Sars responds: Nothing illegal about review process. Ball in Gordhan’s court.

As reported yesterday the battle lines have been drawn in the Tom Moyane, Pravin Gordhan South African Revenue Service stand off. The latest in the intrigue of leaked ‘rogue’ spy reports, internal memos and restructuring has the tax collection unit saying that there’s nothing illegal about the current review process. This contradicts the Finance Minister’s call to put everything on hold in December. The other interesting point is Sars commissioner Moyane is applying his mind to the KPMG ‘rogue’ spy report, and will decide on the next steps in a few weeks. It’s not quite a James Bond classic, but there are sure to be a few more Sars twists. – Stuart Lowman

By Carin Smith

Cape Town – There is nothing illegal or out of the ordinary about its current review process as the process was approved by all relevant stakeholders, the South African Revenue Service (Sars) said on Friday.

This was in reaction to media reports about the Sars Operating Model Review and the leakage of an internal memo – which Sars said was confidential.

Pravin Gordhan, South Africa's finance minister, speaks during an interview in London, U.K., on Thursday, Mar. 4, 2010. Gordhan said he is “disappointed” by the response of developed countries to the government’s plan to seek about $4 billion in loans from the World Bank. Photographer: Chris Ratcliffe/Bloomberg*** Local Caption *** Pravin Gordhan
File photo: Pravin Gordhan, South Africa’s finance minister, speaks during an interview in London, U.K., on Thursday, Mar. 4, 2010.

Fin24 reported on Thursday that the battle lines at Sars have been drawn with Commissioner Tom Moyane seemingly defying Finance Minister Pravin Gordhan on the tax collections agency’s restructuring plans.

After taking office in December last year Gordhan requested that restructuring at Sars be put on hold to give him time to assess the impact of the process. An internal memo sent to Sars employees on Wednesday, however, indicates that Moyane is going ahead regardless of having agreed with Gordhan to put the restructuring process on hold.

In the memo, which Fin24 has seen, Moyane, however, said he is pleased with “the significant progress made regarding the implementation of the operating model” and internal support for the transformation process.

Read also: Donwald Pressly on SARS: In the battle with Gordhan, Moyane must go

In September 2014, Sars was rocked by a number of suspensions and resignations of senior executives and officers after Moyane took over and allegations of a so-called “rogue unit” at Sars – allegedly set up when Gordhan was in charge – surfaced. Gordhan’s predecessor Nhlanhla Nene even appointed a committee to investigate the allegations.

On Friday Sars said it engaged in “a legitimate process of procurement”, which culminated in the approval of review plans by Nene. Sars had appointed Gartner Inc to assist with the process.

According to a statement by Sars, it then had significant engagements “with a multitude of stakeholders”, including business, employees and organised labour.

“In keeping with international best practice, Sars conducted a benchmarking exercise which entailed the study of seven revenue services and five revenue authorities across the world,” said the tax agency.

A presentation was made to parliament’s Standing Committee on Finance (SCOF) and the Sars Advisory Board was engaged on three occasions. The review process had commenced in August 2015.

Read also: Ombud says allegations false; with Pravin back, SARS executives to return?

According to Sars, the review process was designed to leverage off “the phenomenal strides” it has made and to assist in “the identification of growth opportunities, enhance accountability, and re-position Sars as a fair, transparent, innovative and leading tax administrator among its peers”.

Sars said it rejects any insinuation that suggests that Sars or Sars Commissioner Tom Moyane leaked confidential information. It added, though, that since his appointment in September 2014, Moyane instituted “major controls to curb information leaks in order to protect the integrity of the organisation”.

As for the leakage of a forensic Sars report by KPMG, Sars said all copies were uniquely numbered and none of the copies submitted to Sars were leaked and are in safe custody.

“We are aware which copy has been leaked, because the media published its numbering. That copy was not delivered to any Sars official. The matter of the leakage of that report must be addressed with those who are in possession of that report,” said Sars.

It indicated that Moyane is applying his mind to the KPMG report and will then decide on the next steps before releasing it to the public in the next few weeks. – Fin24

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