South Africa

Ivan Pillay's response to Busisiwe Mkhwebane

Attack on SARS linked to State Capture, sensitive case files were removed, Edward Zuma made a midnight call — and much more

Former SARS deputy commissioner, Ivan Pillay (C) arrives at the head offices of the Hawks police unit after South African Finance Minister, Pravin Gordhan, failed to appear before the South African Police Forces offices in Pretoria , South Africa, 25 August 2016. EPA/KIM LUDBROOK

On Friday 5 July 2019, Public Protector, Busisiwe Mkhwebane, released a report finding that the establishment of the SARS “rogue unit” had been illegal. She appears to have disregarded Ivan Pillay's 115-page response. This is what it said.

The former acting SARS commissioner did not hold back, setting out in his affidavit, how “sensitive case” files were removed in 2015, allegedly on the orders of Tom Moyane’s second-in-command Jonas Makwakwa, from a safe at SARS head office before auditing firm KPMG could get to them.

Pillay, responding to Busisiwe Mkhwebane’s Section 7 (9) (2) of the Public Protector’s Act notice, also details threats to SARS officials and a “sitting Cabinet minister” by State Security and Crime Intelligence operatives as well as assaults, surveillance, “odd thefts” and break-ins in relation to the High Risk Investigations Unit and other SARS officials. These occurred between 2013 and 2014.

Pillay Affidavit to Public Protector in Terms of Section 7(4)(a) – 23 AP

The former deputy SARS commissioner also sets out how President Jacob Zuma’s son, Edward Zuma, had called then SARS enforcement executive, Johan van Loggerenberg just after midnight, “on the morning then finance minister, Mr Pravin Gordhan, was fired by former President Zuma, which was self-recorded”.

During the call, said Pillay, “Mr Edward Zuma discussed Brooklyn CAS 427/5/2015, tried to coerce Mr Van Loggerenberg and informed him he was phoning on behalf of a certain minister and that it had been arranged and that the interception of Mr Van Loggerenberg’s phone had been temporarily halted to allow for Mr Edward Zuma to call him.”

The NPA, said Pillay, had a record of this call as it had been reported to them. The by now infamous CAS 427/5/2015 was lodged by Tom Moyane and has been recycled several times in an attempt to neutralise Gordhan, Pillay and others viewed as obstacles to State Capture.

Regarding the documents removed from the safe, Pillay states “various sensitive case files were removed from a safe at SARS head office on 27 February 2015 at around 9h47 on the instructions of former SARS official Mr Jonas Makwakwa. I record that this date precedes the date on which KPMG South Africa took an inventory of the safe”, Pillay said in his affidavit handed to the PP’s office on 19 June.

Pillay further recorded that “during the period when KPMG South Africa did take inventory of the safe, ultimately various sensitive case files and records were removed from the same safe, not disclosed and described to KPMG South Africa and in their presence sealed in a box which was, by agreement, to be handed to former SARS commissioner Tom Moyane”.

Pillay states in his affidavit that he wished to make clear that he considered the 10-day period afforded to him by the Public Protector to respond to her investigation of what she termed the “rouge unit”, as “wholly inadequate to enable me to properly safeguard my rights in the face of wide-ranging accusations contained in this notice”.

Pillay records that he had already been subjected, by the Public Protector, to an investigation into his early retirement from SARS and that this had culminated in the delivery of a PP report in which “irrational, erroneous and unconstitutional findings have been made against me and others”.

Mkhwebane’s report is currently pending review in the High Court.

Pillay said the “rogue unit narrative”, as well as what he termed “multiple attacks on SARS, its officials and its audits and investigations that commenced in earnest in 2014” had its roots directly in State Capture and was specifically used as “a method of capturing SARS, National Treasury and the Ministry of Finance”.

Individuals linked to these attacks on SARS included Hawks head Lieutenant-General Mthandazo Ntlemeza, NPA head Shaun Abrahams, senior deputy director of Public Prosecutions, advocate Torie Pretorius, advocate Sello Maema, Brigadier Nyameka Xaba, Thulani Dlomo as well as “various units in the State Security Agency, most notable Economic Intelligence and Special Operations, Jacob Zuma and persons associated with him”.

The attack on SARS, asserted Pillay, was “to make certain SARS cases disappear or be unlawfully, illegally and improperly ended, halted, diverted, settled or otherwise dealt with, given preferential treatment to open the doors of procurement at SARS and the state for nefarious ends as part of capturing the state”.

He said that Mkhwebane’s current actions “are fuelled by the post-State Capture era where persons with influence operate in the dark corners and pretend to be ‘whistleblowers’, infiltrating penetrating and misdirecting the authorities to deflect attention away from them, to discredit witnesses before various commissions of inquiry and their evidence, as well as to discredit the commissions themselves, and to avoid facing the consequences of evidence that has and will still emerge in various commissions of inquiry, criminal investigations and SARS investigations in this regard”.

Pillay said the High Risk Investigative Unit (and its precursors) had never been illegal and that “despite intense, often underhanded criminal investigations conducted by the Hawks and the National Prosecuting Authority since 16 May 2015 to date, and all the controversies that have subsequently followed, no person has been charged with the establishment of the unit”.

The reason for this, said Pillay, was simple enough:

The establishment of the unit was perfectly lawful, despite the NPA and the Hawks having adopted the term ‘rogue unit’ as if it was a fact, in all of its correspondence. This too has kept the campaign and dirty tricks alive over the years.”

Pillay charges that in her initial subpoena to him on 8 April 2019, and which was served on him two days later, the Public Protector had “changed and adapted” her allegations to reflect that “the unit is claimed to have been established unlawfully because the ‘intelligence unit’ had violated” what Pillay termed “so-called South African Intelligence prescripts and Section 209 (1) of the Constitution”.

Whereas the notice reflects the correct wording of the relevant section at paragraph 14.1.43 with reference to the establishment of an intelligence service, later on in the notice, at paragraph 14.1.56 the Public Protector alters the meaning and intent of the Constitution to equate the unit to an intelligence service.

By this lack of logic, in an irrational way and with no explanation, the Public Protector has effectively outlawed every single plainclothes detective or investigator who is not a member of the South African Police Service, Crime Intelligence division, all investigative units in other government departments and state-owned entities, every single private investigator, private auditor, lawyer, Office of the Sheriff, or company that has ever conducted discreet investigations on behalf of or for the government as well as every single enforcement team at SARS.”

He noted that the “ever-changing continuing attempt to make something stick to the unit is malicious and capricious and clearly intended to keep alive the ‘rogue unit narrative’ for ulterior purposes”.

Pillay reminded the Public Protector that the new complaint was lodged by Floyd Shivambu of the EFF “a politician, with a manifestly political axe to grind, and by someone hidden behind a cloak of anonymity, described by the Public Protector as ‘a whistleblower’ ”.

Pillay said that various investigations SARS had embarked on pre-2014 into “persons associated with or employed by the Hawks, NPA, State Security Agency, erstwhile National Intelligence Agency and the South African Police Service” had been brought to a halt and taken no further since 2014.

Some of these included “the large-scale looting of the SAPS Crime Intelligence division Secret Services Account as requested of SARS formally by members of the Hawks.”

Other cases pertained to the National Intelligence Agency, later known as the State Security Agency, into “large-scale looting of covert funds as requested specifically by a member of the State Security Agency” as well as “a specific company operated by State Security operatives in Marikana”.

These matters were reported to the State Security Agency, the Inspector-General of Intelligence, Presidency, Hawks and NPA in 2014,” said Pillay.

Various meetings took place between myself and former president Jacob Zuma as well as meetings with heads of the erstwhile NIA, later the SSA, SAPS, NPA members and committees of Parliament in most instances accompanied by other senior officials and briefing notes between 2009 and 2014 wherein specific matters of common interest and concern to SARS in relation to SARS officials, investigations, audits and the institution itself being under unlawful threat.”

Investigations into politically connected persons and entities had, said Pillay, “been brought to a halt and taken no further since 2014”.

These included investigations into Zuma-associated, Robert Huang (and related entities), Hennie Delport, Mark Lifman, Carnilinx, British American Tobacco, the Guptas and “the Nkandla matter”. The tax affairs of former President Jacob Zuma also formed part of these investigations as did “various instances of unlawfully and illegally spying on SARS, its audits, investigations, inspections and officials and operations”.

Further investigations that were halted, said Pillay, included “multiple audits and investigations relating to state tender fraud at state-owned enterprises, national government departments and in provinces, specifically KwaZulu-Natal, Limpopo, North West, Free State, Eastern Cape, Gauteng and Northern Cape.”

SARS had worked directly on these matters in conjunction with different entities in government, specifically the justice cluster and Anti-Corruption Task Team, where SARS was a permanent member.

Pillay says in his affidavit “given what I have stated thus far, there can be no doubt about my view that SARS was captured as part of State Capture and that the ‘rogue unit narrative’ was, and appears to remain, a critical element of the capture.”

He added that having read the Public Protector’s notice, he was “perplexed’” that she had not considered “any of the above facts in any manner or form, or any records, information, evidence and directions, most of which are publicly known and easily accessible to her.”

Signing off, Pillay said that it was astounding that “the Public Protector has not, in any way or form, in the course of her purported investigation, paid any regard to the fact that the unit directly and indirectly contributed to the enhancement of tax compliance in South Africa, combating organised crime.”

He also said that the Public Protector had failed to grasp the fundamental nature of the capture of SARS, as set out by the Nugent Commission.

He quoted Judge Robert Nugent’s conclusion that “the transition of SARS from what it was to what it became was brought about by events that are shocking”.

We think what occurred can be fairly described as a premeditated offensive against SARS, strategised by the local office of Bain & Company Inc, located in Boston, for Mr Moyane to seize SARS, each in pursuit of their own interests that were symbiotic, but not altogether the same. Mr Moyane’s interest was to take control of SARS. Bain’s interest was to make money. This was not a plan for mere succession in public service,” said Judge Nugent. DM