SARS INQUIRY, DAY THREE

Jonas Makwakwa’s swift rise to power, and his abuse of it

By Pauli Van Wyk 29 June 2018
Caption
SARS' former Number Two, Jonas Makwakwa.
Archive Photo: SARS' former Number Two, Jonas Makwakwa.

The testimony of witnesses on Wednesday was all about how Tom Moyane treated SARS like a concentration camp. His right-hand man Jonas Makwakwa, however, stole the show on Thursday: Witnesses painted a picture of a mid-level manager who wormed himself into a top job while grabbing hold of operational power in order to interfere in the affairs of high-profile taxpayers. Day 3 of the Commission of Inquiry into SARS was no less of a shock than Day 2.

Jonas Makwakwa was very powerful,” former SARS group executive for corporate legal services Makungu Mthebule said, “the commissioner (Tom Moyane) relied on him for so many things.”

Mthebule was the second witness testifying to the Nugent Commission on Thursday. She was paid at least R2.3-million for “reading newspapers” and raking in “the biggest bonus I’ve ever seen” because she did very little work and made “no noise” about the disruptive “renewal programme” enforced by Moyane and Makwakwa.

She accused Makwakwa of interfering in her department, directing instructions about high-profile taxpayers that he had no oversight of and making unilateral decisions over staff reporting to her.

On Thursday, Mthebule dropped several bombs.

Her testimony was bolstered by other witnesses relating how Makwakwa used his position as head of the renewal programme to settle old scores and scrap the positions of colleagues in the SARS organogram he had a score to settle with.

Over the course of the past four years since Moyane’s appointment, journalists have independently recorded an interesting observation: A mid-level manager and well trained SARS official named Jonas Makwakwa was parachuted into powerful positions by newly appointed Commissioner Tom Moyane. Makwakwa drove the expensive renewal programme in SARS Moyane unilaterally embarked upon. He worked closely with Bain and Company, appointed to develop a new operating model, and was the driving force behind creating the SARS we are saddled with today. Journalists were viciously attacked by Moyane for their “negative” stories and were made out as “a third force” aligned against transformation.

Under oath, Mthebule on Thursday substantiated these stories – and more.

Her in-depth knowledge of the frightening dynamic in SARS’ top structure had the 100-odd crowd in the auditorium at SARS’ offices in Linton house, Brooklyn, Pretoria, glued to her every word. The crowd mostly came to see former deputy commissioner Ivan Pillay testify, but it was Mthebule who possibly made the most valuable contribution of the day.

She dispelled the notion that the “culture of fear” the mid-level to junior SARS employees testified about on Wednesday was exclusive to their rank.

After Mr Moyane stormed out of a [senior management] meeting…because I challenged him over the culture of fear and bullying in SARS…my colleagues hugged me. They were so happy that someone said what they wanted [to say] for a long time.”

At the time, Ivan Pillay resigned from his position after a fallout with Moyane. Mthebula acted in his role as chief officer strategic enablement and communications and was relating the “fear” she experienced from colleagues in the executive committee – SARS’ highest governing body.

Mthebule occupied the second most senior seat in SARS, and thought she could speak her mind. She was evidently mistaken.

To the Commission of Inquiry Mthebule recalled an incident in 2015 when Makwakwa sent her an SMS asking about the tax affairs of a high-profile taxpayer. Mthebule’s portfolio as deputy commissioner included oversight of what was then called the VIP unit – a tax unit looking after the tax matters of presidents, judges, politicians and the like.

I was constantly pushed [by Makwakwa]… and asked ‘how far is this case’, or ‘what is happening with the penalties and interest’ in this taxpayer’s case,” Mthebule testified, accusing Makwakwa of inordinate pressure.

[Makwakwa] would phone me, saying ‘I’m with a high-level taxpayer, very important people. This person owes this amount. How far are you with writing off penalties and interest?’. In my view that is wrong. You can always point queries in the right direction, there is nothing wrong with that. But I cannot be instructed by a person who has nothing to do with my division … while he is doing it with a certain level of force. It caused tension.”

According to Mthebule, it was common for Makwakwa to interfere in the divisions of her colleagues, or to “move our staff without us knowing”. And if she refused to give Makwakwa information about a taxpayer, he would “harass” her staff. So Mthebule raised the “culture of fear and dictatorship” in SARS with Moyane in an executive committee (exco) meeting.

Moyane attempted to make out that it was “corridor talk”, which Mthebule claims to have disputed.

When I raised the issue of dictatorship, my boss was not happy,” she said.

There was a fear around Mr Makwakwa. He occupied a very strong position. I can say that with authority because I sat in Exco. I know what I talk about with this one. I engaged with him. Moyane stormed out of that meeting for about 25 minutes. He was livid.”

Mthebule related how “each and every one was complaining about interference in their divisions, they were complaining about one person” – she referred to Makwakwa.

Reacting to a question posed by evidence leader advocate Lunga Siyo, Mthebule said the degeneration of the SARS workspace into an “atmosphere of fear” was a quick affair. 
“Sho, I won’t say it was a long road. It was quite quick … Before, things weren’t perfect, there was an element of fear … But I never felt I’m unwanted or my job is at stake. Things changed quickly when Moyane came in. It didn’t immediately affect me, but I could see people started using their power in a negative manner… I feel Makwakwa was given too much power. And perhaps he didn’t use that power positively.”
Explaining why she fell out of favour with the powers that be, Mthebule had a simple answer: “Ha! My big mouth.”
 
She explained that all employees on group executive level had to reapply for their jobs during the restructuring process at SARS and that she was unsuccessful for each position she applied for, even though she was more than qualified for at least some of the positions. 
Mthebule believed that she was “targeted” by Makwakwa and Moyane because she was blocking Makwakwa’s inordinate enquiries about taxpayer affairs.
She ended up “doing nothing much” for an extended period, but refused to resign like so many of her colleagues who claimed to have been targeted in the same way.
Mthebule was paid a bonus – “the biggest I’ve ever seen” – and received a material increase in salary.
“Why do you think you got such wonderful payments,” Professor Michael Katz, Commission panelist asked. “For me, it was very extraordinary,” Mthebule said.
“I can only speculate. Either the Commissioner was regretful of decisions he made, or it was a way of shutting me up a bit so that I don’t make a noise.”

* * *

Gene Ravele, former head of enforcement, was the first witness before the Commission of Inquiry on Thursday. Ravele’s portfolio included the High Risk Investigation Unit that was made out as being “rogue” in 2014 by the Sunday Times.

He described the allegations as “hogwash”.

It was Ravele’s comments on the cigarette industry, however, that dropped jaws in SARS’ auditorium.

We had a unit called ‘tactical and enforcement interventions unit’, focused on inland transgressions like round-tripping of goods, bogus exports, bonded warehouses…,” Ravele recalled.

After I left SARS, that unit was told ‘you are not going to do any inspections at cigarette factories’. To this day, no inspections at cigarette factories has happened. So how do we know if people pays excise [tax]?”

Given Parliament’s recent probe on the illicit cigarette problem, and provided the minister of finance’s directive that urgent attention should be given to the crisis, it is perhaps easy to join the dots.

The kicker was Ravele’s next revelation to sceptic Commission panelist Vuyo Kahla:

I’m told the decision [to stop inspections at cigarette factories] was made by Makwakwa.”

* * *

Makwakwa was also the focus of the third witness of the day: Bernard Mofokeng, former group executive for dispute resolution in SARS’ legal department.

For the first time someone in SARS related under oath how it came about that Makwakwa’s girlfriend Kelly-Ann Elskie was appointed into a position she did not deserve, and what the fallout of the debacle meant.

Mofokeng related how Makwakwa asked his colleague Dianne Lawler to transfer SARS employee Elskie to Mofokeng’s division. Mofokeng agreed to the transfer, permitting that Elskie be moved with an approved budget and had the relevant qualifications.

Within a month there were HR issues between [Elskie] and people in the unit,” Mofokeng said.

Without spelling it out, Mofokeng referred to Elskie’s habit of threatening her colleagues with her “powerful husband” whenever she was challenged on her inability to do her work.

The drama escalated to the point where Elskie lodged a grievance against Lawler. In the subsequent hearing, Elskie admitted that she did not have the qualifications she boasted about. It made Elskie’s position untenable.

Concurrently with the Elskie drama, Makwakwa along with Bain and Company was developing the new operating model. Mofokeng testified that Lawler’s position was unceremoniously scrapped from the SARS organogram. He alluded to undue influence by Makwakwa as a reason.

During the restructuring “the only person affected” was Lawler, Mofokeng said.

I found it strange, because all other managers were still there. For me it was personal, they didn’t want her there… The Elskie incident also affected me negatively. Makwakwa was not happy with the treatment given to Elskie. It didn’t take much to adduce that [Lawler] and I were the only ones affected.”

* * *

Scorpio has spent five months investigating Makwakwa. We revealed that, with the help of Moyane and law firm Hogan Lovells, Makwakwa answered to none of the serious charges proffered against him by the Financial Intelligence Centre. The FIC accused Makwakwa of falling into a habit of needing suspicious cash to maintain his lifestyle.

The testimony of SARS employees on Friday makes the evidence aired in the FIC report all the more crucial – SARS employees painted a picture of a power-hungry official who stuck his nose into the tax affairs of the rich and the powerful for no good reason.

Thanks to Hogan Lovells and Moyane, Makwakwa never explained the millions of rand running through his bank account. The Hawks are supposedly still occupied with a criminal investigation into Makwakwa and Moyane – evidence of which we have seen none. DM

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