Five months after alleged Cape underworld kingpin Mark Lifman – currently challenging an almost R400-million tax bill – had met with key players in the spy-ridden tobacco industry in 2013, then Deputy Minister of International Relations, Marius Fransman, wrote to SARS inviting top officials to a “platform” for dialogues between government departments to discuss the “challenges of the illicit tobacco trade”. It is not clear why Fransman, who was also Western Cape ANC Chair at the time, would suddenly be so interested in the tobacco industry which SARS – under former acting Commissioner Ivan Pillay – was investigating. Even more alarming is Pillay’s revelation in his reply that several politicians had approached SARS attempting to strike deals on behalf of tobacco companies and that government departments were being used to further the interests of these companies. By MARIANNE THAMM.
Then acting Commissioner of SARS, Ivan Pillay, in his April 23, 2014 letter of reply to Fransman’s April 14 unexpected invitation to the revenue service to attend a “platform for dialogues”, expresses his “discomfort with certain aspects which appear to be unfolding in this sector”.
Pillay informs then Minister Fransman that he deems it important to inform him that SARS was at the time “engaged in a dispute with one of the members of TISA [Tobacco Institute of South Africa] with respect to a tax assessment of R800,000,000.00” and that SARS had been “approached no less than at least four occasions, most notably in the past two months, by politicians attempting to represent and ‘deal’ on behalf of certain players currently in dispute with SARS”.
The Tobacco Institute of South Africa, an industry body representing established tobacco brands including British American Tobacco (BAT), we now know, had been riddled with State Security Agency spies. Also, it was BAT which funded TISA’s private investigation firm, Forensic Security Services, forking out around R50-million a year.
TISA gave BAT a seat on the Illicit Tobacco Task Team which included representatives from the Hawks, the State Security Agency (SSA) and the NPA, but not SARS. It is now also common knowledge that attorney Belinda Walter worked as a triple agent for the SSA and BAT while acting as chair of the Fair-Trade Independent Tobacco Association (Fita). Walter not only chaired Fita – which represented smaller tobacco companies including Carnilinx – but also acted as Carnilinx’s attorney.
In August last year an anonymous Twitter account, @espionagesa, leaked thousands of documents, voice recordings, records of payment to spies as well as internal documents belonging to Fita and which exposed, through ex-cop, whistle-blower and former FSS employee Francois van der Westhuizen, the extent of it all.
In an affidavit, Van der Westhuizen alleged that he discovered that the “entire basis of my employment was premised on fraud; there was no proof of any illicit cigarette trading; there was no valid or lawful basis upon which the privacy of BATSA competitors could justifiably be breached. In hindsight, the purpose of my employment was for BATSA to deploy my investigative skill together with back-up from corrupt SAPS and SARS officials in order to disrupt the business of BATSA’s competitors, Carnilinx being one of them.”
In court papers Carnilinx later alleged that at least eight South Africans, including Walter, had been on BAT’s payroll and tasked with spying on rival companies.
In Pillay’s April 2014 reply to Fransman the acting SARS commissioner states that SARS was in possession of information that at least one TISA member had “engaged in very questionable activities, including uncompetitive activities, corruption and bribery both in terms of South African law and that of foreign jurisdiction, money laundering and facilitating tax evasion of individuals in South Africa”.
Pillay also expresses surprise at Fransman’s assertion that his dialogue platform – initiated in November 2013 – consisted of members of “various government departments, the private sector, Parliament, civil society and SADC countries”.
November 2013 was also the month that SARS, under Pillay, wrote a letter to the tobacco industry, then Hawks head Anwa Dramat and SAPS Detective Head Lt-General Vinesh Moonoo, stating that the illicit trade in tobacco, apart from the health risks, also robbed the fiscus of millions. Pillay’s letters also indicate that SARS was growing increasingly concerned that state agencies were being infiltrated by “agents provocateurs” including spies and double agents.
“I am not aware that the relevant and affected state institutions have discussed these issues thoroughly and I most certainly cannot confirm this to be the case from a SARS perspective. Our own experience has revealed that certain companies and individuals in the tobacco industry have penetrated a fragmented government system and have been using some elements and access to political parties and persons to further their own interests,” Pillay wrote to Fransman.
Pillay added that he did not believe that state agencies were “sufficiently aligned at this stage in respect of the challenges we face in this sector and I fear the only well organised contingent at the dialogue will be private sector interests”.
In April 2014 Lifman attended President Jacob Zuma’s birthday celebrations at Vygieskraal, at the invitation of Fransman. The two men were photographed together at the event.
At the time, DA leader of the Western Cape, Ivan Meyer, wrote to express the party’s disgust at the ANC’s invitation to Lifman who he charged had contributed funding to the ANC in the Western Cape.
That same month, Fransman and former Western Cape MEC, Pierre Uys, were summoned to appear before the Western Cape Standing Committee on Public Accounts with regard to the Auditor General’s findings in January 2014 that 11 consultancy projects at the Department of Health with contracts or payments amounting to R625-million as well as 20 consultancy projects at the Department of Transport and Public Works with contracts or payments amounting to R328-million, and awarded during the financial years of 2005 to 2010, were either seriously flawed and or badly managed.
Fransman and Uys failed to appear twice before walking out of a 2014 Scopa hearing. Fransman has subsequently fought for years not to account for the contracts and in September last year applied to the Cape High Court in an attempt to avoid appearing before Scopa. Judge Nolwazi Boqwana, however, dismissed Fransman’s application. He has still to answer for the irregularities.
But back in July 2014 – with Pillay still at the helm of SARS – the first media reports that individuals in the tobacco industry had launched a “dirty tricks” campaign aimed at discrediting SARS began to appear. This was a month after revelations that SARS Group Executive, Johann van Loggerenberg, had embarked on a relationship with Walters, a liaison that had cost him his job.
SARS spokesperson at the time, Adrian Lackay, responded that “it has become commonplace for certain individuals with an interest in perverting the course of justice to compile dossiers, files and information which purport to uncover corruption, but are in fact a concoction of some fact and much fiction. Such dossiers are then distributed to the media, certain law enforcement agencies and political players in the hope of disrupting or thwarting a SARS action”.
Lackay’s arbitration hearing against SARS resumed at the CCMA on Monday after several postponements. Lackay, once regarded as one of the most effective government spokespeople, resigned in February 2015.
Commissioner Tom Moyane was appointed by President Jacob Zuma in September 2014. Shortly afterwards SARS experienced a mass exodus of its top executive after stories about the alleged “rogue unit” were placed in the Sunday Times. (The newspaper has since had to apologise and retract these stories.)
Lackay told the CCMA hearing on Monday that his job had become unbearable after the allegations of the “rogue unit” had been circulated and had not been contradicted or denied by Moyane. Moyane in fact moved very swiftly after the untested allegations to purge SARS of top officials.
Lackay had written a letter to the heads of two parliamentary committees in 2015 alleging that Moyane was using the false narrative to justify the purge. In these letters Lackay outlined the background to “Project Snowman”, a dossier initiated by former SARS officials Mike Peega, Mandisa Mokwena and Kenneth Fitoyi and distributed to various media contacts as well as then ANC Youth League president Julius Malema in 2009.
Peega was arrested for rhino poaching in 2009 and both other officials were also facing criminal charges including fraud and tender fraud.
SARS late last year attempted to prevent Lackay from submitting these documents at his CCMA hearing in support of his case but the revenue service’s application was overruled. These documents and their annexes show that not only did SARS, under Gordhan and Pillay, never attempt to conceal the existence of any unit, but had in fact distributed details about it to the police, SSA, Scopa as well as the media.
Lackay is currently seeking 12 months’ salary for what he regards as constructive dismissal from his post.
SARS has denied this even though it advertised his position a month before his resignation. SARS employee relations head, Luther Lebelo, who recently accused ratings agencies of being “gangsters” in a letter penned on behalf of Gupta family bestie Mzwanele Manyi’s Progressive Professionals Forum, began acting as a spokesperson for SARS.
Ultimately, 55 senior managers left SARS in the aftermath of the “rogue unit” story. And while all the stories have been retracted, Moyane has never sought to correct the impression created that a unit did indeed exist.
In the meantime, Lifman is in the process of interdicting SARS in an attempt to stop it from collecting around R380-million in unpaid taxes. The investigation into Lifman took over a year and cost around R20-million.
This is the first time ever that a taxpayer is taking a tax bill on an “audit review”. Daily Maverick has asked SARS under which section of the Tax Act the “audit review” is taking place but had not received a reply at the time of writing.
Lifman’s court papers revealed an e-mail from a low-level auditor at SARS, Gavin Cairns, who appears to be on first name terms with the businessman, and suggesting the “audit review” take place at Lifman’s offices. This is highly irregular as the previous audit of Lifman took place at PricewaterhouseCoopers’ offices in Cape Town.
The decision to “review” Lifman’s audit appears to have been taken by a new “investigative unit” set up by Moyane and headed by SARS investigator Yegan Mundie, who is copied in on Cairns’ e-mail to Lifman.
Lifman is attempting to justify the audit review using the “rogue unit” defence, even though the HRIU had nothing to do with the original audit. This was conducted in 2013 by National Projects. In his court papers Lifman refers also to the meeting in 2013 with a “self-confessed spy” (Walter) “under strange circumstances”.
The tragedy of it all is that, in the end, nothing came of the 15 criminal cases involving R1.2-billion worth of tobacco confiscated at the time or the R800-million assessment Pillay refers to in his letter.
And if anyone could be accused of being “white monopoly capital” it would be the tobacco industry. Yet it is quaint that when Gordhan, Pillay et al set out to collect that which is due to the state and fiscus, they were brutally sidelined.
The question then has to be, who might benefit from the removal of dedicated civil servants? There will come a day when all will be revealed. DM
Photo: Passive smoker, Wan Mohd via Flickr.
Daily Maverick © All rights reserved