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Legal multinational Hogan Lovells regrets its role in State Capture

Legal multinational Hogan Lovells regrets its role in State Capture
Former Sars No 2, Jonas Makwakwa. (Photo: Sars)

On Wednesday 25 January 2023 Hogan Lovells issued a statement declaring that it regretted that its work was connected to State Capture.

Apology to Lavery Modise

Daily Maverick apologises to Lavery Modise in relation to this article for any reputational harm this may have caused. 

Following a complaint laid by Modise, the Press Ombud, Herman Scholtz, has found that Daily Maverick insinuated that Hogan Lovells apologised for the work Modise did for that firm. It was a breach of the Press Code not to approach Modise for comment prior to publication.

We publish Modise’s reply in full below.

A factual inaccuracy was also corrected after initial publication. A sentence referred to “Moyane” rather than “Elksie”.

The full complaint and ruling can be found here on the Press Council

 

When Hogan Lovells was tasked by Sars in 2016 with investigating the conduct of former chief officer for business and individual taxes Jonas Makwakwa — accused of stealing over R1.7-million from state reserves — the firm returned a report which Sars commissioner Tom Moyane used to clear his No 2 of misconduct, returning him to his top job.

On Wednesday 25 January 2023, six years later, Hogan Lovells issued a statement declaring that it now realised it had “found its name connected to State Capture as a result of work that former partners performed for Sars”.

The statement is a moral victory for Lord Peter Hain who has relentlessly spearheaded a campaign from the UK House of Lords for multinationals who were drawn into State Capture to be held accountable.

Jonas Makwakwa, Sars

Former Sars No 2, Jonas Makwakwa. (Photo: Sars)

Read in Daily Maverick: “State Capture: Lord Hain refuses meeting with Hogan Lovells until firm admits wrongdoing and apologises

“Hogan Lovells and Lord Hain agree that business in South Africa must fully acknowledge its role in State Capture and the part business must play to ensure that this is never repeated,” read the Hogan Lovells statement.

Big fish off the hook

It was Hogan Lovells South African Chair, Lavery Modise, who, on behalf of Hogan Lovells, had conducted the investigation into Makwakwa and his romantic partner Kelly-Anne Elksie. 

Later Modise was to tell Parliament’s standing committee on finance that he had not been mandated to investigate “criminal aspects of the financial transactions”.

Modise said he had left it to the Directorate For Priority Crime Investigation (DPCI) to probe Elksie and Makwakwa who have both escaped prosecution.  

Former Sars Commissioner Tom Moyane

Former Sars Commissioner Tom Moyane. (Photo: Financial Mail)

Meanwhile, Makwakwa has made headlines in Botswana after the appointment of his company, Africa Tax Academy, in February 2022 on a contract worth P7-million (R12-million) to consult with Botswana Revenue Service’s Department of Large Tax Audit.

According to the Botswana Gazette, the Directorate on Corruption and Economic Crimes (DCEC) and the Directorate of Intelligence and Security Service in that country have begun a probe into the circumstances of  Makwakwa’s appointment.


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Botswana Unified Revenue Service (Burs) spokesperson Mable Bolele, said the service was unaware of any investigations into the contract at this point.

Makwakwa is the director of Africa Tax Academy which issued a statement to the Gazette that “Mr Makwakwa has also said that he has no knowledge of any investigations into him or his company and confirmed that he forms part of the Commissioner General’s advisory team

“Our Managing Director was investigated while still at Sars and was cleared of any wrongdoing,” by Hogan Lovells back in 2017.

In April 2022, Oabile Regoeng, MP for Molepolole North, asked Botswana Minister of Finance, Peggy Serame, to explain Makwakwa’s appointment considering the controversy that surrounds him.  

Serame had responded that Makwakwa had never been charged in South Africa “and considering his experience was the right man for the job”.

The scene of the crime

Jonas Makwakwa is a chartered accountant who spent 19 years working his way up the hierarchy at Sars. 

In May 2016, when the Financial Intelligence Centre (FIC) flagged suspicious payments Makwakwa and Elskie had made into their personal accounts, he was Sars Chief Officer for Business and Individual Tax. 

The FIC had compiled a report of the transactions and how these might have contravened the Prevention and Combating of Corrupt Activities Act (Precca), the Financial Intelligence Centre Act and the Prevention of Organised Crime Act which were handed to Sars Commissioner Tom Moyane.

Instead of calling in the Hawks, he called in Hogan Lovells.

Hain later reminded the legal firm that it had “issued an incomplete, fatally flawed whitewash of a report, which ultimately cleared Makwakwa, despite reams of evidence to the contrary”.

We’re so sorry

On Wednesday the legal firm said in its statement “We have changed our structure and our processes and given our experience, we are even more careful about the work we do for our clients and how our name may be used in that context. We deplore and oppose all aspects of corruption and we champion integrity in business and in government”.

The firm said that it had committed its expertise and resources “to raise awareness and to take action against the crippling effects of corruption and State Capture in South Africa and we will be supporting anti-corruption initiatives to achieve this outcome”.

Lord Hain said he welcomed Hogan Lovells’ commitment “to ethical business and tackling corruption wherever it is to be found”. DM

Lavery Modise replies

This article has been amended post-publication to include a reply from Lavery Modise and to correct factual inaccuracies.

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Comments - Please in order to comment.

  • Paddy Ross says:

    Is an apology and “appropriate words” enough to let Hogan Lovells off the hook? Can the Hawks/SIU be brought into this charade now or is it ‘time exempt’?

    • virginia crawford says:

      My thoughts precisely! Shoplifters who steal food are not allowed to apologise and go in their way. Was a bribe paid to get the “investigation” in the first place? Is a civil suit for damages possible?

  • Bruce Anderson says:

    6 years and a two-line mealie mouthed apology. I one wonders if this was their only foray into the ethical cesspool of accidental oversight (for a fee). Let’s have full disclosure.

  • Geoff Krige says:

    Sorry is not good enough. How can Hogan Lovell, a major international legal firm, which blatantly allowed State Capture to flourish think that “Sorry” is an adequate compensation for millions stolen from the South African fiscus? Accountability requires repayment of all fees acquired for such shoddy work, it means repayment of money stolen with their acquiescence. It means laying criminal charges against Directors on whose watch this happened. Accountability is not just throwing your hands in the air and saying “Oh, sorry”.

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