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JOHANNESBURG — SARS Commissioner Tom Moyane announced on Wednesday that his deputy, Jonas Makwakwa, has finally quit. In May 2016, Jonas Makwakwa was accused by the Financial Intelligence Centre (FIC) of tax evasion and money laundering amid him stuffing hundreds of thousands of rands into ATMs. Yet, after being suspended following a probe into this matter, SARS reinstated him and cleared him in a much criticised and allegedly compromised Hogan Lovells’ report. This week, ace journalist Pauli van Wyk exposed Makwakwa for his alleged conflict of interest regarding a debt collector deal inked by SARS. It looks like that story could have been the death knell for Makwakwa’s career at SARS – another illustration of how important the free press is in South Africa. – Gareth van Zyl
COMMISSIONER TOM MOYANE’S ADDRESS ON THE RESIGNATION OF MR. JONAS MASHUDU MAKWAKWA
Good afternoon ladies and gentlemen, members of the media, the general public and South African community at large.
I am greatly humbled and indebted to the members of the media in heading to the call to be present this afternoon for this media briefing, particularly taking into account that the media briefing was called at extremely short notice.
I wish to announce that Mr. Jonas Mashudu Makwakwa (“Makwakwa”) has resigned this morning from his employment with the SARS as the Chief Officer: Business and Individual Taxes (“BAIT”). Mr Makwakwa’s resignation is effective immediately as of 14 March 2018 at 11am.
I would like to briefly explain the chronological sequence of events that has led to Mr Makwakwa’s resignation.
Before I do that, it would be prudent to state that in his letter of resignation, Mr Makwakwa has indicated that he is resigning for personal reasons. He regards this as being an opportune moment for him to exit SARS after being cleared of all the allegations of misconduct through a formal disciplinary hearing, and after making the investigation report into allegations of impropriety against him, and his personal tax information available to Parliament for scrutiny and for public accountability. I shall deal with aspects of the investigation and parliamentary processes later in this statement.
Mr Makwakwa has served SARS for the past 22 years. As a result, I thank him for his loyal service and wish him well for all his future endeavours. I now wish to deal with the chronological sequence of Mr Makwakwa’s
resignation: Allegations emerged of impropriety against Mr Makwakwa by the FIC and there
were subsequent investigations and outcomes:
- A criminal investigation by the Directorate for Priority Crime Investigation (“DPCI”) under DPCI inquiry 3/06/2016 against Mr Makwakwa in respect of allegations of corruption, money laundering and racketeering; and
- Recent allegations of impropriety against Mr Makwakwa in respect of the selection and appointment of NEW INTEGRATED CREDIT SOLUTION, a debt collection agency.
ALLEGATIONS OF IMPROPRIETY AGAINST MR MAKWAKWA BY THE FIC AND SUBSEQUENT INVESTIGATIONS AND OUTCOMES
The FIC submitted the investigation report and was received by SARS during the course of May 2016. Upon receipt of the report, I engaged with the FIC with regard to the need for the FIC and the SARS to co-operate with each other in respect of an investigation into allegations of corruption, money laundering, and
possible violation of tax statutes against Mr Makwakwa.
The FIC submitted the report to the Hawks and the Hawks had commenced with its criminal investigation under DPCI inquiry 3/06/2016. This criminal investigation is ongoing and SARS is fully co-operating with the investigation.
With regard to the FIC, it must be noted that SARS did not receive the much-needed assistance and this process took longer than anticipated. With hindsight the differences between the FIC and SARS on this matter should have been resolved speedily.
As a result of lack of assistance from the FIC, during September 2016, SARS proceeded to suspend Mr Makwakwa on the basis of the allegations contained in the FIC report. During October 2016, SARS appointed Hogan Lovells to conduct an investigation into allegations of impropriety against Mr Makwakwa. Hogan
Lovells were also instructed to appoint Price Water Cooper (“PWC”) to assist with the investigation and in particular with regard to an analysis and audit of evidence of Mr Makwakwa’s financial affairs.
Hogan Lovells together with PWC finalised the investigation and submitted a report to the SARS around May 2017. In the main, the Investigation Report recommended that disciplinary proceedings be instituted against Mr Makwakwa and in particular with regard to his failure to make the required declarations in accordance with the SARS Ethics Policy, and possible contravention of the Public Finance Management Act 1 of 1999.
Further, the Investigation Report recommended that the aspects of the investigation pertaining to money laundering and corruption be fully investigated by the DPCI as an authorised authority with the necessary capability.
It is a matter of public knowledge that Mr Makwakwa was cleared of all the charges at the disciplinary proceedings chaired by Adv. Terry Motau SC. The investigation into corruption and money laundering is ongoing and the SARS is co-operating with the DPCI.
Together with SARS, a decision has been made to make Makwakwa’s tax records available to Parliament under conditions agreed between SARS and the Standing Committee on Finance. Mr Makwakwa’s tax records will be submitted together with the Investigation Report by Hogan Lovells and incorporating the
Report by PWC. The said Report will be submitted on or before 16 March 2018.
As mentioned, this criminal investigation is ongoing and the SARS is fully co- operating with the DPCI.
THE RECENT ALLEGATIONS OF IMPROPRIETY AGAINST MAKWAKWA IN RESPECT OF THE SELECTION AND APPOINTMENT OF NEW INTEGRATED CREDIT SOLUTIONS (“NICS”)
As I understand the allegations, on 13 and 14 March 2018, the media widely reported that Mr Makwakwa irregularly participated in the tender adjudication and appointment of NICS by SARS, notwithstanding the ongoing criminal investigation by the DPCI into allegations of corruption and money laundering involving Mr Makwakwa and NICS together with other entities in respect of payment of over R400 000 (Four Hundred Thousand Rand), paid to Mr Makwakwa. These allegations are currently being investigated by the DPCI on
the basis of the FIC report of May 2016.
As I understand the allegations, Mr Makwakwa was conflicted as he failed to declare a potential conflict of interest, acted dishonestly, failed to act fairly and failed to recuse himself from the adjudication as the circumstances duly required.
I have formally put this matter before Mr Makwakwa with the intention to suspend him in respect of the said allegations pending an investigation. At this point, he denied the allegations and indicated to me that he had already decided to resign.
Due to the resignation being effective immediately, it serves no purpose to proceed with this matter from an employment relations perspective.
However, an investigation will proceed to probe the allegations of irregularity surrounding the appointment of NICS. The matter will also be referred to the DPCI for criminal investigation.
Furthermore, the SARS is currently preparing a letter to NICS to give cause why the bid should not be suspended pending an investigation. In this regard, SARS reserves its legal rights in law including instituting legal proceedings to terminate the relationship between the SARS and NICS.
As the Commissioner, I would be negligent if I did not admit that the incidents surrounding the issues on Mr. Makwakwa have taught us valuable lessons. I am sure there are areas that we could improve on and could have handled better.
I thank you and will now take questions. I will be assisted by Mr Luther Lebelo, Mrs Refiloe Mokoena, Mr Teboho Mokoena and Mr Johnstone Makhubu in answering your questions.
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