It is 13:27 on Friday, 16 March 2018, and the SARS press release that had just landed in journalists’ inboxes suggests Commissioner Tom Moyane is livid.

Earlier that morning Daily Maverick published a Scorpio investigation revealing how Moyane “aided possible acts of money laundering and fraud” and that he “pressured SARS officials to illegally effect three VAT payments to the Guptas” totalling R70-million.

The press release is titled “SARS Commissioner acted within the law”. Moyane labels Scorpio’s investigation “malicious, disingenuous and part of the well-orchestrated agenda to discredit” him and argues that when the “screaming headlines and frivolous innuendo are stripped away” it is supposedly clear that Moyane is actually the most innocent official in SARS.

Moyane’s vitriolic reaction at the time was curious. He argued that this “agenda” Daily Maverick holds “includes the narrative which hinges on the predictable and unproven assumption that Commissioner Moyane is corrupt, is a lackey of the Guptas and must be ‘fired’ from his job”.

On a proper read of The Moyane Dossier Part 1, it is clear that in that specific article no one accused Moyane of being corrupt, being a lackey or argued that he should be fired.

His reaction was also strange, given his stoic silence when News24 revealed the fact of R70-million in VAT payments in June 2017.

Scorpio’s investigation built onto this fact, revealing the detail of what actually happened – including just how unlawful the actions of Moyane and SARS head of legal Refiloe Mokoena were.

President Cyril Ramaphosa suspended Moyane on 19 March, three days after Scorpio’s revelations. A Commission of Inquiry into governance at SARS was set up, headed by retired Judge Robert Nugent, and Moyane was told to appear before a disciplinary hearing chaired by adv. Azhar Bham SC.

Since then Moyane has done his utmost, with the help of attorney Eric Mabuza and Adv. Dali Mpofu, to frustrate the process. Over the course of five months Moyane has not once answered to the merits of the disciplinary case against him, and attempted to argue that the Commission of Inquiry into SARS was focused solely on him. Moyane’s arguments failed before Nugent and Bham. He has now, yet again, threatened legal proceedings without actually initiating any challenge. Strange, coming from someone who clings to his innocence.

Last week Scorpio and News24 published new evidence of how Moyane’s SARS paid R420-million in VAT claimed by the Gupta companies into an attorneys trust account, to a shelf company and to a shady businessman.

This bout of new evidence allows us, for the first time, to properly analyse Moyane’s emotional press release of March 2018.

We quote it here verbatim, in italics, and publish our analysis under each paragraph.

***

MEDIA STATEMENT

SARS COMMISSIONER ACTED WITHIN THE LAW

PRETORIA, Friday 16 March 2018 –The South African Revenue Service (SARS) has noted with some dismay the media reports that allege irregular value-added tax (VAT) payments to Oakbay.

Our response

New evidence shows that R35.8-million in VAT refunds claimed by the Gupta companies had already been paid into an attorneys trust account months before Moyane was officially, in around April 2017, made aware by Oakbay CEO Ronica Ragavan that their VAT is “stuck” in the SARS system.

These payments were in fact irregular and illegal. SARS’ new management last week conceded that the VAT payments were in fact in violation of the VAT act.

Moyane further allowed an additional R384.2-million in VAT refunds claimed by the Gupta companies to be paid to a third party pay agent and a shelf company after he was made aware that paying third parties was a big no-no.

The payments into an attorneys trust account, to a third party pay agent and to a shelf company are also a contravention of local and international money laundering regulations, Reserve Bank rules, the SARS act, FIC act and an abuse of an attorneys trust account.

What Moyane cannot argue against is that he should have known. SARS’ best tax experts told him the payments would be illegal. A SARS spokesperson further explained last week that “in the ordinary course of doing business SARS would be aware of all refunds to all vendors and this can be extracted at any point in time. It is not known whether Mr Moyane was aware of any other refunds”.

If Moyane was aware, he admits to a crime. If he argues that he did not know, he admits to gross negligence.

***

Moyane, continued

SARS finds it necessary to address the unsubstantiated tone of the report published in the Daily Maverick that suggests corruption and a dictatorial attitude on the part of Commissioner Tom Moyane that resulted in R70-million VAT repayments to Oakbay.

Our analysis

The definition of corruption is when an official abuses their public office for private gain. It is a curious allegation, coming from Moyane, seeing that Scorpio did not accuse Moyane of privately gaining from illicitly pushing through the Guptas’ VAT payments.

Is it perhaps the musings of a guilty conscience?

The Nugent Commission of Inquiry into SARS has heard various testimonies of SARS officials accusing Moyane – under oath – of a dictatorial management style. Until Moyane starts speaking under oath, his word will not weigh up against the testimony already provided.

***

Moyane, continued

SARS wishes to state categorically that the allegations linking Mr Moyane to the refund payment are malicious, disingenuous and part of the well-orchestrated agenda to discredit him.

This agenda includes the narrative which hinges on the predictable and unproven assumption that Commissioner Moyane is corrupt, is a lackey of the Guptas and must be “fired” from his job.

Our response

Again this unsolicited protestation about corruption. Moyane either lives in a parallel universe or is aware of facts that were at the time of his writing still hidden to us.

Further, it is now an established fact that a cursory internal query by Moyane would have shown that by March 2018 (when Scorpio published the revelations), nearly R320-million in Gupta VAT refunds had been paid to third parties.

In fact, less than 30 days later the largest single VAT refund of R89-million would be paid to In House Wages. WhatsApp exchanges between Ragavan and In House Wages director Ash Maharaj attached to court papers show that Ragavan was expecting the funds to be paid in early April 2018.

Moyane was aware of the R70-million in VAT refunds to Terbium which had caused a fallout between SARS execs in May 2017. If he had fulfilled his duties as Commissioner in a responsible manner, he would have made inquiries and put a stop to SARS breaking the law multiple times.

It is not only his actions, but more important, his inaction that portrays him as a Gupta lackey.

Sources inside SARS who fear retribution further attested to Moyane and Mokoena, pressurising them into effecting the VAT payments.

***

Moyane, continued

When the screaming headlines and frivolous innuendo are stripped away from the story, the incontestable facts are as follows:

On the 22^nd of May 2017, Oakbay escalated their complaint to Mr Moyane regarding the payment of a legitimate refund due to them. The escalation of complaints by taxpayers to the Commissioner is a frequent occurrence and it is therefore disingenuous of the journalist to cast aspersions on the SARS Commissioner for receiving this particular complaint.

Our response

It is in fact disingenuous of Moyane to portray this as innocent. Considering the weight of publicly available information relating to the Guptas’ toxic money laundering practices – Moyane should have, as the Commissioner, taken extra care to deal with the tax affairs of the Gupta companies and individuals – who posed a massive risk to the integrity of SARS. By then, he should have been aware that the FIC had red-flagged R13.15-billion in suspicious transactions over the past five years to the Guptas and their companies. All indications were that the Gupta empire was running an extensive money laundering scheme.

It is further improbable, if not impossible, that the highly sophisticated SARS risk engine had not at this stage identified numerous risks associated with the Gupta family business empire.

It is, again, Moyane’s apparent failure to act that is key. Why did he not intervene?

The biggest unanswered question is how the Guptas operated under the SARS radar. SARS possesses the foremost financial investigation capacity in the country, and the Guptas were never once brought to book by the taxman.

***

Moyane, continued

As part of a standard procedure, the Office of the Commissioner always escalates complaints to the relevant division.

In this instance, the office of the SARS Commissioner referred the complaint to the division which deals with taxpayer complaints, then to legal services.

The referral to legal services was necessary because the complaint was about the interpretation of aspects of the VAT Act.

The undeniable fact that must be stated unambiguously is that at no point did the SARS Commissioner instruct any SARS employee on how to deal with the Oakbay matter.

The referral of the complaint by the Commissioner to other units of SARS was forwarded by his office as received by Oakbay, with no irregular action on his part.

The legal department, led by Ms Refiloe Mokoena, which comprises of experienced and well respected tax experts, had to provide a legal opinion whether or not the VAT Act allowed for the refund of the taxpayer to be paid into the Oakbay account or a third party account.

Various views were exchanged among the legal experts in SARS and their leader Ms Mokoena, but never with the Commissioner.

Our response

Moyane was copied on all the emails – which means he obviously had sight of opinions that differed from Mokoena’s. Why did he not intervene at this stage – and to protect SARS – seek outside legal advice? SARS would further be aware of all refunds to all vendors. The information can be easily extracted from the SARS system at any point in time. Why did Moyane not fulfil his duty?

***

Moyane, continued

Mr Moyane was copied in on the email exchanges that took place among these experts, which is a norm in high-level matters but he never intervened in these email exchanges, either for or against a particular view.

The SARS Commissioner has always maintained that our legal experts have to make decisions on matters of tax law. It is extremely malicious for the journalist to conclude that by being copied, he therefore agreed with Ms Mokoena’s view.

Our response

Neither did he disagree. Not even when Mokoena invoked his name in order to bully her colleagues into submission. Did Moyane at no point recognise the risk Ragavan’s request posed to SARS?

***

Moyane, continued

In fact, the email quoted by the journalist proves precisely this point: that Ms Mokoena, as the head of legal services, made the final decision on the matter.

This decision was then communicated to the division responsible for paying the refund.

Interestingly and contrary to the journalist’s uninformed view on tax matters, SARS had previously received a similar request that a VAT refund be paid into a third party account. In this case too the legal position adopted by SARS was that this could be done and was not illegal.

Our response

A blatant lie, as evidenced by the current stance taken by SARS.

***

Moyane, continued

The conclusion that the Commissioner’s silence and his non-participation in the exchange of emails among legal experts amounts to agreement with one or other view is frankly absurd.

Our response

It is far more absurd for the Commissioner to sit idly by as serious tax matters are discussed and opposing views are reached by the foremost experts in SARS – and then to say nothing when his name is invoked in order to enforce an illegal decision.

***

Moyane, continued

In fact, Section 72 of the VAT Act gives the SARS Commissioner powers to make such decisions, but in this case he did not use these powers – he wanted the experts to make a decision and advise him of their decision.

Our response

This contradicts answers Moyane sent to Scorpio before Daily Maverick published our article on 16 March 2017. Moyane then said:

“As Commissioner, I exercised my discretion in terms of section 72 of the VAT Act due to the anomalous situation created by the closure of the Oakbay bank accounts, particularly in view of the fact that the refunds were due and payable in law to Oakbay.”

Moyane either lied before or after the article was published.

***

Moyane, continued

Although section 72 of the VAT Act refers to the Commissioner, it does not mean literally that the Commissioner must make such a decision. Section 5 of the VAT Act provides that the powers conferred by the VAT Act on the Commissioner may be made by the Commissioner or by any SARS official. Therefore, a decision in terms of section 72 need not be made by the Commissioner, and historically, officials in the legal division of SARS make decisions in terms of section 72.

Our response

A SARS spokesperson has this week said the following:

“SARS can find no record of such a section 72 decision at that time.”

Moyane is caught on a direct lie.

When we look further, his post-fact interpretation of the VAT Act fails at even a cursory level. Section 5 read in full states:

5. (1) The powers conferred and the duties imposed upon the Commissioner by 10 or in terms of the provisions of this Act or any amendment thereof may be exercised or performed by the Commissioner personally, or by any officer engaged in carrying out the said provisions under the control, direction or supervision of the Commissioner. (2) Any decision made and any notice or communication issued or signed by any 15 such officer may be withdrawn or amended by the Commissioner or by the officer concerned, and shall for the purposes of the said provisions, until it has been so withdrawn, be deemed to have been made, issued or signed by the Commissioner.

It is important to highlight that any official delegated to exercise powers in terms of Section 72 does so under the “control, direction or supervision of the Commissioner”.

Moyane therefore cannot argue that officials historically do anything. His responsibility is towards safeguarding and running SARS. He failed to do this if – based on his own version – he allowed other officials to exercise his mandated powers without his direct involvement.

***

Moyane, continued

The application of section 72 of the Vat Act deals with unusual circumstances and there will inevitably be differing legal views and opinions on an issue.

Our response

Yes, agreed. But it is clear that SARS did not take every necessary precaution to ensure that it was not breaking the law when dealing with these particular “unusual circumstances”.

The VAT act is quite simple – if the Gupta family businesses had no access to bank accounts in South Africa (which they did under Bank of Baroda) SARS simply needed to insist that they register and nominate an officially mandated subsidiary of one of their overseas entities.

But the Gupta family could not do this, and so fell foul of the VAT act.

It was therefore the responsibility of SARS to exercise a far greater level of caution in refunding these particular ‘taxpayers’.

***

Moyane, continued

When there are differing legal views, someone has to make a decision. This final decision-making is the duty of the Chief Legal Officer.

The application of section 72 regarding the use of a third-party’s bank account highlights two fundamental issues:

Firstly, SARS has an obligation to pay a refund that is properly payable to a taxpayer.

Our response

SARS has a more pressing obligation not to break the law and not to sanction a money laundering ring.

***

Moyane, continued

Secondly, when the peremptory requirement for a bank account belonging to the vendor was inserted in the VAT Act, the Memorandum on the Objects explained that the purpose was to limit fraud.

The decision to permit the use of a third-party’s banking account was taken in the above context.

Our response

In light of new evidence uncovered during our investigation, any assertion that the decision to permit use of a third-party was taken to limit fraud is laughable. The VAT amendment act specifically dictates that no third parties may be used for refund purposes for this exact reason. The conditions attached to third-party payments are specific, and the Gupta refunds don’t come close to adhering to the law.

***

Moyane, continued

The journalist repeats her accusation that Commissioner Moyane instructed officials to pay the refund, but in her whole diatribe she has failed to produce any shred of evidence to support the obviously baseless assertion.

Finally, anyone who has ever received a refund from SARS will know that the payment of a refund does not need the Commissioner’s approval. In other words, once Ms Mokoena ruled on the matter it gets referred to the relevant department to ensure automatic payment.

Our response

Moyane’s inaction led to SARS breaking the law. On his own version he never intervened. This exposed SARS to risk.

We further cannot name our sources, who fear retribution. It is however clear that Moyane did not intervene when Mokoena used his name to stifle her colleagues’ objections over the matter.

***

Moyane, continued

There is never any reason to inform the Commissioner or any reason for him to approve anything.

Our response

Moyane failed to exercise his duties as Commissioner in safeguarding SARS, especially after the matter was specifically brought to his attention.

***

Moyane, continued

The above facts demonstrate the dismal but desperate attempt by the journalist to implicate Mr Moyane in a matter that he handled within the law and in which he acted above reproach.

Our response

Moyane allowed SARS to sanction a Gupta money laundering scheme. He bullied SARS officials into submission, sources said, and allowed his name to be used in order to overrule the objections of SARS’ best tax experts.

Moyane did not act within the law, and neither is he above reproach.

***

Moyane, continued

With this in mind, SARS wishes to remind all South Africans that the organisation remains resolute, focused and single-minded about meeting our revenue collection target for South Africa by the end of this month.

Our response

So resolute, focused and single-minded that the Moyane-led SARS missed its revenue target by R48-billion. DM