Break seal in case of emergency

Fire Moyane NOW, Judge Nugent urges Ramaphosa, and begin recovery process with a new, competent leadership in place

By Pauli Van Wyk 17 October 2018

Suspended SARS Commissioner Tom Moyane during a break in the proceedings of the Nugent commission of inquiry on tax government and administration on June 29, 2018 in Pretoria, South Africa. Moyane’s lawyer, advocate Dali Mpofu, said an inquiry into the operation of the agency should be halted pending a disciplinary hearing against his client Moyane. (Photo by Gallo Images / Sunday Times / Masi Losi)

Tom Moyane was “reckless” and “irresponsible” and must be removed from his position as Commissioner of SARS “urgently” and “without delay”, Judge Robert Nugent recommended in a preliminary report delivered to President Cyril Ramaphosa. He further recommended that a fitting and permanent SARS head be appointed without delay.

The day Tom Moyane took office was a calamity to the South African Revenue Service.”

Judge Robert Nugent, Commissioner of the Commission of Inquiry into SARS, in a preliminary report in which he recommends that President Cyril Ramaphosa remove Moyane from his position.

Judge Robert Nugent, who chairs the Commission of Inquiry into SARS mandated to investigate governance and administration issues at the revenue service, said it was “imperative” that SARS be urgently restored to “sound management” in order to arrest ongoing loss of revenue and eroding tax compliance.

The revenue service, managed into failure since Moyane’s appointment in September 2014, must be set on a “firm course of recovery”.

In the 30-page interim report Nugent was stringent in his criticism and listed some of Moyane’s sins, covering the four years he headed the critical institution, in order to substantiate why Moyane is a stumbling block to recovery.

Replacing Moyane will not restore SARS, but it is a “non-negotiable pre-requisite for the process of recovery to begin”, Nugent said.

Almost immediately [after his appointment], and then continuously for the next eighteen months, SARS was thrown into turmoil, with tragic consequences for the lives of many people, tragic consequences for the reputation of SARS and tragic consequences for the country at large.”

Moyane took over an institution that won international and domestic accolades.

He turned it into a revenue service that missed three revenue targets in a row – a disaster that had a material influence on the recent increase of VAT.

Moyane has maintained that he is the best Commissioner in democratic history and that the Commission of Inquiry into SARS, as well as a disciplinary hearing into his own conduct, are illegal.

* * *

The Commission has held public hearings and heard testimony behind closed doors. So far 60 witnesses have given oral evidence. Moyane was not one of them. He once attended for a few hours, and then only in an attempt to derail the Commission.

According to Nugent, it is “perfectly clear that Mr Moyane has no intention of engaging with the Commission or confronting the evidence that has been presented and has no intention of accounting for his tenure as Commissioner of SARS. That is not the character of a person fit to lead a vital public institution.”

Yet, Nugent found that the fear Moyane instilled in his colleagues was so entrenched that witnesses did not want to meet with the Commission at SARS premises, in case Moyane one day returns. The fears these people expressed were well founded, Nugent said.

* * *

A trigger moment of SARS’ decline – other than Moyane’s appointment, that is – was Sunday Times’ reporting on the now defunct “rogue unit” narrative, Nugent found.

(Sunday Times, after much public pressure, eased out two journalists instrumental in their “Rogue Unit” reporting, Mzilikazi wa Africa and Steffan Hoffstatter.)

Moyane abused the narrative to disband his exco (the managing body of SARS), force out officials with decades of experience in the revenue service and make sweeping changes that had a ghastly impact on SARS’ revenue collection ability. He also disbanded the unit, then named the High Risk Investigating Unit, without substituting it with a similar capacity. Its decimation left a gap that contributed to SARS’ inability to collect enough revenue.

Moyane went as far as to ignore a legal opinion dated 2015 saying that the unit was legally constituted. He has forever maintained that the unit from inception to disbandment was illegal and operated in an illegal way.

That response is extraordinary in any rational terms,” Nugent found.

Mr Moyane had barely arrived at SARS, with no experience for revenue collection, yet almost immediately he denounced and humiliated senior management, with vast knowledge and experience, and dissolved the body through which SARS was being managed. All that on the basis of no more than a newspaper report, and moreover, a report on events of which at least most of the Chief Officers could not be expected to have had any knowledge.”

Nugent acknowledged that the pre-Moyane SARS was not perfect. It had its problems. But Moyane and those he appointed to assist him recklessly and irresponsibly mismanaged SARS and ought not to be permitted to continue.

Said Nugent: “We consider it imperative that a new Commissioner be appointed without delay to remove the uncertainty at SARS and enable it to be set on a firm course of recovery so as to arrest ongoing loss of revenue.”

Replacing Moyane is only a “first necessary measure without which there is no possibility of rectifying the damage that has been done to SARS”.

The Commission took this unusual step to recommend the removal of Moyane before suspension procedures against him were concluded and before the Commission finalised its report in November because “any further recommendations will be fruitless” without decisive action.

Our concern is not disciplinary transgressions but instead the management of SARS.”

The Commission said it is also concerned about the senior management of SARS, who “seemingly sat back while the reputation of SARS has been tarnished and its personnel demoralised”.

Moyane’s exco did not co-operate with the Commission. Some members only recently came forward, and then only to respond to allegations against them.

Moyane used the rogue unit narrative to get rid of Deputy Commissioner Ivan Pillay and head of strategy and risk Peter Richer by December 2015. By mid-2017 there was nothing left of the original exco. All appointees, except Jonas Makwakwa (COO) and Matsobane Matlwa (CFO) were from outside SARS, and “none but them had had experience of tax collection. The institutional memory that had been built up in SARS was almost entirely eradicated.”

* * *

Moyane’s restructuring of SARS and the appointment of KPMG, Bain & Co and Gartner has also been found wanting, Nugent said.

KPMG was appointed in December 2014 against a R24-million bill footed by the taxpayer to investigate Sunday Times’ “rogue unit”. (KPMG has since returned the money to SARS.) The auditing firm seized computers, correspondence and documents and by June 2016 a preliminary report accused Pillay and his former colleagues of serious impropriety. KPMG laid the basis for Moyane to lay criminal charges against Pillay, former Commissioner Oupa Magashula and then minister of co-operative government and traditional affairs, Pravin Gordhan. In a move that tarnished his reputation until he was removed from his position, prosecutions boss Shaun Abrahams withdrew the charges 20 days after they were proffered against the accused.

Bain & Co were appointed in December 2014 to review the operations model at SARS. The Commission forced a concession from Bain’s local managing partner Vittorio Massone that he had been coaching Moyane for over a year before he was appointed as head of SARS. Why that occurred is being investigated, Nugent said.

Bain’s new operating model was implemented in 2015. It broke SARS. Without considering that SARS is a sensitive ecosystem, Bain fractured reporting lines, closed units without good reason and moved departments around. About 200 employees had to reapply for their positions – a move that allowed Moyane and his lackey Makwakwa to settle old scores by pushing their perceived enemies into positions with no proper content or relegated them to supernumerary positions. Thanks to this toxic triad of Moyane, Makwakwa and Bain, SARS lost its ability to investigate the illicit trade in commodities such as tobacco – a sector that operates with little restraint, Nugent said.

Nugent said he thinks “it is plain that placing employees in those positions was calculated to drive them out of SARS, and that is what occurred in many cases”.

Another company appointed in early 2015 was the international consulting firm Gartner, brought in to review SARS’ information technology. The current Chief Officer of that division testified that the systems are in a state of disarray and degeneration. An investigation by Scorpio also points to the fact that Moyane’s friend and business partner Patrick Monyeki illegally received a chunk of the Gartner contract.

* * *

Moyane’s reign was described as one of terror and mistrust by several witnesses testifying before Nugent. Some employees were willing to present their evidence openly, notwithstanding their own anxiety, but others refused point blank, often out of fear. Nugent did record however that in the last few weeks more witnesses became willing to testify before the Commission. He ascribed it to increasing anger at the damage done to SARS and themselves; the realisation that someone is at last listening to what happened to them; that there is an increasing awareness that if they want change, these witnesses need to risk speaking out; and Nugent recorded an increasing confidence that the work of the Commission might bring about change.

SARS however still “reeks of intrigue, fear, distrust and suspicion”, Nugent said, and argued that SARS will continue to lose money and the ability to collect revenue if the issues mentioned are not immediately addressed.

Nugent found that acting Commissioner Mark Kingon has taken “admirable steps to correct the more immediate concerns” plaguing SARS, but said an immediate appointment is necessary for long-term certainty and stability.

Said Nugent: “No responsible leader of a major and complex organisation would have acted as Mr Moyane did, with lasting impact on the current state of SARS. With no experience of SARS or of revenue collection, his first decisive step was to denounce and humiliate its senior management and deprive it of its role. Having done so he turned a world-class organisation upside down, leaving SARS as it is today: wracked with intrigue, suspicion, and distrust, and fear of senior management; information technology that is in decay; a fragmented structure that inhibits collaboration amongst functions to the detriment of revenue collection; space for the illicit trade to flourish; loss of long-serving skills; skilled and experienced personnel in supernumerary positions doing little if anything at all; and revenue collection compromised.”

* * *

The ball is now in Ramaphosa’s court. Whether he accedes to the recommendation to remove Moyane is entirely up to him. DM

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