Johan van Loggerenberg: Tito’s right – SARS needs “intrusive” investigative units

A policeman by experience and lawyer by training, Johann van Loggerenberg is best known for heading the ill-fated SA Revenue Services Investigative Unit. As he wrote in his co-authored book "Rogue", miscreants got the unit closed down through the combination of a fake news campaign and a dodgy KPMG report. He was a guest on Rational Radio this week where, inter alia, Johann applied his mind to the call from finance minister Tito Mboweni to re-establish "intrusive" investigative units at SARS. – Alec Hogg.Content hosted by iono.fm.A warm welcome to Johan van Loggerenberg. A well-known author, the man who was given a really hard time for being part of the supposed rogue unit at SARS. It was interesting having a look at your LinkedIn profile, you're actually an LLB, you're a lawyer. How does a lawyer get into investigations and then run an investigative unit at SARS?.___STEADY_PAYWALL___.That came later in my life. I was actually a policeman for the majority of my 20's. I worked for the Organised Crime Intelligence Unit, what was known as the Narcotics Bureau. From there I entered the world of tax at the tender age of 29..It's been quite a quite a learning curve I guess for you and for the country as a whole. I saw a story that you published this week or a comment rather on LinkedIn, you listed them: KPMG, Trillian, Tongaat, VBS, Prasa, Bain, Steinhoff, Denel, BAT, Eskom, Regiments Capital, Oakbay and so on. Sahara, Sekunjalo, Transnet, my goodness the list is long. State Capture – as you argued I think quite comprehensively there – affected every single South African but I don't know how many people are actually joining the dots..I don't know either but I don't for one moment believe that South Africans are stupid – they're not – but we're a very young, growing democracy going through our own growing pains at all different levels. 1994 presented us with political freedom but that's about it. So I think most South Africans – the majority by far – are just trying to get through the day, to make sure their kids are at school and that they have a meal to eat or a place to sleep at night. But I don't think any sane person can deny what's happened. The point of my post really was, that list – which by the way is by no means a complete list – shows a few things. One is that state capture was not limited to one crime family. It was across the board free for all. Politics does play a role, but it's not something that one can generalise and simply point to only one political party. The individuals who would be connected to any one of those case studies. On the tax paying side, those people who are capable of buying things – a value added tax purchase – pay more today than for the last 25 years because VAT has gone up for the first time. There are no tax breaks in fact that the tax creep is upwards. The tax base is shrinking. I just read an article recently about South Africa having lost somewhere around 283,000 small businesses over the last 10 years or so. If each company employs one person that's 283,000 people who are no longer employed. The point I was trying to make is that it's indiscriminate..The final point is that when you look at that list, there are some pretty big names there, you're talking about multinationals, about brands and company names that for many years and many lifetimes, were supposed to epitomise good governance and the example of how to make money in a democracy – with a triple bottom line – even caring for the environment. What we're beginning to see now, when we see these lists of implicated private companies, is that it's one thing to point the finger at government officials and politicians but in every single instance there's a private player involved and these players are not small. They're big and the money lost is obscene . It's scary to think what you could have done with the money that they benefited from, as a result of the horrible past 10 years..The last point I'm making is, it's by no means over, because to try get that money back and hold these people to account, will mean using expensive lawyers who drag things out forever which places an additional burden on our criminal justice system and other parts of the government..An interesting point – the last one – is something that Peter Hain and Paul O'Sullivan have really been hammering on about, is that when you get lawyers who are very well paid through what they call the proceeds of crime, who help and assist those who have been miscreants, it really just drags things on. But I guess on the other side, we're seeing some positive developments, not least that the Minister of Finance Tito Mboweni reckons that the kind of work you were doing when you were at the South African Revenue Services needs to be reinstated, that you need to have those investigative units again. Intrusive was the word that he used. From where you are, from the fire that you've been through, do you look at this in a rather cynical way and say "where were you when I needed you" or do you feel that he's got a point and he needs support..No, I feel he's got a point and he needs support from all honest taxpayers because simply put, no decent tax authority and customs authority in the world does not have intrusive powers. They are an absolutely essential element of compliance to bringing goods across borders..What is intrusive? What what does he mean by that?.That's really the debate isn't it. I have a feeling that debate – in the South African context – is very closely linked to the so-called Rogue Unit propaganda. The detractors of the Revenue Service and the proponents of this rogue unit nonsense, would have the world believe that this small unit went around breaking into people's homes and stealing their mail and planting bugs under their desks and secretly listening to their phone calls. There is that kind of intrusive which is done through law enforcement agencies – proper intelligence agencies. SARS has never done that and that unit has never done that. From a legal perspective and from a tax and customs perspective, intrusive refers to the powers that are given to these authorities in order to enforce their laws. Tax laws and customs laws are what clever people call coercive in nature. In other words, they're based upon the premise that says, at some point a person or a business entity may become eligible to fall into the tax net. Whether you import for commercial purposes or export, or whether you earn enough income or whatever the case might be, you are then obliged to put up your hand at the Revenue Service and register. Once you're in the net and registered, you're then required by law, to make certain submissions – either based on certain transactions in the case of imports or manufacturing and so on – or if you're a provisional taxpayer every six months, or value added tax every month, or possibly every two months, if you're a normal salaried employee. In a perfect world, if everybody was honest and they all complied and paid their taxes as they should have and submitted what they should have, you would not need to enforce the law. But as we know, that's not the case. There is a huge tax gap – the last estimate I saw something like R30bn per year – and from 2015 onwards South Africa has been under collecting billions of taxes. I think the total – from 2015 to date – is somewhere around R140bn over three or four years, which is a massive gap that government has to fill by way of borrowing or doing without. That affects services, it affects social grants, it affects everything in our daily daily lives..Surely that means there must be some upside if you want to try and look at it from a positive perspective, the way we were going clearly we were falling off a cliff. R140bn in tax that hasn't been collected really gives you an indication that the country was in huge trouble. Have people like you – who've got the expertise – been called on, is there a #ThumaMina from the Union Buildings to say come and help us. Mr. Van Loggerenburg? We need this money and we need your services….Let me dispossess anybody who might be contemplating making such a call to me that unfortunately priorities in my life have changed. I now have a little daughter, she's just one years old, and frankly the trauma has been too much. I'll help by all means. I'll go and sit and have coffee or if people want me to sit with them for a day and share my views and experiences and thoughts on matters. But beyond that I won't. But I know a lot of people who left the institution who will go back if called upon..Coming back to the point the minister made about intrusive. What it really means is because the tax system is coercive, it then requires the tax system to reciprocate with the capability of digging for information, digging for an understanding of where people are not complying. That's half the story because they must present a credible threat of discovery to people who fail to comply and that's about information collection it's about speaking to people, it's about looking at data, it's about comparing data and so forth. Once you identify those people they must be a further credible threat of negative consequences if you don't comply. Now if anybody in this country feels that our revenue and customs authorities should not have that ability then they must be prepared to subsidise every single tax evader in the country. I don't think that's the way to go, it will put the revenue service back into the dark ages. There's not a revenue and customs authority in the world that does not have that. There's a continuum of this from where tax evasion in China can lead to the death penalty to tax inspectors in Russia that are paramilitary trained masked, highly weaponised – almost soldiers – from the IRS model to the Scandinavian models, that's intelligence based and so on. I think the only people who would object to what the minister said would be people who cannot afford to and do not want a strong and effective Revenue Service..Johan van Loggerenberg, the author of the book on the rogue or the alleged rogue unit, the man right in the middle of all of that, pity that he has been through too much to go back and support, but I'm sure there's somebody listening in Pretoria thinking let's get some insights from him. Fascinating to see that he fully supports what Tito Mboweni had to say.

Johan van Loggerenberg: Tito’s right – SARS needs “intrusive” investigative units

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