Tom Moyane displayed “profound lack of judgement” with his handling of the Jonas Makwakwa debacle, he lied to Parliament, acted irrationally and is guilty of “gross dereliction of duty”. These are the allegations Moyane and his lawyer Eric Mabuza will grapple with in the next two weeks as they craft a reply to the stinging 69-page affidavit submitted by Pravin Gordhan in disciplinary proceedings against Moyane.

The affidavit is addressed to Advocate Azhar Bham SC, chairman of the disciplinary initiated by President Cyril Ramaphosa in March 2018.

Moyane’s tenure at SARS, starting in September 2014, was marred by allegations of a witch hunt on the old guard, a decimation of SARS’ investigation capacity and illegal tax deals for politically exposed persons (including the Guptas).

These allegations, and in some cases evidence, were always strenuously denied by Moyane, claiming that he was on the receiving end of a critical media agenda.

Moyane’s tenure ultimately resulted in a R48-billion revenue gap – a genuine crisis, considering government’s extensive expenditure programme.

Scorpio’s investigative work, contained in a series of stories published between November 2017 and June 2018, labelled the Moyane and Makwakwa dossiers, revealed devastating details of the neglect, mismanagement and corruption in SARS and ultimately lead to Moyane’s suspension in March 2018.

“Mr Moyane is no ordinary employee,” current Minister of Public Enterprises Pravin Gordhan said in the affidavit submitted on Thursday morning as the founding document in Moyane’s disciplinary hearing, arguing that Moyane had to adhere to the highest standard based on his position in government.

The charges against Moyane are mostly based on Scorpio’s Makwakwa Dossier, and a body of work relating to Moyane’s run-in with Auditor-General Kimi Makwetu last year. Scorpio revealed in the past year how Moyane:

• Breached the Financial Intelligence Centre Act twice over in order to help Makwakwa in his fight against SARS;
• Unilaterally and illegally paid his staff bonuses of just over R3-million without permission from then minister of finance Pravin Gordhan. This includes Makwakwa’s bonus of R930,000 received while he was on suspension;
• Lied to parliament about the extent of the investigation into Makwakwa;
• Sabotaged the KPMG investigation into SARS’ former High Risk Investigation Unit (HRIU) by instructing a SARS official to play sick so as not to give his version of events to KPMG.

Gordhan accuses Moyane of having breached his fiduciary duties and the Constitution. He is charged with misconduct in violation of his duties and responsibilities as Commissioner of SARS based on the SARS Act, the Public Finance Management Act and the SARS Code of Conduct.

President Cyril Ramaphosa suspended Moyane in March, and charged him with:

1. Gross mishandling of the FIC report;

2. Unauthorised bonus payments;

3. Misleading Parliament; and

4. Instructing a SARS employee not to co-operate with the KPMG investigation into the HRIU.

Gordhan deposed of the affidavit, saying he has “personal knowledge of the facts” in his position as minister of finance up until 30 March 2017 when he was kicked out by former president Jacob Zuma in his last Cabinet reshuffle. Said Gordhan:

“The documents and correspondence relevant…were within my custody and control during that time.”

The charges

• Charge One: Gross mishandling of the Financial Intelligence Centre report on Jonas Makwakwa.

Insiders describe the first charge against Moyane as the most serious in the affidavit, and is therefore the best substantiated and most voluminous of the four charges. It relates to Moyane’s shielding of his right-hand man, Jonas Makwakwa.

Gordhan’s affidavit notes that Makwakwa was a “senior member of the SARS executive and Mr Moyane’s second-in-command. His position as chief officer business and individual taxes tasked him with controlling SARS’ biggest revenue streams. In these circumstances, the allegations made in the FIC report were extremely serious with the potential, if not handled correctly, to damage the credibility of SARS, tax morality and the collection of tax revenue”.

Gordhan argued that Moyane’s conduct in the Makwakwa debacle did not protect the integrity and reputation of SARS and did not ensure that public confidence in SARS remained intact.

The FIC’s accusations against Jonas Makwakwa and his partner Kelly-Ann Elskie has publicly been well documented since September 2016.

In short: FIC investigators ordered an investigation into Makwakwa and Elskie’s finances to determine whether the couple was involved in money laundering and whether mysterious cash deposits and payments into their personal accounts were proceeds of crime.

FIC investigators accused Makwakwa and Elskie of stuffing ATMs with hundreds of thousands of rand in mysterious cash. The FIC concluded that Makwakwa grew a “dependency” on the mysterious income to maintain his lifestyle. Between 2010 to 2015, the funds flowing through Makwakwa’s account grew by 152%. In a subsequent investigation Scorpio confirmed that Makwakwa splurged, at times, two to three times more per month than what he legitimately earned and declared from SARS.

Section 41 of the FIC act prohibits the disclosure of such an FIC report, even and especially to the subject under investigation. In breach of this provision, Moyane disclosed the contents of the FIC report to Makwakwa and Elskie, while keeping its existence a secret, even from the Hawks and Gordhan, who was his political head at the time.

The reason for this provision was adequately substantiated when a Scorpio investigation proved that the mysterious payments into Makwakwa’s bank accounts stopped abruptly right after Moyane tipped him off that the FIC is looking over his shoulder.

In a failure of logic, Moyane did not immediately suspend Makwakwa or Elskie and did not institute immediate investigations to determine whether the couple were guilty of tax evasion, money laundering, corruption and breaches of the PFMA. To the contrary, Makwakwa was allowed to accompany Moyane to important parliamentary and ministerial meetings in the following months. Only when amaBhungane lifted the lid on Moyane’s Makwakwa secret in September 2016, four months after the FIC report was handed to Moyane, did he suspend Makwakwa. In the same week, Moyane informed Gordhan of the report and appointed law firm Hogan Lovells to conduct the disciplinary process. The tax investigations into Makwakwa and Elskie was farmed out to PwC, even though Moyane stated that SARS would conduct the tax investigations.

Moyane further misused SARS as a post box to ferret out secret information from the FIC in order to assist Makwakwa’s lawyer Liezel David in their fight against SARS.

“This action was grossly inappropriate and again reflected profound lack of judgement on Mr Moyane’s part,” Gordhan argues.

When then FIC head Murray Michell realised what was going on, he slapped Moyane over the wrist and “strongly recommended” a formal investigation into the “gross mishandling” of the FIC report. Moyane reacted by badmouthing Michell in public and in Parliament.

Moyane’s handling of Hogan Lovells’ terms of reference, their report as well as the PwC investigation has also come under scrutiny.

Moyane failed to act on some of Hogan Lovells’ recommendations, Gordhan argues, including that Makwakwa should be charged for “failure to co-operate and fully assist his employer in an investigation”.

Moyane’s handling of the PwC investigation was even more damaging.

Gordhan argued that farming out the investigation to PwC was “unacceptable” to start with, because tax investigations squarely fall in SARS mandate.

“It was also the only entity that could effectively conduct these investigations. In failing to ensure that these investigations were conducted by SARS and in allowing them to be outsourced to PwC, Mr Moyane as Commissioner of SARS committed gross dereliction of duty,” Gordhan said.

SARS refused to give PwC access to Makwakwa and Elskie’s SARS-issued computers and cell phones; withheld SARS accounting records, documentation and systems that could help PwC determine whether the couple breached the PFMA; and refused documentation to assist PwC in determining whether any settlement agreements with taxpayers approved by Makwakwa have been compromised.

Said Gordhan:

“The findings of the PwC report were then inconclusive. It is apparent from the PwC report that this was due in large part to the fact that SARS failed to provide PwC with the information and documentation it needed in order to conduct an effective investigation.”

Gordhan also noted that neither PwC nor Hogan Lovells investigated the integrity of settlements concluded by Makwakwa.

PwC therefore recommended further investigation into possible contraventions of foreign exchange regulations by Makwakwa and asked for adequate supporting documentation in order to conclude their investigation.

“SARS failed to act on either of these recommendations,” Gordhan said.

“Mr Moyane’s actions in this regard brought SARS into disrepute both as far as the FIC was concerned… and in the eyes of the public generally. …That Mr Moyane did none of these things reveals a profound lack of judgement on his part and dereliction of duty.”

Gordhan concludes that the Hogan Lovells and PwC investigations were wholly “inadequate”, and criticises Moyane for lifting Makwakwa’s suspension while there was no clarity on the allegations against him, while he was still being investigated by the Hawks.

“The reasons for Mr Makwakwa’s suspension therefore remained in existence. Mr Moyane’s action in lifting the suspension was accordingly irrational and constituted a gross dereliction of duty,” Gordhan said.

• Charge two: Unauthorised bonus payments

In 2016 Moyane ignored instructions and advice from Gordhan, then minister of finance, and unilaterally increased SARS staff’s salaries and pay bonuses to his executives.

The acrimony between Moyane and Gordhan was displayed at the time by a flurry of 16 letters where Moyane complained that Gordhan made him feel like a “little boy” and Gordhan warned Moyane’s conduct would be “illegal” and “immoral”.

Moyane paid no heed and in so doing gave Gordhan a stick to bash him with. His unilateral approval of performance bonuses and salary increases violated the SARS act and pitted SARS in a bitter fight against the Auditor-General Kimi Makwetu. Moyane attempted to strong-arm Makwetu by threatening legal action, but Makwetu had none of it – he described the payments as illegal, irregular expenditure and an act of financial misconduct. Makwetu also found SARS guilty of internal control deficiency and irregular expenditure.

When Scorpio wrote about Moyane’s misconduct, SARS reported Daily Maverick to the Press Ombud. Scorpio won the case in totality.

And now Moyane will have to answer for his belligerence: His conduct is a violation of the SARS Act, an act of financial misconduct that is grounds for dismissal, a violation of the SARS code of conduct and triggered an adverse finding against SARS by the Auditor-General, Gordhan said.

These acts brought “SARS into disrepute and caus(ed) reputational harm to the institution”.

• Charge Three: Misleading Parliament

The third charge constitutes two themes: Gordhan accuses Moyane of lying to parliament about the extent of Hogan Lovells’ investigation into SARS as well as about details relating to SARS’ appointment of a debt collector linked to Makwakwa and an alleged money laundering ring.

Moyane’s reporting to Parliament was “factually incorrect, misleading and concealed the true state of events,” Gordhan said.

In September 2016 Moyane confirmed to Parliament that SARS appointed Hogan Lovells “to investigate (the Makwakwa) matter, and to conduct disciplinary proceedings” against Makwakwa and Elskie.

Scorpio’s stories later revealed that Hogan Lovells in fact did not investigate any of the material allegations made by the FIC, as Moyane pretended.

The second theme relates to the appointment of New Integrated Credit Solutions (NICS) in February as one of eight debt collectors to recover R16.6-billion in revenue for SARS.

Jonas Makwakwa resigned in March, hours after Scorpio and the Sunday Times revealed that NICS was mentioned in the much discussed FIC report as part of a money laundering ring that ultimately benefited Makwakwa and a friend of Moyane’s, Patrick Monyeki.

Moyane told Parliament that he played no role in approving the appointment of NICS – yet his signature is on the final document dated 15 February 2018, doing just that.

Said Gordhan:

“It is apparent that Mr Moyane provided Parliament with false information about the Hogan Lovells investigation, and concealed his role in approving the appointment of NICS… Mr Moyane’s conduct violated the SARS Code of Conduct. It also amounted to gross misconduct in his capacity as Commissioner of SARS.”

• Charge Four: Instructing a SARS employee not to co-operate with the KPMG investigation into the HRIU

The last charge relates to how Moyane actively sabotaged the KPMG investigation into an alleged illegal SARS investigative unit.

Moyane instructed Helgard Lombard, a SARS employee, to feign illness in order to avoid attending an interview by a KPMG investigator. The telephonic discussion was recorded, and Lombard submitted the recording and transcription to the disciplinary hearing. He also deposed to a confirmatory affidavit.

This is the same KPMG investigation that was later used to prosecute Gordhan, former SARS commissioner Ivan Pillay and former SARS investigations head Johann van Loggerenberg.

Lombard had valuable information that would have changed the outcome of KPMG’s botched investigative report, of which the auditing firm had to retract its recommendations and findings.

The act of sabotage “constituted an abuse of the Office of the Commissioner of SARS and gross misconduct”, Gordhan argued.

“The KPMG investigation was initiated at Mr Moyane’s instance. By instructing Mr Lombard not to attend the interview, Mr Moyane ensured that information, relevant to the investigation, was withheld from the investigation.”

This violated the SARS code of conduct, Gordhan said.

Now what?

Moyane and his lawyer Eric Mabuza have about two weeks to reply to the allegations contained in Gordhan’s affidavit. DM

Read Pravin Gordhan’s affidavit in the Presidency’s disciplinary case against Tom Moyane here, (in two parts):

)Pravin Gordhan Affidavit Part 1 by janet on Scribd

Pravin Gordhan Affidavit Part 2 by janet on Scribd