How complicated can it be, really?

Jonas Makwakwa is a chartered accountant and has spent 19 years working his way up at SARS. In May 2016, when the FIC flagged the suspicious payments Makwakwa and Elskie had made into their personal accounts, he was SARS Chief Officer for Business and Individual Tax. In fact he is still listed as such on the SARS website. Don’t judge, they’ve been busy.

On 17 May 2016, the FIC compiled a report of the transactions and how these might have contravened the Prevention and Combating of Corrupt Activities Act (Precca), the Financial Intelligence Centre Act and the Prevention of Organised Crime Act.

The allegations of corruption and money laundering in the FIC report transcended the SARS mandate, meaning they were considered a potentially criminal matter and a job for the illustrious Directorate for Priority Crimes Investigation (the Hawks were then headed by the now thoroughly discredited, and mercifully retired, General Mthandazo Berning Ntlemeza)

Now let’s just pause the narrative here.

Imagine you are Tom Moyane.

The FIC hands you a detailed report that reads, in part,

“MJM’s [Mashudu Jonas Makwakwa’s] personal bank account is the primary account used to receive and disburse funds. Credits into this account have increased yearly from R1,358,817,01 in 2010 to R3,418,925.24 in 2015 … Likewise, MJM’s payments have grown over this period, creating a dependency on suspicious cash deposits and payments to maintain his current standard of living. These payments and cash deposits are of concern as they originate from unknown sources and undetermined legal purpose.”

“Holy cow!” you exclaim, “My trusted No 2, the man tasked with controlling SARS’ biggest revenue streams, those from corporates and high net-worth individuals in South Africa, has been caught, on camera nogal, making 75 cash deposits into his and his girlfriend’s private bank accounts.”

What do you do? Call the cops, of course.

Err, no.

Instead, Moyane, on 23 May, opted to inform Makwakwa and Elskie about the FIC report, an action that Corruption Watch has deemed illegal and in breach of the Prevention and Combating of Corrupt Activities Act and for which they have laid charges against the SARS commissioner (charges the Hawks have been less than keen to investigate).

The whole scandal could have been resolved the day after Moyane had been alerted by the FIC in a conversation that might have played out more or less like this:

Moyane: “Jonas, WTF?”

Makwakwa: “No man, nothing to worry Com Tom. It’s just the proceeds from this really cool stokvel I belong to – we work in cash even if it amounts to millions. You understand how stokvels work! And bank charges! Bloody extortion I tell you. Oh, and there’s also some cash I get from a taxi business on the side.”

Moyane: “Oh ja, of course!” (hitting forehead with palm). “I remember man. You declared all of this additional income to SARS, in fact we have the tax records for it all, as well as the registration of the stokvel and all its members. Whew! For a minute there I thought you and Kelly-Ann might have been breaking the law.”

There we go, not at all complicated. Call a press conference, clear it all up.

Makwakwa is a chartered accountant after all and should have not had much trouble explaining it all to the Hawks as well, in fact.

Only that’s not what happened.

A year later no one quite knows WHAT’s going down. On Tuesday SARS told Daily Maverick that Makwakwa was still on suspension and that “there is a hearing under way” and that an “outcome” is expected in early October 2017.

“The finalisation of the matter is at an advanced stage but SARS is not in a position to disclose more than what has been publicly disclosed to date,” and then later, “It is important to note that as SARS, we are dictated by the laws of this country to respect employee rights which includes Mr Makwakwa’s.”

In May Moyane told Scopa that the Makwakwa matter “needed closure” but that he did not know when the investigation would be complete as it was “complicated”.

In June, SARS chief officer of strategy, communications and enforcement, Hlengani Mathebula told Parliament’s standing committee on finance that Makwakwa’s disciplinary should be finalised in July.

On 13 September the finance committee met again and chair, Yunus Carrim, did not conceal his irritation, telling the commissioner, “It is unacceptable this matter drags on. He was your deputy in a sense. It’s just not on.”

He also asked why Makwakwa was being “protected”.

It certainly seems that this has been the case.

Back in May 2016, Moyane, instead of alerting the Hawks, called in a private law firm, Hogan Lovells, to investigate allegations of tax evasion “and other contraventions of the Tax Administration Act and whether there had been a breach of the Public Finance Management Act and SARS’ internal policies.”

Why would this be an “employee” matter when the FIC had clearly red-flagged alleged criminality?

Moyane said he had been aware of his legal obligation to refer the matter to the SAPS for criminal investigation as required by the Prevention and Combating of Corrupt Activities Act:

“However, upon inquiry and before I could report this matter to the SAPS, I was advised by the Directorate for Priority Crimes Investigation (the Hawks) that the matter had already been referred to the SAPS for investigation during early June 2016.”

Strangely, all of this was news to the Hawks.

On 11 September, 2016 Daily Maverick emailed the Hawks about their apparent investigation into Makwakwa and Elskie. Hawks spokesperson Brigadier Hangwani Mulaudzi responded with:

“Marianne Thank you for the email. Yes I read all newspapers and no we are not investigating the matter. I assume it is an internal matter and for further details please consult SARS. Regards Mulaudzi H (Brig)”

A month later, on 9 October 2016, Hogan Lovells handed its report to Moyane., providing a “legal opinion”. On 15 September Moyane announced he was suspending Makwakwa and that his No 2 would face an internal disciplinary hearing. Elskie, also a SARS employee and the mother of two of Makwakwa’s children, was also suspended.

Apart from the cash deposits, the FIC also uncovered a series of Makwakwa’s transactions it has labelled “suspicious and unusual payments” and relating to the Department of Water Affairs and Forestry and a deposit of R17,872,957.13 into the account of a company, New Integrated Credit Solutions – a debt collection company formerly contracted to SARS.

This total was then moved in a series of payments to five different companies, Mafube Payment Solutions, Arvomark, Street Talk Trading 181, Biz Fire Worx (where Makwakwa was a previous director) and to Mercedes Benz Financial Services. The last payment of R480,000 is believed to have been for a Mercedes Benz C220 BLUETEC for Kelly-Ann Elskie. New Integrated Credit Solutions had been subcontracted with Mafube to analyse debt data for SARS.

Hidden somewhere in these transactions are the names of people who might not enjoy a public airing of their business connections with SARS’ second most powerful official.

In December 2014, three months after Moyane’s appointment in September, it was Jonas Makwakwa who was appointed along with a SARS “steering committee” to work with KPMG to conduct “a documentary review of evidence” gathered by two earlier panels into the so-called “rogue unit”, the Kanyane and Sikhakhane panels.

KMPG SA last week dramatically withdrew the findings and conclusions of that report and apologised to those named in it, including former Finance Minister Pravin Gordhan, former deputy Commissioner Ivan Pillay and others. This week KPMG met with Gordhan, former SARS spokesperson Adrian Lackay, Pillay, Peter Richer and Yolisa Pikie, who all left SARS in the wake of the allegations published in the Sunday Times.

New KPMG CEO Nhlamu Dlomu said on Tuesday, “I appreciated the opportunity to meet with Mr Lackay, Mr Pillay, Mr Pikie and Mr Richer and listened closely to their concerns. They told me loud and clear that the report KPMG South Africa prepared for SARS caused suffering to them, other SARS employees and their families. I understand their pain and apologised for the part that KPMG played. We acknowledge their concerns and anticipate that the terms of reference for the independent investigation will be broad enough so that their concerns can be addressed.”

KPMG, buckling under pressure after revelations of its dealings with Gupta-linked companies and the siphoning off of R30-million to pay for the big, fat Gupta wedding at Sun City as well as its involvement in the SARS report, has offered to repay the R23-million SARS paid as well as donate a further R40-million to charity.

Commissioner Moyane, on the other hand, hit back last week in a press conference, saying that the KPMG report was the property of SARS, and rejected the auditing firm’s withdrawal of the report’s findings and conclusions. Moyane has threatened to institute legal action.

Makwakwa’s name blipped onto the media radar in February 2016 when an amaBhungane investigation revealed that SARS insiders had accused Moyane of “grabbing control of a key revenue-generating division that deals with large corporations and wealthy individuals”. The hugely successful large business centre had until then been autonomous but was eventually placed under Makwakwa.

In January 2015, Moyane embarked on a massive restructuring of SARS and appointed Makwakwa to lead this. However, Makwakwa’s previous dealings, as senior group executive for audit, with high-net taxpayers, had rung alarm bells for some SARS insiders.

Two examples were cited: Makwakwa’s dealings with Mpisi Trading 74, run by Taiwan-born Jen-Chih “Robert” Huang, a company represented by Jacob Zuma’s lawyer Michael Hulley and previously chaired by Zuma’s nephew (now reportedly stranded and “penniless” in Dubai) Khulubuse Zuma.

“Makwakwa, it is claimed, met Mpisi on two occasions in the company of another SARS official, and Makwakwa later instructed SARS officials to hand him all cases related to Huang. This raised suspicion among some at SARS,” amaBhungane revealed.

The second instance involved Durban businesswoman Shawn Mpisane, who faced tax fraud charges in 2013. After petitioning then NDPP Mxolisi Nxasana (who may or may not be poised for a comeback) and claiming “prosecutorial misconduct”, the case was withdrawn in January 2014.

Makwakwa’s role in the failed prosecution was questioned by the SARS executive, specifically his engagement with taxpayers. This led to clashes between Makwakwa and former chief of operations, Barry Hore, and former Commissioner Oupa Magashula (who all later left the employment of SARS).

In April 2016 both Moyane and Makwakwa sued the Mail & Guardian and amaBhungane for a combined R4-million for defamation following the publication of the article. Moyane also sought an order declaring that the M&G had violated the confidentiality of the Tax Administration Act by disclosing interactions between SARS and those taxpayers mentioned in the story. The case is still pending.

It was Makwakwa who in July 2016 (two months after the FIC had flagged the suspicious transactions) signed off on another “independent” investigation instituted by Moyane, that by Grant Thornton, an assurance, tax, advisory and outsourcing service, into the SARS Modernisation and Technology Programme implemented between 2007 and 2014. Code-named Project Lion, this “forensic investigation” was handed to SARS in December 2016.

Moyane and SARS have intimated that the Grant Thornton report is “confidential” and that “action will be taken at the appropriate time”.

The Grant Thornton investigation is generally regarded as a “fishing expedition” by Moyane with the hope of uncovering some impropriety on the part of Pravin Gordhan who was SARS commissioner between 1999 and 2009.

On Tuesday Business Day reported that Moyane was seeking to extend the scope of the Project Lion investigation and had requested a deviation from Treasury, a request that was denied.

During Moyane’s and SARS’ appearance before the finance committee earlier this month it was revealed that Makwakwa, while on suspension, had requested the payment of a bonus.

SARS Chief Officer Human Capital, Teboho Mokoena, told MPs Makwakwa had been informed that it was not policy to pay bonuses to officials on suspension.

It took several follow-up questions to obtain clarity on whether SARS had indeed considered paying the bonus. “The correspondence indicates SARS would not pay a bonus,” was Mokoena’s final reply.

The finance committee was also told Makwakwa appeared before a disciplinary hearing over four days from 26 to 28 July, and again on 15 August. By 13 September closing arguments had been submitted and it was now the wait for the hearing chairperson to make a decision.

Corruption Watch, in March 2017, wrote to IPID director, Robert McBride, complaining of the “unsatisfactory” responses by SAPS and the Hawks with regard to the investigations into Makwakwa, Elskie as well as the charge the organisation had lodged against Moyane.

“Corruption Watch is concerned about the manner in which the Hawks are handling the FIC report which was referred to them in May 2016 as well as the criminal complaints we lodged in December,” wrote Corruption Watch head, David Lewis.

CW was concerned “about the failure of the Hawks to conduct an investigation” into the parties and as complainants in the criminal complaints against them, we are entitled to request and receive information about investigations in these matter (sic), however, we have been provided with little or no information.”

So here we are, a year later, with no clarity on, well, anything. Makwakwa spent his time away on full pay. Moyane’s claim of the Hawks investigation appears not to correspond with reality. What’s more, Hogan Lovells’ report itself landed on Moyane’s desk almost a year ago. Even a moderately enthusiastic action by the SARS commissioner could have ended in resolution by the end of 2016. Why wait? Who, or even better, WHAT, is protecting Makwakwa?

It is a tangled web, dear reader, but it is unravelling, one strand at a time. It can’t be too much longer now. DM

Photo: SARS Commissioner Tom Moyane and his suspended No 2, Jonas Makwakwa, with his girlfriend, Kelly-Ann Elskie. (Supplied)