plan (APP).

Memela said Moyane had simply implemented the commitment made by his predecessor to Parliament and that it was “unfortunate narrative that Large Business Centre (LBC) has been collapsed as a result of the new operating model. He said that “as opposed to the previous model in which the LBC was situated in 4 offices nationally, the new operating model has expanded the footprint of the LBC services to the majority of SARS branches.

SARS is also increasing its capacity by recruiting additional specialised skills to deal with clients that are being serviced by the LBC including focusing on Base Erosion and Profit Shifting challenges.”

Pillay’s operating model had been sent to to previous Minister of Finance, Nhlanhla Nene, to consider for review. In so doing Pillay did not act without the Minister’s approval, which is what Moyane appears to be doing.

Pillay’s proposal with regard to the LBC did not envisage its dismantling and did not suggest the concentration of its powers and functions under the ambit of only a few officials as is the case with Moyane’s model.

In the past, senior appointments, including Deputy-Commissioners had always been regarded as falling under the Minister of Finance who acted in concert with Cabinet a tradition Moyane appears to have broken.

The response from SARS this week – considering the growing pressure as some members of the ANC have come out in full support of Gordhan – appears to be an attempt at mopping up, or at least thwarting, some of the political blowback.

Also, the KPMG report, with its altered terms of reference and signed off by investigator Johan van der Walt and which includes the disclaimer, was handed to Commissioner Moyane in December 2015. The Commissioner was, according to reports, still applying his mind to the report.

Meanwhile Gordhan had made his views on the report clear: “It’s allegations that have no foundation. They are based on a leaked document that even I haven’t seen,” he said shortly after his reappointment in January. DM

Photo: SARS Commissioner Tom Moyane and Finance Minister Pravin Gordan (GCIS, SAPA)