South Africa

SARS Wars: Moyane under pressure as suspended No 2 lands a new controversy

By Marianne Thamm 24 February 2017

In the week in which Finance Minister Pravin Gordhan announced that the South African Revenue Service had collected R30.4-billion less than projected, Commissioner Tom Moyane’s once-trusted No 2, Jonas Makwakwa, was revealed to have been disciplined for allegedly interfering, while on suspension, with a tax probe into Durban’s “teflon” billionaire couple Shawn and S’bu Mpisane. And remember those “suspicious deposits” totalling around R1.3-million, some of which Makwakwa was filmed depositing into his bank account? Daily Maverick has reliably learned Makwakwa is claiming that the money is from a “stokvel” and taxi business. By MARIANNE THAMM.

SARS chief officer for business and individual tax, Jonas Makwakwa, a man who was once such a powerful figure in the revenue service that he occasionally acted as commissioner when Tom Moyane was away, is at the centre of another scandal, this time while on suspension, as a private investigation continues into “suspicious and unusual” payments, some of them in cash and amounting to R1.3-million, into his private bank account.

This is the third scandal involving Makwakwa, who has also been accused of using his influence to leapfrog his girlfriend, Kelly-Ann Elskie, from a job as a personal assistant to a legal unit which deals with SARS’ most sensitive and high-profile legal cases.

Now Makwakwa has been allegedly caught interfering with the tax matters of Durban’s teflon billionaire couple, Shauwn and S’bu Mpisane while on suspension from SARS. The SARS No 2 allegedly contacted a SARS employee and attempted to intervene in a tax matter on the Mpisanes’ behalf.

It is believed that Makwakwa also drew Alton Netshivhungululu (Apostle Netshivhungululu in his private life), a former SARS official who is currently a tax practitioner, in to represent the Mpisanes in their dealings with SARS.

Investigative magazine Noseweek has been following the financial fortunes and misfortunes of the Mpisanes for several years and has exposed how Makwakwa’s name often appeared in documents and other evidence in an aborted Durban tax case against the Mpisanes.

Nowhere in the tax trial records is it suggested that Makwakwa deliberately sabotaged the tax probe and prosecution of the Mpisanes, but there are some disturbing incidents that compounded the problems that brought their politically charged criminal trial to an abrupt end. In 2011 Shawn, along with her company Zikhulise Cleaning Maintenance and Transport cc, faced 119 criminal charges including forgery, tax fraud and the under-declaration of VAT. Husband S’bu, while not a director, is directly involved in the business and was present in court behind his wife from the time she was charged in June 2011 until January 30, 2014 when she was acquitted of all charges,” wrote Noseweek editor, Martin Welz.

Makwakwa’s involvement in the Mpisane matter raised “several red flags, the most notable being the couple’s claim that, at an informal, out-of-the-office meeting, he had agreed to knock R13-million off their R33-million tax bill. He had calculated and scribbled the reduced payment, down to the cents that SARS would allegedly accept in settlement, on a piece of paper that happened to be available – and which was tendered as evidence in court.”

This then forms the backdrop of the current scandal which Finance Minister Pravin Gordhan confirmed at a media briefing after his Budget speech on Wednesday. Gordhan said he had been informed that Makwakwa had undergone a disciplinary hearing in the past two weeks, but was unaware of the details.

It is believed that Commissioner Moyane ordered that Makwakwa be disciplined after the SARS official, who had been contacted by Makwakwa to meet with the Mpisanes, grew concerned about the irregular meeting and alerted his superiors, who in turn alerted Moyane.

Moyane’s swift action in this mater is in marked contrast to his rather low-key response to the serious allegations of suspicious deposits into Makwakwa and Elskie’s accounts, flagged by the Financial Intelligence Centre in May last year. Moyane “sat” on the matter for several months and in had fact informed Makwakwa about it instead of reporting it to the Hawks.

Later Moyane chose instead to appoint the private law firm Hogan Lovells to probe the matter. The investigation is ongoing but Daily Maverick has reliably learned that Makwakwa has since claimed that cash deposits of R785,130 made between 2010 and 2016 (most of these – 48 deposits totalling R726,400 – were made between 2014 and 2015) were, in fact, wait for it… proceeds from a stokvel and taxi business.

In December last year Daily Maverick sent a list of questions to SARS spokesperson Sandile Memela with regard to the tax obligations of people who belong to stokvels – usually an informal savings or investment collective where members contribute a regular monthly amount from which they eventually receive a lump sum payment.

Memela replied that SARS has “no prohibitions preventing employees from joining stokvels nor does it have a list of employees who belong to stokvels. In cases where SARS employees see potential conflict of interest they are expected to declare it. Declarations are examined and if a conflict of interest is identified, measures are taken to resolve and/or manage the conflict positively.”

It should, however, be relatively easy to track whether Makwakwa declared his membership of what appears to be a highly lucrative stokvel. What is unusual is that stokvels where members deal in large amounts are seldom conducted using cash, as this is too risky.

What is interesting with regard to the FIC’s flagging of suspicious transactions into Makwakwa and Elskie’s accounts is that amaBhungane reported that through a complex network of bank accounts and companies, investigators traced these payments back to a February 2015 payment of R17.87-million by the Department of Water and Sanitation in favour of a debt-collection company called New Integrated Credit Solutions.

It is not clear what the connection is between a chain of six different companies that have been identified in the report, which include several debt-collection companies and a company called Biz Fire Worx, where Makwakwa was once a director. It sells fire safety equipment. In most instances, as soon as payments arrived in one bank account, the money was immediately transferred to the next, with a slice being deducted by each company in the chain. On the day after New Integrated Credit Solutions received its payment from the department, it transferred precisely 25% – R4,468,239.28 – to a company called Mahube Payment Solutions,” amaBhungane found.

At the time, New Integrated Credit Solutions chairman Baker Maseko said the payment “would most likely have been as part of its subcontracting arrangement with Mahube to do data analysis on debt data. He said although SARS was a former client, it had not done business with the tax entity for four or five years”.

However, Mahube has an indirect link with SARS through the company’s sole director, Patrick Monyeki, who is said to be a close friend of Moyane. Monyeki, an “information technology veteran”, also formed part of Minister of Social Development Bathabile Dlamini’s hand-picked team of advisers, appointed in 2013 to guide the minister on the “best models for payments of the grants”.

That didn’t turn out too well, we discovered on Wednesday when Minister Dlamini briefed Parliament’s portfolio committee, finally admitting that SASSA and the department were nowhere near ready to act as paymaster for the country’s social grants and that a new contract would have to be negotiated with CPS. Bear in mind, however, that SASSA is going to need loads of new technology when it is finally able to deliver, in “18 to 24 months”, according to Dlamini.

Monyeki reportedly “played a crucial role” in the original decision to award the lucrative SASSA contract for the distribution of SASSA grants to Cash Paymaster Services. According to amaBhungane, Tom Moyane chaired that bid committee.

It has also emerged in the meantime that “Monyeki has an interest in the company that was awarded a controversial R378-million contract to supply an ‘inmate management system’ to the Department of Correctional Services. Before he was appointed by President Zuma to head SARS, Tom Moyane was the National Commissioner of Correctional Services.

All of these matters will no doubt be included in the eagerly awaited Hogan Lovells report.

Moyane is under increasing pressure on various fronts. In December last year Corruption Watch lodged criminal charges against the SARS commissioner for breaching sections of the Financial Centre Intelligence Act as well as sections of the Prevention and Combatting of Corrupt Activities Act in relation to the Financial Intelligence Centre report.

So far the Hawks, unsurprisingly, appear to be dragging their feet. In January Corruption Watch wrote to Hawks head, Lieutenant-General Mthandazo Ntlemeza, after he had simply ignored an earlier October 2015 letter. Ntlemeza was given until Feb 3 to respond.

The silence has been, well you know.

The animosity between Gordhan and Moyane since Gordhan was parachuted back into the job has been growing increasingly heated. Gordhan has attempted to halt Moyane’s restructuring of SARS, which has seen the mass departure of highly experienced staff. SARS has also been slowed down by the Grant Thornton “Operation Lion” probe, an apparent attempt at digging up dirt on the Pillay and Gordhan years.

With so much distraction is it any wonder revenue collection has fallen short? SARS insiders have said that the unhappiness at the country’s most vital link in the economic chain has affected its ability to deliver on its crucial mandate. DM

Photo: SARS commissioner Tom Moyane (l), No 2 Jonas Makwakwa (r).

Gallery

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