Ejected SARS bosses start fighting back; illicit cigarette industry tagged

The genie is now well and truly out of the SARS bottle. Even herculean efforts from the highest office in the land to restore it are unlikely to be enough. There are simply too many people affected, too many working parts in this particular plunder of the public purse. Among them restored Finance Minister Pravin Gordhan’s two closest lieutenants from his decade at SARS, Ivan Pillay and Peter Richer. The duo, along with a large group of colleagues, were ejected from the tax collection service soon after Gordhan was moved away from Finance in 2014. Here’s what my sources say is going down. SARS has been waging a war against illicit cigarettes, a trade worth literally tens of billions of rand to the criminal underworld. As sin taxes escalated, so has the incentive – today roughly R13 of each packet of 20 cigarettes sold should go to the State. The closer the SARS team started getting to the source of the massive illicit cigarette trade, the more the pressure built on the respected State unit. Among the responses was the old trick of fighting truth with created fiction, specifically rumours of SARS’s supposed “rogue unit”. Most South Africans assumed Gordhan’s 2014 demotion was because he wanted to tighten Parliamentarian’s belts. Insiders say it was because criminal interests could spark a thoroughgoing purge at SARS to protect their cigarette business. That resulted in Pillay, Richer and fellow executives being removed by the new Commissioner Tom Moyane. Gordhan is so determined to uncover the cancer he went to war on the issue last week with his boss, President Jacob Zuma. The disturbing issue is why Zuma is staunchly defending Moyane at a time when so many people are thinking and believing the story my sources are sharing. Then again, if you’re a smoker, you’ll know all about this already. If not, try the under-the-counter test by asking your local shopkeeper if he has something cheaper than what’s displayed. You’ll soon get the answer to the truth behind the latest crisis gripping the nation. – Alec Hogg

By Genevieve Quintal, News24

Johannesburg – Former Sars deputy commissioner, Ivan Pillay, and strategic planning risk group executive, Peter Richer, have accused Police Minister Nathi Nhleko and State Security Minister David Mahlobo of violating their rights to dignity and reputation.

This was following a press briefing held by the two ministers on the investigation into the SA Revenue Service’s (Sars) so-called ‘rogue unit’.

Pravin Gordhan, South Africa's finance minister, has until Wednesday to answer 27 questions sent to him by the Hawks on Sars' 'rogue unit'. Photographer: Waldo Swiegers/Bloomberg
Pravin Gordhan, South Africa’s finance minister

“We are left with no other option than to seek legal advice and to take appropriate action to defend ourselves,” Pillay and Richer said in a joint statement on Wednesday.

“To date, all investigations that have been instituted against us, either by Sars or other state institutions, have never afforded us a fair opportunity to be heard or to have our side of the story represented.”

Both men had at first been suspended from Sars following the revelations about the unit before resigning from the revenue service in May 2015.

High Risk Investigation Unit

Last week it came to light that the Hawks had sent questions to Finance Minister Pravin Gordhan, who was Sars commissioner when the High Risk Investigation Unit (HRIU) was allegedly set up, as part of its investigation into the matter.

Among the 27 questions posed to him were whether he had any knowledge of the disbandment of the National Research Group (NRG) in 2009, leading to the establishment of the HRIU; the aims and objectives of the new unit; who headed it and to whom it was responsible and accountable.

Read also: Max du Preez: Why Zuma must risk everything to keep his pawn Moyane at SARS

Nhleko on Wednesday said there were no charges yet, arguing that one “can’t have charges without investigations into possible violations”.

The Hawks are investigating the existence of the HRIU, accused of allegedly being behind suspected illegal operations within Sars.

The Sikhakhane Report, compiled after an investigation into the unit, found there was prima facie evidence of the unlawful establishment of a unit that operated in a covert manner, Nhleko said.

The findings also said the establishment of the unit was without the requisite statutory authority and was indeed unlawful, and that the unit may have abused its power and resources by taking part in activities it had no lawful authority to perform, he continued.

Forensic investigation

It advised that a more detailed investigation be conducted, resulting in a forensic investigation by KPMG.

Gordhan previously rejected claims that auditing firm KPMG had confirmed the existence of such a unit at Sars. He said the rumours of the unit’s existence were baseless.

The Sikhakhane Report also found that surveillance technology and assets totalling over R1.6m were procured between 2009 and 2014.

State Security Minister David Mahlobo said it had to be established if intelligence laws were breached through the possession of the equipment.

Peter Richer, Ivan Pillay, SARS
Former SARS executives Peter Richer & Ivan Pillay. Picture: YouTube

Pillay and Richer on Wednesday said the allegations that Sars, during their time as managers, had purchased and used sophisticated spyware, were false and unsubstantiated.

The same went for allegations that the investigative units in Sars were illegal, that it had run a brothel and bugged President Jacob Zuma.

Noting the briefing held earlier, Pillay and Richer said the ministers had not mentioned which law had been breached or specific breaches the Hawks were investigating.

“They ignore the assertion that was made by the Minister of Finance, that the NRG and other investigative units at SARS were established lawfully, with ministerial approval, operated within the Sars legal and policy framework and generated significant tax revenue for South Africa.

Read also: “Unfireable” Gordhan threatens to quit: If Moyane doesn’t leave SARS, I go

Not broken any law

“The ministers of police and state security have sought, among others, to rely on the Sikhakhane report which is flawed in fact and in law, and is eminently challengeable, and the Kanyane report, which bears no relevance to the lawfulness of or not of the investigative units in Sars,” they said.

Former head of investigations at Sars, Johann van Loggerenberg, in a statement on Wednesday said he had in the past offered to fully co-operate with the Hawks.

“I deny that I have ever broken any law or done anything illegal (or allowed any unit or Sars official that reported to me to do so) whilst I was a Sars manager,” he said.

“I was never afforded a fair hearing nor a right of reply, by either of these panels. Had I been heard fairly and given a right of reply, these panels would not have come to the conclusions that they did.”

Van Loggerenberg said he would heed legal advice to act in his own best interests. – News24

Source:  http://www.fin24.com/Economy/former-sars-officials-respond-to-ministers-press-briefing-20160302

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