On Monday afternoon, Judge Gregory Wright was sparring with Advocate Nic Maritz. Before adjourning for a late lunch, the judge said the case had to be completed this week. We’re in for a late night, he warned the courtroom. Looked like a long week. Although Maritz said he was not available this week, and SARS wanted him and only him to lead the case, the judge said we’d charge into the week, Maritz or no Maritz.

Then, returning from the lunch break, Maritz addressed the court. He said it’s a sensitive matter and SARS withdraws its application to have EFF leader Julius Malema sequestered. The surprise move maybe embarrassing for SARS, but for Malema it removes the threat of being ruled legally insolvent and therefore ineligible to be a Member of Parliament and plays into his party’s hands ahead of the 2016 elections.

In 2012 SARS brought Malema to court for owing R16 million in unpaid taxes, penalties and interest after failing to submit accurate and on time tax returns between 2005 and 2011. His Sandton and Polokwane houses, as well as his Limpopo farm were seized and sold. But with taxes still outstanding, the North Gauteng High Court issued a provisional sequestration order in 2014. On the day the order was to be made final, Malema reached a compromise agreement to pay R7 million of the R18 million debt (the increase owing to interest), accepting that further assessments for 2011 and 2012 would follow, knowing that misleading SARS or failing to comply with the agreement would break the deal.

Malema paid off the debt, R3 million through donations and his salary, and R4 million from the sold assets. But in March, SARS applied for the sequestration order to be made final, without explaining its reasoning, and effectively cancelled the compromise deal in search of the R11 million they had agreed to write off.

“I think in this case our president will win,” said EFF supporter George Sekele outside court on Monday. “I think the ANC did this because they see Mr Julius Malema has got more powers to defeat them.” Hundreds of supporters gathered outside the High Court and police cordoned off the road, with barbed wire, nyalas and rubber bullets ready. “Pretoria is going to be in chaos,” another EFF supporter, TP Matletle, predicted if the case went against Malema.

Photo: Julius Malema leaves the North Gauteng High Court after SARS dropped its case to have him sequestered.  (Greg Nicolson)

After striking off the roll urgent applications from the EFF and Julius Sello Malema Trust to join the case, Wright interrogated the argument from SARS. Meritz said SARS was exercising its right to go back on the deal and seek the outstanding money. A sequestration order would allow SARS to interrogate the relevant parties in search of assets showing Malema could pay the amount.

“Why laugh off R11 million when the next day you’re going to chase R11 million?” asked the judge. He said the compromise reached with Malema must have been an admission from SARS that it was recovering all it could, given the agency’s mandate to collect taxes. It would be against the purpose of SARS to agree to the compromise if it could collect more. The key issue was recoverability and the compromise, not how much Malema initially owed, and SARS admitted it had no new evidence since it entered into the deal that Malema has any new assets to pay the larger amount.

“Why laugh off R11 million, which is what SARS did that day?” asked Wright. The answer seems to be that given what SARS knew when agreeing to the compromise and the future cost of potentially recovering more, it was the best they could do for the state. And the situation hasn’t changed.

Photo: Julius Malema shakes hands with supporters after addressing the crowd outside the North Gauteng High Court. (Greg Nicolson)

So why would SARS return to court? It’s not clear. Maritz struggled to answer the judge’s questions and much of the argument was caught up in the differences between the Insolvency Act and the Tax Administration Act. When Daily Maverick tried to speak to SARS spokesperson Luther Lebelo on Monday evening he said he was in a meeting.

But the EFF was certain the sequestration order attempt was politically motivated. “This is not a tax matter, this is a political matter,” Malema told supporters, claiming Maritz couldn’t answer the judge’s questions because he was dealing with political rather than legal issues. Malema blamed the ANC, as he has done since his tax troubles began in 2012, the same year he was expelled from the party, claiming it was using SARS to attack the leadership of the EFF because it had no other response to the party’s growth. “The ANC that says a swimming pool is a security measure is not the ANC of Nelson Mandela,” Malema said, in one of many attacks on the ANC.

Leaving court, supporters tried to flock to Malema while marshals and his security forged a path through the street. Addressing the crowd on the EFF truck, Malema continued to blame the ANC, saying more schemes would follow. He told members calling for the downfall of SARS to support the institution because they’ll need it when they govern. He warned SARS however not to play politics. It’s a win for constitutional democracy for all South Africans, he told the crowd, showing the judiciary remains independent.

The EFF leader is now free to continue as an MP without the threat of sequestration, but he still faces criminal charges relating to a R52 million Limpopo tender awarded to On-Point Engineering. The Public Protector found he “benefited improperly from the unlawful, fraudulent and corrupt” actions of the company, but court proceedings have repeatedly been postponed and on Monday Malema called for them also to be dropped.

Monday’s capitulation from SARS plays into the EFF’s hands, constantly claiming to be victimised by the ANC-run state. Malema quickly turned to the 2016 local government elections, saying the court case was a “by the way” on the path to governing and spoke of Tshwane and Johannesburg, which could be up for grabs next year.

Before leaving, however, Malema seemed relieved the insolvency matter was finally behind him. Like a celebrity on awards night, he profusely thanked his deputy Floyd Shivambu, the EFF leadership, his friends, lawyers, those who made donations to his tax debts, and, of course, his supporters. DM

Photo: EFF leaders and supporters applause around Julius Malema when SARS announced in court it will abandon the application to have the EFF leader sequestered. (Greg Nicolson)