First published in the Daily Maverick 168 weekly newspaper.

State Capture eviscerated the very organs of state that were meant to enforce the law and raise revenue for service delivery. Now these institutions are being restored.

Acting Chief Justice Sisi Khampepe’s judgment in Jacob Zuma’s trial for contempt of court sent a firm signal that the State Capture years are coming to an end.

The judgment, sentencing Zuma to 15 months’ imprisonment for defying the court’s order to appear at the State Capture Commission, may be only the trailer for Zuma’s corruption trial, but it demonstrated very firmly that he is not above the law – the first principle to establish if State Capture and those who perpetrated it are to be dealt with and the corrupted institutions cleansed.

Meanwhile, the damage done to state institutions such as the South African Revenue Service (SARS) and the National Prosecuting Authority (NPA) during the Zuma presidency, in an effort to stymie their capacity to crack down on State Capture, is being remedied.

The work of SARS’s Edward Kieswetter, the NPA’s Shamila Batohi and the Investigating Directorate of the NPA’s Hermione Cronje is beginning to bear fruit. SARS and the NPA are working together to enforce the law and cut corruption; they are recouping, cleaning up and preparing to go after those who ravaged the state.

SARS

Millions of rands’ worth of illegal cigarettes hidden in a tanker from Botswana, tik destined for Israel and a substance from Kenya used to make Mandrax were seized in clampdowns by SARS recently – yet another sign the tax authority is regaining strength.

Over roughly three years, SARS has been clawing its way to recovery from the pillaging of its reputation and operations that unfolded under Jacob Zuma’s presidency. And it seems that it is now slowly moving up this steep path.

Plans to bolster SARS include strengthening ties with the NPA and using its recently created National Rapid Response Team to clamp down swiftly on smuggling.

Once viewed as one of the best in the world, the revenue service – through which nearly all state revenue passes – flipped completely in just a few years to become South Africa’s poster child for State Capture.

By 2018 it stood out among other captured casualties, including the prosecuting authority, Transnet, Eskom and South African Airways.

Several SARS employees’ careers were ruined, and the service was ripped apart as crude stories about a rogue unit within SARS, allegedly concocted and planted by corrupt elements in the state, were peddled to journalists and disseminated.

Over the course of a decade, SARS has had three permanent commissioners. Two of them – Oupa Magashula and Tom Moyane – were appointed during Zuma’s presidency and left the revenue service amid various suspicions.

But it is Moyane who stands out. He was accused of actively working to incapacitate SARS, but has denied involvement in State Capture.

The third SARS commissioner, Edward Kies­wetter, was appointed in March 2019 under Cyril Ramaphosa’s presidency and it is on his watch that the revenue service is turning around.

Kieswetter was not available to be interviewed by DM168, but recently told Parliament that there had been no political interference with SARS since he took over. He also said he would rather resign than entertain such meddling.

Kieswetter, in a statement in June about the confiscation of illicit goods, also warned: “SARS is determined to make it hard and costly for any person who does not comply with their tax and customs obligations.”

He highlighted that SARS was not simply about getting residents to pay taxes, but that its operations had a critical trickle-down effect. “The revenue that SARS collects is important because it enables the state to provide basic services to the poor and vulnerable, such as old-age grants, as well as medical care to persons affected by the devastating Covid-19 pandemic,” Kieswetter said.

A presentation to Parliament in May indicated that SARS was trying to shake off what appeared to be Moyane’s legacy.

The revenue service’s envisioned two-year goals included “a stable SARS having substantially arrested and addressed the effect of the past five years… SARS has begun the rebuilding and slowly one can start seeing results, but still [has] a long way to go.”

SARS told Parliament:

It was working on seven State Capture-linked projects involving 85 civil and 58 criminal matters.

It had handed over 27 of the completed criminal matters to the NPA.

It had started issuing letters of demand for more than R28-billion in 2019/20, compared with R3-billion in the preceding year.

It was involved in 570 investigations that could see R4-billion recovered.

A presentation on SARS’s annual performance plan for 2021/22 said that stumbling blocks in its path included previous underfunding, which had “seriously compromised the autonomy of SARS to give effect to its legal mandate”.

Kieswetter told Parliament another challenge was the illicit economy, which had grown under Covid-19 when the formal economy was effectively suppressed. It is believed to cost the country billions annually.

Even though it was on the path to recovery, former SARS executive Johann van Loggerenberg described it as “a shadow of its former self”.

“The decimation of the investigative capabilities at SARS that commenced in late 2014 … negatively affected at least 87 projects focusing on various elements, sectors and focus areas of the illicit economy in South Africa,” he told DM168.

“Had this not happened …  SARS would have continued to make a marked impact on organised crime and transnational organised crime as it did in the years 1998 to 2014.”

Van Loggerenberg believed that if SARS had been able to proceed with projects during the years leading up to 2014, several organised criminal channels could have been suffocated.

“The gang wars and assassinations that have become so endemic in the Western Cape have a direct relationship with the halting of certain projects that SARS had been busy with in the years up to 2014.”

He said it would take several years to rebuild SARS into what it was in 2014. “One only has to look at one small example, being the illicit tobacco trade during the lockdown period and its devastating consequences, to realise the negative effects on the fiscus and the country as a whole. In the period prior to this, from 2015 to 2019, the illicit trade boomed to unprecedented levels in South Africa.”

A reply to a parliamentary question said that the illegal cigarette trade resulted in the loss of about R4.1-billion in the 2014/15 financial year and R6-billion for 2015/16. This climbed to an estimated R8-billion the following year.

SARS recorded illegal cigarette confiscations worth nearly R220-million in the 2020/21 financial year – more than double the R103.5-million in confiscations in 2019/20.

Wayne Duvenage, who heads the Organisation Undoing Tax Abuse, was optimistic about the rate of SARS’s upward trajectory. He told DM168 that, even though South Africa was in a worse state than it was a few years ago, the organisation believed that under Kieswetter’s leadership SARS was on the path to recovery.

“They have started to build up capacity, rebuilding public trust and confidence, and recently announced that it had collected R38-billion more than they forecast in their past budget,” Duvenage said.

“This, in itself, under the strain of the Covid-dampened economy, is good news and signifies that Kieswetter and his team are on track to address its strategy of improved revenue and collection.

“Furthermore, the reintroduction of its modernisation programme (which was halted by Moyane, and gave rise to the woes and electronic problems being experienced by taxpayers with the SARS e-filing system in 2018) is now a thing of the past.”

Duvenage said SARS’s credibility was back on track.

“In all likelihood,” he said, “SARS is probably close to being capacitated and in a similar shape [to what] it was just prior to Moyane’s entrance.”

SARS was once a global contender but swiftly declined, to become a shame in governance.

A commission of inquiry into SARS, constituted in May 2018 and chaired by retired justice Robert Nugent, concluded: “What SARS was, and what it has become, is sufficient proof in itself that integrity and governance failed on a massive scale.” It also found: “This was more than mere mismanagement. It was seizing control of SARS…”

The Nugent Commission made several recommendations, including that qualified individuals be recruited to control and develop SARS’s information technology.

Another recommendation was that “SARS re-establish capacity to monitor and investigate the illicit trades, in particular the trade in cigarettes”.

In its report to Parliament last month, SARS said all the Nugent Commission recommendations assigned to it had “been substantially implemented”.

SARS’s quick decimation was the focus of the State Capture Commission towards the end of March, when Van Loggerenberg testified.

He said that by 2013 SARS scored among the top five revenue and customs authorities in the world.

In the early 2000s Van Loggerenberg picked up a trend that crooks would corrupt officials, to try to escape scrutiny, or would threaten them.

By mid-2000 he said this involved “our people” being held hostage, shot at and assaulted.

Van Loggerenberg testified that SARS operations took a nosedive in 2014, roughly the same time “dossiers” of apparent information, which he said actually contained “complete nonsense”, started doing the rounds.

He alleged that when Moyane was appointed, “SARS lost any semblance of effectively countering the sorts of attacks”.

For his part, Moyane distanced himself from wrongdoing. “On the contrary,” he told the State Capture Commission in May, “I was privy to information which is likely to implicate some of my accusers in some activities which may or not fall under the general rubric of State Capture.” Moyane said he performed “sterlingly” at SARS.

Meanwhile, Van Loggerenberg made it clear to DM168 that not all his, and others’, “evidence” has been made public because of legal limitations. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.