You will be assimilated
17 November 2017 23:27 (South Africa)
Politics

Op-Ed: Time to release KPMG SARS ‘rogue unit’ report

  • Marianne Thamm
    marianne-thamm.jpg
    Marianne Thamm
  • Politics
Marianne-KPMG.jpg

It has been six months since auditing firm KPMG handed a report (sorry, make that a draft report) to SARS commissioner Tom Moyane containing the findings/recommendations of a forensic investigation (sorry, make that a documentary review) into allegations that a “rogue unit” existed in SARS. It’s quite a tidy sum for a document that has not yet been publicly released and possibly never will be and that KPMG itself has said may not be used to resolve disputes or controversies. By MARIANNE THAMM.

It was the EFF’s Floyd Shivambu who, in a written question to Parliament, asked accidental Minister of Finance Pravin Gordhan how much the controversial and seemingly compromised KPMG “probe” into the alleged SARS “rogue unit” had cost, whether the firm had been appointed in an open tender and what exactly its terms of reference were.

Shivambu’s actual words were:

What was the cost incurred by the SA Revenue Service (SARS) for the services of a certain company in their investigations into (a) a certain person and (b) other former employees of SARS?”

The reply was published in March, a terrible month for a certain person, Pravin Gordhan: you might recall when he finally replied to 27 questions personally sent in February by Hawks head bully Mthandazo Ntlemeza. The written reply has only just surfaced in the real world but still leaves many unanswered questions and traces of unfinished nasty business.

The reply read: “The South African Revenue Service has submitted the following information. Please note that the Minister is unable to verify the content (code for, “You'll have to take Com Tom’s word for it”) and then, “The cost incurred for the mandated work was; KPMG R23, 131, 265.30. The KPMG investigated the allegations made in respect of an investigative unit within the SARS.”

Gordhan’s reply continued that “an already existing panel was utilised for this purpose that was previously appointed through an open tender process in terms of paragraph 4.9 of the National Treasury Supply Chain Management – A guide for accounting officers/authorities – February 2004”.

Gordhan says SARS submitted that “the Terms of Reference of the mentioned company was to perform a forensic investigation based on the recommendations of the Sikhakhane report to institute a more detailed investigation and to provide evidential support to the findings made”.

But here’s the thing, who should we believe?

While SARS clearly states that KPMG was contracted to perform a “forensic investigation”, KPMG CEO, Trevor Hoole, in a press statement released in January, contradicts this. In the statement Hoole says “our mandate 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”.

So, if KPMG was not mandated to interview those individuals (or alleged suspects) named in the report it would not be illogical to ask why on earth SARS spent R23-million of public funds on a “report” that is, to all intents and purposes, useless and in some ways a mere repetition or replication of three other reports?

The report, which was delivered by KPMG auditor Johan van der Walt to SARS Commissioner Tom Moyane on 4 December 2015, contained an explicit disclaimer that it had not been prepared “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”.

What then is its purpose? We still don’t know.

As it is, the version of the report that Daily Maverick has seen is not thick enough to use as a door stop, so essentially taxpayers paid for a blunt political instrument that is now being kept in a drawer in Moyane’s office, no doubt.

The SARS reply also does not reveal (and perhaps this is a question someone else in Parliament could ask) just how much additional public money was spent on SARS legal firm Mashiane, Moodley and Monama who essentially wrote a large chunk of the “recommendations” in the Executive Findings and Conclusions of what is supposed to be an independent KPMG report. (See: SARS Wars: KPMG report compromised by interference, undeclared conflicts of interest and press leaks in Daily Maverick.)

Daily Maverick questions to SARS about the above have still not been answered.

SARS has also not made public how much it paid Advocates Nadine Fourie and Martin van As, who assisted SARS investigators, under the guidance of KPMG, in another investigation prior to the draft/final December report.

It would be safe to assume that the actual amount SARS has spent chasing its own shadow is probably way more than R23-million, with little to show for it.

So far KMPG has managed to fly under the radar with regard to its involvement in this matter of national importance even though there are serious questions that have been asked (but not answered) around the firm’s obvious conflict of interest, that it also represents British American Tobacco (BAT) which is implicated in the entire “rogue unit” saga. (See SARS Wars, season two: How can we trust the KPMG report? in Daily Maverick)

In their submissions to SARS and the Sikhakane panel, former deputy commissioner Ivan Pillay and group executive Johann van Loggerenberg provided evidence implicating BAT UK (British American Tobacco), BAT SA and their attorney Belinda Walter in corruption and money-laundering, but the KPMG report into the “rogue unit”, Draft 3, completely ignores this and in fact does not even name BAT, while it names other firms.

KPMG also failed, it appears, to inform SARS that in March 2015 it was appointed as auditors for BAT. The firm was working for two bosses at the same time while one boss should have been investigating the other.

The question that KPMG has not answered (and which Daily Maverick asked months ago) is whether it complied with the statutory provisions of the Poca (Prevention of Organised Crime Act), Fica (Financial Intelligence Centre Act) and PCCA (Prevention and Combatting of Corrupt Activities Act) in reporting corrupt practices and money-laundering to the Hawks and the FIC (Financial Intelligence Centre) and specifically under Section 34 of the PCCA in respect of Pretoria attorney Belinda Walter, British American Tobacco SA, British American Tobacco UK and her declared involvement with BAT UK and BAT SA.

Perhaps it is time for the Independent Regulatory Board for Auditors (IRBA) to look into the matter, as no one else seems concerned about this apparent ethical breach.

The IRBA functions in terms of the Public Accountants’ and Auditors’ Act, 1991 and its members are appointed by the Minister of Finance. Its core mission, is “to protect the financial interests of the people of South Africa, and other stakeholders, through services rendered by registered accountants and auditors”.

Investigations can be initiated by any member of the public and perhaps this is a route that will bring to an end a saga that has dragged on for two years and has cost several people their reputations, jobs and livelihoods.

Either Commissioner Tom Moyane must make public the KPMG report so the citizens of South Africa can see what truths it has uncovered, or he must be called to account for initiating the “investigation”/ “documentary review”, call it what you will, in the first place. Apart from the R23-million spend, the damage to the reputation of SARS may be just too great. DM

  • Marianne Thamm
    marianne-thamm.jpg
    Marianne Thamm
  • Politics

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