In the run-up to 2014, as Jacob Zuma prepared to enter his second term as president of South Africa, he was swatting away the SA Revenue Service’s (SARS’) irritating and persistent interest in his tax affairs. Ivan Pillay, the deputy commissioner of SARS, on several occasions attempted — in the most courteous, delicate ways possible — to get the delinquent president to regularise his tax affairs. Pillay’s attempts were consistently met with silence, excuses or delays, sources recount.

At the same time, SARS investigators were also circling Zuma’s son Edward’s tobacco interests and his friends’ various nefarious businesses. 

These were not coordinated attacks on Zuma by SARS, a source with intimate knowledge said, but rather, with the benefit of hindsight, the uncovering of the ever-expanding Zuma network that could not remain hidden any longer. 

Judicial Commission of Inqu…

“We would investigate a complaint, and we would find a trace of Zuma there,” a source with intimate knowledge remembers their growing awareness of the Zuma network. 

“We would probe a problem our risk engine would highlight, and we would stumble upon a Zuma friend, or someone we knew supported him financially. At the same time, without the different teams knowing of the other, we attempted to regularise his tax affairs and perhaps asked questions that may have been uncomfortable. I think that is why the president thought we were gunning for him.” 

Zuma and friends started to feel the squeeze from various sides. 

It is tempting, then, to link Zuma’s extraordinary interest in SARS — keenly observed by the State Capture Commission chair, acting Chief Justice Raymond Zondo — with what Zuma may have perceived as an existential threat to his continued wellbeing. 

Zondo dedicated 87 pages of his 874-page Judicial Commission of Inquiry into State Capture Report: Part 1 to Zuma, his henchmen and how they captured SARS.

“It is a notable feature of the SARS evidence,” Zondo wrote in his report, “in contrast to the rest of the evidence which the commission heard, that this is one of the few instances where President Zuma himself directly and personally involved in the activities and plans to take over a government entity, namely SARS.”

Zuma, it is well known, refused to answer any of the allegations against him — stubbornness that led to an epic clash with Zondo and a jail sentence.

This journalist spent four years investigating Moyane and the implosion at SARS. This article details Zondo’s findings coupled with the journalist’s own sources and information.

The recipe: How to subvert a state institution

The capture of SARS, Zondo said, followed familiar patterns also experienced at Denel, Eskom and SAA. Zondo pulled no punches on where, according to him, the ultimate culpability lies: “…all of which happened under the watch of the Government of the ruling party, the African National Congress. Most, if not all of these entities were led by the Chief Executive Officers and Board of Directors who would have been approved by the ruling party through its national deployment committee.

“The decline happened over a number of years, but both the government and the ruling party failed dismally to make any effective interventions to halt the decline. Either they did not care or they slept on the job or they had no clue what to do.” 

The essence of SARS’ story is this: 

Zuma colluded with Moyane, whom he appointed as SARS commissioner in September 2014, and Vittorio Massone, the Africa head of Bain & Company, to establish a coordinated agenda to seize and realign SARS. They were connected by an opaque presence in Zuma’s life — that of Duma Ndlovu, a playwright and, the story goes, Zuma’s spiritual adviser. Throughout Zuma’s presidency, Ndlovu played a pivotal role in the shadows — at one stage heading a type of Zuma kitchen cabinet focusing on several governmental sectors, including education, police and security. 

Bain entered the fray with its own agenda. Massone caught on that the illicit road to South Africa’s money pot ran right through its president. Connected by Ndlovu, Massone met with Zuma at least 17 times in about two years, Zondo wrote, noting the “very frequent” timing of these meetings. The privilege of these meetings with the president earned Ndlovu several million rands, paid by Bain.

In what he labelled Project Phoenix, Massone told Zuma that Bain could overhaul the entire government, Cabinet and the ANC. The ultimate goal was a type of President’s Project in which a new procurement system would be established — an institution set up to circumvent all procurement rules and oversight, reporting directly to the president. 

Bain also coached Moyane on what to do in his first 100 days at SARS, including how to “neutralise” certain people. Frequent meetings with SARS’ head of internal audit, Jonas Makwakwa, were also recorded. Makwakwa, who slipped Bain secret SARS information, was later appointed as chief operating officer — a position that opened up after its incumbent, Barry Hore, was “neutralised” by Moyane. 

All of this happened, it is important to note, before Moyane was appointed as SARS head, in fact, before the position of SARS commissioner was advertised and before the tender that Bain ultimately won to restructure SARS was even published. 

Zondo took a dim view of Bain’s conduct, especially a flippant remark by Massone in an internal Bain email saying to his colleagues that “we know that we can’t claim to have done much on the specific topic”.

“This is Bain admitting,” Zondo writes in his report, “that they did not have the necessary expertise to be awarded this contract, and that, despite this, they were almost assured that they were going to get the work.”

“Bain knew that they did not have the necessary expertise. They must have thought South Africa did not know this or did not care whether they had the necessary expertise. I think President Zuma and Mr Moyane neither knew nor cared.” 

Parachuted into the position as SARS head in September 2014, Moyane used a ruse — rumours of a rogue unit perpetuated by the Sunday Times — to fire his executive committee and start a purge of competent SARS officials with decades of experience and institutional knowledge. “He raised it at every turn as a justification for his actions,” Zondo found. 

Creating gaps, Moyane strategically appointed pliant people who did his bidding. 

From there, it all went downhill: Moyane closed down units, hollowed out SARS’ investigative capacity, pulled the institution’s reporting structures apart and created a climate of fear and bullying. 

Over the course of four years, this journalist detailed how COO Jonas Makwakwa, by then an intrinsic part of Moyane’s bully-team, deposited mysterious wads of cash he could not explain into ATMs, how head of legal Refiloe Mokoena pushed through large illegal VAT payouts to the Guptas, how a debt collection contract was awarded to Moyane’s friend Patrick Monyeki and how the institution’s tax collection ability, notably from the illicit tobacco market, gradually tanked.

On the face of it, SARS seemed to have been well and truly captured. 

Zondo agreed: “…the evidence that was heard by the Commission in regard to SARS revealed conclusively that Mr Moyane was involved in advancing the project of State Capture when he was Commissioner of SARS. In fact, the evidence revealed that he started planning for the capture of SARS long before he was appointed as Commissioner of SARS. Mr Moyane simply did not act with the interests of SARS at heart. He sought to advance Mr Zuma’s and Bain’s interests.” 

Zondo’s coup

Zondo’s findings and recommendations were unsurprising to those who have investigated the SARS wars since 2014 or followed the subsequent work of the Nugent Commission of Inquiry into SARS — established to investigate the systemic failures at the institution. 

Zondo’s greatest coup, however, was getting Moyane to talk — even if only to prove that Moyane remained stuck in an alternative universe where facts do not bind his understanding of any matter.  

Moyane refused to testify before the Nugent Commission and could not spare the time to read its report, saying that he “did not take this report seriously, because it was prepared in order to tarnish [his] organisation”.

In an example of Moyane’s frayed grip on reality, he consistently claimed that he was “denied the right of participation in the SARS Commission [headed by Justice Robert Nugent] and subsequent to his lodgement of legal objections to its processes” he was “legally precluded from such participation”.

Zondo had none of it, and forced Moyane to concede that his lawyers and the Nugent Commission were in endless deliberations over Moyane’s appearance. 

Moyane eventually said he had no comment on why he refused to tell his side of the story.   

“That answer was telling!” Zondo wrote. 

“Mr Moyane knew that, from the moment the Nugent Commission was appointed, there was a lot he had to account for which he had done that was wrong in respect of which he would have no answers. He knew the meetings he had with Bain about SARS even before he was appointed as Commissioner of SARS. He knew the plans he had made with Bain, which were to dismantle SARS and he knew that the best thing for him was to avoid taking the witness stand in that Commission. He, therefore, decided to try all sorts of excuses to justify his refusal to appear before that Commission and account for how he had led SARS.” 

Moyane described as “preposterous” the allegations that he was pursuing a political agenda at SARS. 

“In light of the evidence,” Zondo said, “the protestations ring hollow.”

Moyane vs Gordhan: The Vlok Symington case

A feature of Moyane’s tenure at SARS was his bitter clashes with the then finance minister, Pravin Gordhan. 

Moyane refused to report to Gordhan, his political head, refused to discuss the sweeping changes at SARS and refused to ask permissions, for example, for bonus payouts to his staff. 

Zondo noted that Gordhan seemed to have fallen out of favour with Zuma — the time was around October 2016 — a fact which emboldened Moyane. 

Moyane opened a case with the Hawks relating to the “rogue unit”, and eventually criminal charges against Gordhan were included in the case. The charges included SARS deputy commissioner Ivan Pillay’s pension payout and early retirement, SARS employee and lawyer Vlok Symington’s area of expertise.  

During the Hawks’ investigation of Gordhan, Symington found himself in the middle of Zuma and Moyane’s vendetta, which culminated in a bizarre hostage situation. Symington, Zondo noted, recorded information that seems to prove Moyane withheld crucial information from investigators. 

Symington recorded on his phone an incident showing how a Hawks investigator forcibly manhandled him, and Moyane’s bodyguard blocked his exit from a SARS conference room in an attempt to retrieve a series of documents. 

Symington at the time didn’t realise what they were after, but found their insistence odd, seeing that the Hawks wanted an affidavit from him based on documents they had given him a few hours before but now wanted back in an abrasive manner.

What Symington’s camera captured was this line in an email Moyane accidentally enclosed in the documents Symington was handed: “On ethical reasons, I cannot be involved in this one, as I hold a different view to the one pursued by the NPA and Hawks.”  

The note was from attorney David Maphakela, a partner at law firm Mashiane, Moodley and Monama, who was advising SARS and Moyane on pursuing criminal charges against Gordhan.

It turns out Maphakela gave Moyane a legal opinion saying there was nothing unlawful about the early retirement of Pillay — a conclusion supported by Symington in a 2009 memorandum which Gordhan depended on in his decisions about Pillay’s pension and that Moyane had access to before he laid criminal charges.

The two memoranda were devastating for Moyane’s case against Gordhan — evidence that may be seen as exculpatory — and therefore he simply withheld them. 

Symington reported the matter to Ipid (the police oversight body). A report was correctly drafted, but the investigator was then summoned to SARS and instructed to prepare an additional report accusing Symington of nefarious conduct. 

The conclusion seems to be, Zondo noted, that Moyane wanted Symington removed from SARS. 

Zondo had this to say: “…this saga illustrates an extreme example of the culture of fear and bullying which characterised Mr Moyane’s tenure at SARS. It also illustrates the lengths that he went to have certain people, who were obstacles to state capture, removed. Mr Symington described this time as a ‘nightmare’ time at SARS, and to visibly see the efficiency rate dropping during Mr Moyane’s tenure was something he hoped would never happen again.” 

The acrimonious relationship between Moyane and Gordhan was on full display during Moyane’s cross-examination of Gordhan before Zondo. Their bickering offered nothing valuable to the commission’s mandate, Zondo said. 

But in the end, Zondo sided with Gordhan. 

Gordhan’s evidence, the commission chair noted, provided important general corroboration of the specific testimony of other witnesses. Gordhan also observed first-hand how Moyane refused to answer to him and instead managed SARS as he wished. 

“This is important evidence of the capture of the institution,” Zondo said. 

Zondo’s recommendations

Zondo recommended that Moyane be charged with perjury for lying to Parliament about SARS’ debt collection contract given to his friend Patrick Monyeki. In truth and on the balance of all the evidence against Moyane, including in the Nugent report, charges of perjury may actually be the least of Moyane’s problems. 

Zondo also recommended that all Bain’s contracts with state departments and organs of state be re-examined for underhand tactics and that the police must probe these contracts. It will then be for the National Prosecuting Authority (NPA) to decide whether any perpetrators are to be prosecuted. 

Lastly, Zondo recommended that the SARS Act should be amended to provide for an open, transparent and competitive process for the appointment of a commissioner.  

Repercussions in more than just the SARS episode of Zondo’s findings, it seems, now hinge on the efficiency of the Hawks and the NPA. DM

[hearken id=”daily-maverick/8976″]