Dirty war: Organised Crime v/s SARS & the citizens of SA
The recent attempted assassination attempt on a SARS advocate and the still unsolved assassinations of liquidator Cloete Murray and his son who who had done work for SARS have shone the spotlight on the threats faced by SARS for going after organised criminals for tax evasion. In this interview with BizNews, SARS whistleblower Johann van Loggerenberg details the threats faced by investigators during his time at the Revenue Service. "It's either I'm going to bribe you, and if I can't bribe you, I'm going to threaten you. And if I can't threaten you, I'm going to make sure that you lose your job. And if I can't do that, then I'm going to hurt you or someone close to you. If I can't do that, and/or, I'll get rid of the evidence. And if that won't work, I'll kill you. And if that won't work, well, we'll just disassemble all of you. "Recalling the "fall" of the then enforcement component at SARS, he says: "We not only made enemies amongst criminals, but we made enemies amongst politicians, influential business people, organised criminals, organised criminal syndicates, and even people who were behaving or misbehaving or behaving badly among our friends in the criminal justice system and the intelligence service…" Van Loggerenberg says this is not a war that the country can afford to lose, and details the measures needed to fight it effectively.
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Summary of the interview
The recent assassination attempt on a SARS advocate and the unsolved murders of liquidator Cloete Murray and his son highlight the severe risks faced by SARS in combating tax evasion by organized crime. In a revealing BizNews interview, whistleblower Johann van Loggerenberg exposes the extreme threats faced by SARS investigators, from bribery to violence. Van Loggerenberg stresses the urgency of winning this battle against corruption and crime to protect the integrity of the nation's revenue system.
Extended transcript of the interview ___STEADY_PAYWALL___
Chris Steyn (00:04.161)
The apparent assassination attempt on a SARS advocate last week has shone the spotlight on the threats faced by SARS for going after criminals for tax evasion. We speak to SARS whistleblower, Johann van Loggerenberg. Welcome, Johann.
Johann van Loggerenberg (JvL) (00:22.914)
Hello Chris, thank you for the opportunity.
Chris Steyn (00:26.849)
Please take us back to the late 90s, early 2000s when SARS first started going after drug lords and crime bosses for tax evasion. How did those criminals push back?
JvL (00:39.724)
Yes, well we have to travel back in time quite a bit. People may remember that the South African Revenue Service as we know it now only came about in the mid 90s after democracy came to South Africa. Before that it comprised two different departments, Customs and Excise and The Receiver of Revenue, some people still like to refer to it as. Those two departments were then amalgamated and became the statutory body we now know as the South African Revenue Service. At the time, the commissioner was Mr. Trevor van Heerden and the Minister of Finance was Mr. Trevor Manuel. And almost at the cusp of 2000, the now retired Minister of Public Affairs, who was also Minister of Finance, and before that he became the Commissioner at the Revenue Service, Mr Pravin Gordhan.
The South African Revenue Service story is a complex story of modernisation that spans several decades, but it has its genesis in those years.
An element of it was the fact that it developed an enforcement capability which did not really exist before. That enforcement capability focused on prosecuting and going after people who simply didn't pay their tax willfully and intentionally. In other words, who committed tax fraud in its various guises, which obviously includes Customs and Excise duties.
But it was also the time of what I call the golden years of law enforcement in South Africa. Because back then, we saw a lot of developments in the law enforcement landscape. People may recall the birth of what became known as The Scorpions. Lots of new legislation entered the legal framework of our constitutional democracy with the aim to combat and prevent organised crime.
JvL (03:08.626)
There were new laws to deal with illicit drugs. The police legislation was amended. We got an Asset Forfeiture Unit that didn't exist before. And various components like that, the Special Investigations Unit and so forth.
And then within that sort of continuum and development of the capacity of the state to combat and prevent crime and organised crime in particular, the revenue service enforcement capability began to feature. In fact, it was written into those pieces of legislation that I've just mentioned and more. So it began to impose an obligation on the Revenue Service to play its part in combating crime and organised crime.
Another good example would be the so-called PRECCA Act, the Corruption Act. The Revenue Service is mentioned in these pieces of legislation as a participant and in fact it has obligations. The drugs laws, same story, asset forfeiture and so forth, organised crime act, the POCA Act.
And that was then the sort of landscape within which I found myself at the time as a fairly young former police official. And I walked that journey of the development of the enforcement capability within the Revenue Service. And we worked very well together with, let me call them the blue blood law enforcement agencies such as the Police Service, the Asset Foreiture Unit and the Prosecuting Uuthority.
And we were quite instrumental at the time to develop various platforms that sought collaboration. And so, at the time, memorandums of understanding and operational agreements were developed with the Border Police component of the Police Service at the time, the Commercial Crime Unit of the Police Service at the time.
JvL (05:29.189)
We also helped set up a dedicated prosecution capacity within the Prosecuting Authority and so forth. And we all worked together on multiple matters, including what was then known as the National Threat Assessment, where all the law enforcement agencies collectively determine which parts of organised crime were considered to be completely out of control and should be prioritised, and within that context also which criminal syndicates.
So the Revenue Service, although the enforcement component was very small in comparison to true law enforcement agencies, did play a significant role in the sense that it was capable of going after the money and it had the means and the powers to do so.
This was not something unique or new in the world. Many people like to refer to the old case in the United States of America of Al Capone, where all conventional law enforcement agencies failed to address him, and he was considered a national threat at the time. And it was ultimately the prosecution of for tax evasion that saw him go to jail. And so to some extent, I mean, one sees these examples at the time, we closely studied the Australian model, the models in the Scandinavian countries, Germany, even Russia, the United Kingdom and the American model. And we sought to take from there lessons learned. We didn't want to redesign the wheel.
Out of those efforts over time, we began to pave our way as an auxiliary support player within the broader criminal justice system. And there are some examples in those early days. think there was a famous gangster, he's now passed away, but there was a famous gangster in the Western Cape… conventional methods just could not address him and his gang.
JvL (07:57.06)
And the Revenue Service was capable of convicting him for tax evasion and he went to jail. And so through the years we began to develop this capacity and capability and we began to become a force to be reckoned with, I think by organised criminals. So much so that by the mid-2000s Mr Pravin Gordhan instructed us to develop an Illicit Economy strategy.
Part of the reason was he wanted us to use our resources as best as we could because they were limited. But he also wanted us to make an impact on organised crime to the extent that the revenue service could do so. And of course, smuggling was a big problem. It's a big component of the illicit economy.
And so together with all the different agencies, we ultimately came up with a fairly, I think, coherent Illicit Economy strategy that was Revenue Service specific. It highlighted particular economic sectors in the formal economy that really struggled with organised crime, as well as shall I say, illicit economy sectors where the enterprises were purely criminal from the word go. We made that artificial distinction between crimes that you would find in, let's say, the motor car industry, you know, where people smuggle parts or steal vehicles and smuggle them out of the country and that kind of thing. So that would be an example of a sector within the formal economy, whereas you know, people who run Ponzi schemes or investment schemes set up illicit enterprises from the word go.
JvL (09:58.625)
And that would be an example of a peer illicit criminal enterprise. And I think, you know, the history books speak for themselves.
Certainly by, I think by 2013, you know, people started coming to the Revenue Service, asking the Revenue Service to address particular national organised crime threats as a first stop because I think there was an element of faith and an element of belief in the fact that the Revenue Service was capable of delivering, whereas perhaps other parts of our criminal justice system was struggling.
And, I think, also, this was the time when State Capture was at its height and many other factors played into that. Also the fact that we're not a perfect constitutional democracy, we're a developing state. So it's within that context then that this enforcement capacity developed. Now, I'm taking a bit long to give you the, to sketch the scene, but to answer your question, specifically, certainly in my own experience, and this is well documented over the years, initially I don't think organised crime per se considered the Revenue Service as a threat. But as we began to foray into that field and as we began to demonstrate success, as we began to increase our reach, go for assets in other jurisdictions, as we began to collaborate with other law enforcement agencies and intelligence services, and as we began to collaborate with revenue agencies and customs authorities worldwide, we began to, I think, punch well above our weight. And many people will remember those years.
JvL (12:23.058)
There would not be a month, in my recall, that would go by without the Revenue Service being in the news for some other crime syndicate or crime figure that was in trouble with the Revenue Service. And that became commonplace. It became a sort of standard thing. And of course, when you start pushing like that against bad people, they're not going to sit around and do nothing.
Initially, the sort of common trend was to try to bribe the way out. And that I think is also pretty standard the world over. With enough money, you can potentially buy anything, influence, even access to politicians. And a lot of these people in those days tried to put pressure on us in that kind of way.
JvL (13:25.692)
To counter that, various measures were put into place at the Revenue Service, such as who gets to select a case to investigate, managing cases in a project fashion. So there were multiple people involved, multiple levels of decision-making. Powers weren't centered with an individual. Committees and levels of authorities were implemented.
There was also a no-gift policy that was introduced at the time. And so from a systemic perspective, the way the Revenue Service sought to counter at least the initial pushback, which was in the main bribery orientated, was to make it difficult for somebody to be bribed, even if they wanted to be bribed or permitted it.
And that, of course, escalated the sort of tension between what we were trying to do and the bad guys and that frustrated them to the extent that they began to increase the pushback through threats. So it would have been threats against us, threats of violence or threats of them having access to influential people. I used to call it names dropping. They would ask our names and then they would, you know, allude to the fact that they know so and so. And they would literally in some cases tell people, look, if you don't stop, you're going to be out of a job soon.
Again, I think that was also partly mitigated by the systemisation of what we were doing. And we would be very transparent in how we went about combating these criminals. I remember participating in many parliamentary oversight committees that dealt with questions around organised crime.
JvL (15:51.235)
Some that jumped to mind would be the concern by Parliament in the 2000s around abalone smuggling and also drug smuggling and the use of drugs in certain parts of the country. And we would go on account and we would explain what we were doing. And then we also believed that our cases would speak for themselves. So we were implementing the law without fear of favour.
And of course, the people we were up against would try and twist that to say they were being targeted; we were abusing our powers – and it was that typical, I wouldn't call it a chess game because that would mean it would be more sophisticated than what it was; it was more a case of playing Checkers or Snakes and Ladders.
And that of course, as we became better at what we were doing, we put some stress into the hearts of some of these people.
And again, by the mid-2000s, we began to see incidents of violence and actual threat to our people and their families. Things like very strange break-ins into their vehicles or their homes, and then the only items that would be stolen would be laptops or evidence of cases and that sort of thing.
There were several incidents that I recall where people were shot at, assaulted. In one incident that I remember people were kept hostage in a flat in Hillbrow. Another incident in Durban where the bad guys actually pointed their firearms at investigators who arrived for an inspection. And then they were the unfortunate murders. I distinctly recall one customs official in Durban that was very involved in a joint project in combating cigarette smuggling who was murdered in his driveway.
JvL (18:11.413)
And I also remember at the time, Labour, the unions, raised this issue of risk to the officials at the Revenue Service. And as a consequence, to mitigate that, we purchased bulletproof vests. We sent people on training courses. We also recruited people who were trained to deal with physical risks and that sort of thing. And we also began to arrange our resources in a way such that people who asked or chose not to do that kind of work were never forced to do that kind of work.
And out of that came the birth of some of the units that were known at the time at the Revenue Service. I suppose the most famous one was ultimately named the High Risk Investigations Unit. And while the name speaks for itself, these were people who we believed were most capable of taking care of themselves in such difficult situations. And they were then assigned these difficult tasks, or at least the tasks where there was risk.
In fact, I just remembered now there was even an incident where it came to light, I think during a bail application of a very well-known crime boss at the time who is today spending his days in jail that he had planned to bomb my office to get rid of all the evidence.
So it wasn't just a risk to the individuals and their families, it was also risk to the evidence. So the manner in which we kept evidence, the manner in which we duplicated evidence and so forth, all of those things were operationalised and became the way in which we did our work.
JvL (20:26.938)
And then I think finally, I think as most South Africans that are interested in what happened in the State Capture era would know, we had just made too many enemies. We not only made enemies amongst criminals, but we made enemies amongst politicians, influential business people, organised criminals, organised criminal syndicates, and even people who were behaving or misbehaving or behaving badly among our friends in the criminal justice system and the intelligence service.
And by some strange twist of fate, their paths began to cross. I can keep you busy for hours telling you about the weirdest of bedfellows that came together. And they all had one thing in common, one common purpose, and that was this enforcement component of the Revenue Service must fall because it's a massive threat to us.
And they all did their bit. They may not have all sat in one room planning their strategy, but as soon as one very dubious supposed secret agent came for me in early 2014, it was not days before others jumped on that bandwagon; some of these people began to capitalise on the opportunity and it became you know, a fake news, false dossier, fest of note that lasted for a decade, literally. And I always refer to it as the bogus rogue unit propaganda. And it was difficult. It was a difficult thing to counter. I'm not sure how to effectively counter that kind of attack where, you know, where they go for the individuals in that brutal fashion, by effectively infiltrating ordinary community groupings and political bodies and where everybody have this in common, where they don't want us around. So that, I think, saw the fall of the enforcement capability.
JvL (22:58.447)
And it was certainly evident in the findings of the Commission of Inquiry into
Governance and Administration at the South African Revenue Service Report which, I think the report came out at the end of 2018 and it was chaired by a retired judge Nugent. I think if anybody's interested in the detail. The enforcement capability within the Revenue Service was literally ripped out of that part of the State in a very short space of time. Something that had been built up over a decade and a half ceased to exist almost overnight.
And then I later would testify to this too at the State Capture Commission which was chaired by Chief Justice Zondo. And in fact, you know, my testimony deals with what I've just explained to you, perhaps in a more thought-through manner and less anecdotal. But yeah, that was the point that I made.
Again, on the one hand, I don't want to elevate the conversation to a point of drama. The fact of the matter is that any person who works for the State, not just the Revenue Service, but the Police, the Prosecuting Authority, and even investigative components in other parts of the State, Home Affairs, for instance, has an investigations component.
Many state departments have anti-corruption kind of investigative bodies. All of those people face the same risks. It's either I'm going to bribe you, and if I can't bribe you, I'm going to threaten you. And if I can't threaten you, I'm going to make sure that you lose your job. And if I can't do that, then I'm going to hurt you or someone close to you. If I can't do that, and or, I'll get rid of the evidence. And if that won't work, I'll kill you. And if that won't work, well, we'll just disassemble all of you.
JvL (25:10.259)
And that's, I think, the message, certainly in my testimony to the State Capture Commission, that we should expect this kind of thing. It's not unique to South Africa. You see it everywhere where there's competition between State authorities and organised crime and this is how it works, this is the game and apart from making sure that you address the criminals and bring them to book, you do need to be sure of the safety of your people and your evidence at all times. So that's, think, I've now spoken for a long time but that would be my answer.
Chris Steyn (26:06.593)
Ffascinating, Johann, and I'm sure that our viewers would find that really interesting and informative. I do want to take you to the present day, though. Do you think there's a possibility that the assassinations of the liquidators, Cloete Murray and his son, could have been linked to work they did for SARS?
JvL (26:26.73)
Chris, I don't know enough. I don't have access to the facts that I imagine the police would have or the Revenue Service for that matter. So I wouldn't want to speculate. It's never been my way. Yeah, it's possible, given what I've just said. But then, Cloete, I've known for many, I knew for many, many years, he did a lot of work for us.
He was a superb professional, a no-nonsense kind of guy. He didn't have time for fools or chit-chat. He was all business. And some people experienced him as difficult, but he was a true professional and he was an expert at what he was doing. So, all I can say is it's a possibility.
I think the facts ought to speak for themselves. He didn't just work on one matter, he worked on multiple matters. So it could be anything. I just don't know.
Chris Steyn (27:37.679)
Johann, there is obviously a war between organised crime and SARS that is ongoing. Who do you think is winning that war at present?
JvL (27:49.319)
You know, I would take the war, I would describe that war in a broader fashion. I think there's a war between organised crime and the majority of people in this country, the ordinary citizens. There's a war. And the ordinary citizens have elected a government as democracies do, to fight that war on their behalf. And that's why we have the criminal justice system that comprises of different state departments. We also have government at large. So we have these smaller components within other parts of government that does not necessarily strictly fall within the criminal justice system. We have our intelligence services and we have our collaboration with other governments. So I certainly think that there's always been an expectation by the victims of crime that the state would stop the crime and where there is crime, hold those people to account. I think the state has not always succeeded in part of the social contract.
I've been a victim of several crimes in the last, I don't know how long. Every single person that I know in my social circle has also been a victim of crime in one way or another. Today in South Africa we pay 1% more in Value Added Tax whenever we buy something as a result of organised crime. People who do not pay their taxes willfully and wittingly, deliberately so, are stealing from us who do pay willingly and honestly.
JvL (29:57.996)
So who's winning that war? Well, you know, this thing, it depends. It depends on how you want to look at it from a philosophical perspective. I think there are by far more honest and genuine people in this country than there are crooks.
We will win the war ultimately. They may win a few battles and skirmishes. But in the long run, I'm one of those people who I just want to believe that good does triumph evil. Sometimes we're just going to go through dark days, but we mustn't quit. Certainly one of the lessons I learned at the Revenue Service in my time there was not to quit. If you keep at it, just keep at it.
And even after I left there, you know, it took me sort of 10 years, 10 years of my adult life I spent trying to reclaim, you know, what was essentially nonsense that was put out in the public domain. And then it was, you know, repeated and repeated.
But the moral of the story is that no matter how long it takes, bad people, bad things are not sustainable because most people are good inherently. And I like to view things like that and I like to believe that that's our society functions. The only thing I would say is that it would be really great for me if there are opportunities for the public and private sector to collaborate to address crime. If that could be perhaps re-looked at and if we can invest in that because I do think governments worldwide, even in developed states, have reached a level where it's simply an impossibility to service each and every citizen on a one-to-one basis.
JvL (32:20.223)
The ratios don't work. And so you're going to have to look for force multipliers, and I think that sits in collaboration. So that's certainly one aspect of this war that I think can be escalated. And there are signs of where this has worked. Perhaps the most recent one in South Africa would be the latest conviction of Mr. Matodzi in the VBS saga. It good collaboration between public and private players in the criminal justice system. So it shows what can be done. And there are many, many other examples of that.
I think a second aspect is, and that's kind of something that's been troubling me for many years, is dysfunction that sits in the criminal justice system as a whole. It's almost as if the different departments that should work along a single value chain see themselves as separate from each other as opposed to one part of government. Where if a crime is reported or a crime is discovered, mthe investigative component needs to do something, but it needs to do that in collaboration once they pass that case on, you know, because then another department comes into play, typically the Prosecuting Authority. And then it's up to the judiciary and so on. And so the manner in which their strategies are developed, the manner in which their business plans are developed, the way in which they could potentially share resources. Some things I think can be centralised or aligned or perhaps work in better sync. The way in which, you know, every February when we listen to the Minister of Finance, the way in which money is allocated to these departments.
JvL (34:38.662)
I have yet to see a of a ratio that tells us that you need X number of investigators for Y number of prosecutors and for Y number of prosecutors you need Z number of magistrates or judges and support staff and so on. The system is not quite functioning as a system in my humble view. I think that would be a second area.
The third area is, I think there's a lot of talk about this because it's human nature, you know, crime affects us all. And so I've certainly attended many workshops and groupings and get togethers of one kind or the other where issues concerning crime are discussed and people are looking for ways to deal with this. And I think we're not always output orientated. And so often what would result would be sometimes very good plans and documents, but it would stay there. We're not so great in the implementation. And there's an art to it. So that's an area where I think we might want to improve on in this war.
The other one has to do with, I guess, how we capacitate and skill people, you know, the training of a police officer, for instance, last six months. It's a six-month intensive training course at the Police Academy. They don't have subjects there in the academy that teach them how to analyse basic financial documents. They're taught to shoot and they're taught to defend themselves and they're taught basic criminal procedure and law of evidence and that kind of thing, how to attend to crime scenes.
JvL (36:53.903)
But, yeah, they're not taught how to follow the money. So, you know, the same almost applies to the Prosecuting Authority at the Justice College. And even in our universities, you know, if you want to do a degree in policing or if you want to obtain a law degree, there's not so much emphasis on the financial aspect of crime and the kinds of crimes that I'm referring to are crimes that are precisely driven by greed and the desire to extract and rent-seeking and fraud and all the commercial, what's known as white collar crimes and corruption. So that's certainly, I think an area, where I think one could even begin to collaborate aspects of my first point which is public-private partnerships upskilling people and there I think is a place for special specialisation.
We could look at certain courts where we could potentially centralise the resources that we have that are good at doing these sorts of things and focus them on areas where there's impact. So that's a very long-winded answer.
I don't think it's a war we can afford to lose. I should say, as a last comment, for the period of democracy, the last 30 years in this country, we've heard of three primary areas that governments always trying to improve the lives of people, and that's poverty, unemployment, and inequality. I would elevate crime to the same level and make it a fourth focus area, simply because no effort to try and alleviate poverty, increase employment or equalise society will succeed if we do not have a handle on crime in our country.
JvL (39:22.547)
You could with a magic wand fix, let's say, Eskom or Transnet overnight, and in a very short space of time if we don't get a handle on crime, we'll be right back to where we are now. So I think these things should be seen in a matrix as opposed to in a linear fashion and yeah I think more effort should be put into how how we combat crime – and we must be smarter because we'll never have enough policemen or women, we'll never have enough prosecutors, we'll never have enough court buildings, never mind people to preside over those things. And I think there are tools in our laws that are perhaps underutilised and I think we should utilize those.
Chris Steyn (40:16.609)
Thank you. That was Johann van Loggerenberg, the SARS whistleblower, speaking to BizNews after the apparent attempted assassination last week of a SARS advocate. Thank you, Johann.
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