EDINBURGH — KPMG is at the centre of allegations that it has helped the Gupta family in various ways to access state funds and dodge tax. Senior KPMG employees attended the controversial Gupta family wedding at Sun City. KPMG has moved to distance itself from the state capture scandal, by issuing a half-hearted apology and making moves to institute an investigation into its graft-linked activities in South Africa. Some of its clients have cut ties with KPMG as its name becomes synonymous with corruption; however, many corporate leaders are standing back to wait for more evidence of wrongdoing before taking a stand against KPMG for its sins. Today, Biznews publishes the inside story of how KPMG did the Devil’s Work at the South African Revenue Service (SARS). This is the account of how KPMG played a role in developing cruel fake narratives against individuals who have worked against criminal activity and corruption. KPMG lent its brand and name to a report used to concoct spurious charges against former finance minister Pravin Gordhan. Journalists at mainstream media companies were taken in, publishing ugly and false allegations against individuals. Many SARS employees have paid the price for KPMG’s dirty work – as have Gordhan and others. People have lost jobs, relationships, have faced intimidation and even been attacked. This is the heartwrenching account of Johann van Loggerenberg, who is burnt out after standing his ground against the politically powerful and corrupt. Much of this information is in the public domain, as Van Loggerenberg has published a book, with colleague Adrian Lackay, about his ordeal. After reading this Q&A, you may find it hard to fathom how it is that KPMG employees and clients can still hold their heads high. – Jackie Cameron
MEDIA QUERY – JOHANN VAN LOGGERENBERG // KPMG // “SARS REPORT”
- We confirm that we act for Mr JH van Loggerenberg (“our client”) and refer to your email dated 4 October 2017 and the questions contained therein.
- We set out our client’s response to your questions below. For sake of clarity and convenience we repeat the question, as received, and set out our client’s response thereto.
Question: What was your career trajectory? How did you end up working at SARS and what was your role there?
In very broad outlines, our client started working for the South African Revenue Service (“SARS”) at age 29, in November 1998 as a grade 5 official (just above an entry level investigator) in what was then known as Special Investigations. At the time he and three other officials built a case selection, tracking and monitoring system as part of a small unit and conducted research on the so-called “tax gap”. He later in 2000 started an experimental unit known as the Special Compliance Unit which was aimed at assisting law enforcement agencies to combat crime from a revenue and Customs perspective. Hereafter he was moved to form what was initially known as the Tax and Customs Intelligence Unit, later renamed Business Intelligence and later renamed Risk and Segmentation. He was eventually promoted to grade 6 (the equivalent of team leader or operational specialist) and was the manager of the unit at the time. He then moved on to oversee the amalgamation of several enforcement units into a single unit then known as the National Enforcement unit. He was promoted in this period to the role of manager. He then served as advisor to what was known as the Compliance division for a while, before becoming the manager for what was known as Special Operations in 2007. This division consisted of the National Enforcement Unit, a small communications unit and what was known as the Significant Case Management Unit. By March 2008, he had also taken over the management of what was then known as the Special Projects Unit, later dubbed the “rogue unit” by some. He was eventually promoted to grade 7 (the equivalent of manager or specialist).
By 2010 he was promoted to Group Executive: Enforcement (grade 8), and he oversaw the alignment and functioning of 5 units, namely, National Projects (which was an amalgamation of the National Enforcement Unit and various other smaller type enforcement units), Central Projects (which joined a special debt management team, the team that was involved in the famous “Dave King” case, and the older Significant Case Management Unit), Evidence Management and Technical Support (which consisted of specialised skills in audit, tax, Customs, criminal investigations and liaison with law enforcement agencies and a world class IT forensic laboratory), the then renamed High-risk Investigations Unit (formerly known as the Special Projects Unit in 2007, renamed National Research Group in 2008), and finally the Tactical Intervention Unit, which was transferred from the Customs Border Control Unit. During the majority of 2012, our client did not manage any units and served as advisor to the Chief Officer for the Tax and Customs Enforcement division. He returned to manage the mentioned five units at the end of 2012 onwards.
Throughout his career at SARS he reported primarily, at various times, to either Messrs Gene Ravele, Ivan Pillay, Vuso Shabalala and Jonas Makwakwa in their various capacities they occupied within SARS at the relevant times.
During his period of employment at SARS, our client completed a number of internal SARS courses, external courses in SARS related subjects, a part-time post-graduate certificate programme in business management (MAP) at the University of Witwatersrand Business School and part-time bachelor’s degree (LLB) in law at the University of Free State.
Our client resigned from SARS on 5 February 2015 at the age of 45 years, turning 46 that same month.
Question: Why do you think you were targeted? How were you targeted?
Our client has been on record to state that SARS as institution, he and others there, had been the subjects of deliberate disinformation campaigns and attacks for many years, most of them attributed to subjects that were under investigation by SARS, certain disaffected persons who had left SARS for a variety of reasons, certain state officials from other departments and SARS officials within the institution, sometimes as individuals, sometimes as groups, sometimes separately and sometimes in conjunction with each other.
The most notable of these would be the attempts by former SARS official, Mr Michael Peega, in late November 2009 and February 2010, who had set out to “recruit” persons within SARS and some who had left SARS, to “implicate PG (Pravin Gordhan), IP (Ivan Pillay) and JvL (our client)” with the “Old Man” (President Zuma) under the code name “Broken Arrow”. This is public knowledge. At the time, Peega’s (and others) intention was recorded in writing, by some of those he approached, as wanting to use former and current SARS officials, who were “willing to collaborate” and by using the then named National Research Group, as the focal point of this disinformation campaign. Mr Peega saw this process to fruition in November 2009 and February 2010 when he distributed a so-called “intelligence dossier” under the code name “Operation Snowman” to various media houses and politicians.
For more detail please see: http://www.fin24.com/Economy/Plot-to-discredit-Gordhan-with-Zuma-20150225 and https://citizen.co.za/news/south-africa/963742/arrow-still-aimed-at-rogue-unit/ as examples.
Our client has always held the view that what initially set off events at SARS in May 2014 arises from a combination of:
- Fears among persons associated with the tobacco industry (both private investigative firms, spies and a multi-agency Tobacco Task Team comprising of officials in the Hawks, State Security Agency, National Prosecuting Authority, South African Police Service Crime Intelligence and their own spies and informants) of what SARS had uncovered in their investigations and which implicated them in serious criminal offences;
- Persons who were being investigated by SARS;
- Persons who had axes to grind with our client and others;
- Persons who considered SARS as too independent.
The way our client and others were attacked over the years always took on typical formulas. Some attacks were in the form of “dossiers” and “intelligence reports” which always carried the same hallmarks of false and unsubstantiated allegations of our client (and others) being Apartheid-spies or remnants thereof, being racist, being “Anti-Zuma”, conspiring in some way or another against government and illegally intercepting taxpayers’ communications.
A variation of these attacks usually took the form of the verbal spreading of similar rumours to politicians and powerful people, who in turn would then confront SARS verbally.
SARS was always able to meaningfully defend itself against these sorts of attacks, such as in late 2009 and early 2010, when Mr Peega released his “dossier” (following “Broken Arrow” he authored a report entitled “Operation Snowman”), by releasing two very detailed line-by-line refutations, with annexures as proof, to the media, politicians and law enforcement agencies and briefing them thoroughly. In other instances, those attacking our client, others and SARS, either registered fake allegations and “complaints” with law enforcement agencies or SARS or infiltrated such agencies and directed their efforts to undermine SARS. In our client’s view, SARS was less effective in countering these sorts of attacks. Incidentally, our client points out, these documents acknowledged the existence of the unit known then as the Special Projects unit and later National Research Group, explained its approved mandates and operations (including work conducted in conjunction with other law enforcement agencies) and demonstrated the fallacies of the “Operation Snowman dossier”. SARS also allowed its members to be interviewed and provided whatever documents and explanations were requested by other agencies. Our client can therefore not understand how anybody (especially KPMG South Africa) can therefore claim the unit to have been “covert”, “unknown of” and “secret”. At the same time, our client must question, given this, why no law enforcement agency ever objected to the unit’s existence throughout the years, until late in 2014.
These “dossiers” all had the same characteristics as indicated, including:
- In most cases these were anonymous.
- All were unattributed to any state intelligence agency or official/s.
- Almost all had exotic names, such as “Broken Arrow”, “Snowman” and after our client and others had left SARS, the later “dossiers” which sought to continue the disinformation, such as “Check Mate” (sic) and “Spider Web” (sic).
- Poor grammar and spelling.
- Always conspiratorial in nature.
- Contained unsubstantiated, false and defamatory allegations that were vague and unsupported by any evidence.
- Always directed to high office.
For more detail please see: http://www.politicsweb.co.za/news-and-analysis/sars-this-is-the-inside-story–adrian-lackay and https://mg.co.za/article/2014-03-20-big-tobacco-in-bed-with-sa-law-enforcement-agencies and https://www.dailymaverick.co.za/article/2016-03-17-state-capture-bizarre-project-spider-web-report-contained-clues-long-before-nene-was-fired/ and http://www.702.co.za/articles/250455/bogus-intelligence-report-not-the-first-attempt-at-discrediting-treasury
With respect to the so-called “complaint” dated 28 May 2014 against our client, it is our client’s view that when the lady with whom he had a relationship between 25 October 2013 and 13 May 2014 (a period of about 6 months) responded to an email from him and copied it to various managers at SARS, it opened the proverbial door for others to kick wide open. It is our client’s considered view, based on facts and evidence he now holds, that very soon after this commenced, from 28 May 2014 onwards, other groups and persons with their own separate motives and agendas began to capitalise on what was called a “complaint” against him on this day, and joined in the fray.
Our client has no doubt that he, and others were targeted for a variety of reasons, primarily made up of a combination of them being considered too independent and objective, stepping on powerful toes during investigations and audits and the exposure of corruption, abuse of state power and serious criminal offences.
In this regard, our client would like to clarify a few misconceptions (among the many) which have been bandied around in the media ever since:
- It is a fact that our client ended the relationship on 13 May 2014 and our client can prove this by way of text exchanges during that time. He had last physically met and seen the lady in the weeks prior. Our client does not wish to elaborate on the reasons why he ended the relationship in the media, as he believes it to be inappropriate for now.
- Subsequently, our client did stay in touch with her via text and always tried to remain friendly and courteous until 27 May 2014 when the interaction between them turned very sour.
- This fact stands in total contrast to the allegations made by the so-called “Sikhakhane panel” and later by KPMG South Africa. Our client contends that had these persons considered the text exchanges on these dates meaningfully, including his affidavit submitted to the panel and annexures thereto, they would not have stated that the relationship ended on 27 May 2014.
- The facts as to the initial days of the relationship were recorded in correspondence the lady addressed to the Sunday Times newspaper and constitute a correct reflection of what transpired at the commencement of the relationship. In an e-mail of 5 February 2014 under legal letterhead, she recorded the following:
“Firstly I am an admitted attorney, and understand my responsibilities regarding legal privilege, as well as distinguishing my legal and ethical responsibilities to clients as well as the South African statutory environment. Any suggestion by anybody to the contrary is rejected with the utmost contempt it deserves…..This is more about common decency and respect than legal arguments and something that I urge you to understand at a basic human level as a father, as a husband, as a son what your reckless actions may result in. Nobody can predict who they will fall in love with. Our situation is no different.
The possibility of a misunderstanding regarding my romantic relationship was discussed at length and thought through with my partner at its inception. Even these original discussions placed the possibility of a relationship under strain and contributed to my personal stress and what later transpired.
We went out of our way to precisely avoid any perceived prejudice to any third party, associated person, employer etc. This should not be construed that we have anything to hide or that we were doing anything wrong. We primarily did so particularly to protect the integrity of the institution for whom my partner works. My partner and I both take our careers very seriously and the responsibilities entrusted to us. Having said that, we also consider our private lives private! These are but some considerations I had to contemplate before pursuing a relationship seriously with my partner. These would be the same considerations I would have needed to consider if, for instance, I pursued a relationship with a journalist at the Sunday Times. Even writing this letter to you, I find myself in extreme discomfort having to disclose these private matters to you in confidence because your actions have forced me to.
For the reasons mentioned above, I did a number of things prior to the relationship becoming serious. These included:
…I informed a particular client who was involved in litigation with a state department where a possible conflict of interest could be perceived that I was interacting with this person in a social context on text. My client did not express any concerns whatsoever in this regard at that point in time. The discussions are recorded on text messages;
…the relationship was very young and casual and even though my client was comfortable about this possible romantic relationship, my partner maintained that it would be better for me to consider terminating my mandate with this client to avoid compromising them or the state department in any manner. After giving it some thought, I terminated my mandate and I informed all parties concerned immediately. Once again, this is documented in correspondence. This happened within a space of less than one month from when I first socially interacted with my partner, to the termination of mandate. I point out that this was at my own financial expense;
…never met my partner in his formal capacity or interacted with him in respect of ANY litigation pertaining to this client, or any other client, at any time. In fact, I only ever met with him once which concerned a general discussion about compliance issues in the tobacco industry. At that meeting, I did not represent my client and did not attend in my capacity as an attorney but attended in my capacity as the Chairperson of Fair-Trade Independent Tobacco Association (“FITA”);
…our very first social interaction occurred in a group setting arranged by him, after I invited him out. This happened almost 2 months since the abovementioned meeting and with no exchange of communication until the week that we first socially interacted. We agreed up front to not discuss work at all. I had no ulterior motives at all with regard to the social interaction with my partner and the same is true for him;
…we enjoyed each other’s company and agreed to slowly continue social interaction. Bearing in mind that I am a single mother of minor son (who permanently resides with me) and have my own legal practice and the nature of the work hours and responsibility of my partner, we met infrequently. During these meetings we would always take special precautions to keep our interactions strictly private, including to our close family members. That is the extent to which we set the level of privacy to our relationship;
…we, furthermore, at length discussed and determined boundaries and “no-go” areas in respect of aspects concerning our professions, and at no stage did I disclose any privileged information or anything else unlawfully to him, and more particularly, nor did he to me. We are both adults and are quite capable of understanding what that means. Any suggestion otherwise in any form or way is not only false but also slanderous and casts a very negative light on the integrity on both of us. It does not matter if you publish our relationship under the guise of an allegation or attributing it to hearsay or whatever the context you may wish to couch it in, once you have published it and made it known, you will cause us irreparable harm;
…bearing in mind that this was still in the infancy stages of a new relationship, the other matter of me being the Chairperson of FITA was also raised in discussion. Again, my partner suggested that I consider this carefully in light of the possibility of a long-term relationship that may develop with him. In the immediate future FITA intended to hold its AGM and I believed a new Chairperson would be elected. We therefore agreed to wait the week to let this happen naturally. It turned out that I was re-elected as Chairperson. I then resigned from FITA within the following week formally and notified all parties, including state departments with whom I had interacted on behalf of FITA. Similarly to the above, we never discussed matters concerning FITA as we were focussing on the personal aspects normally associated with romantic relationships as would be the case for any person. Any suggestion otherwise in any form or way is not only false but also slanderous and casts a very negative light on our integrity;
…I pause to note that I resigned from the particular client, and FITA, within the space of less than 2 weeks and only then did we agree to pursue the relationship exclusively. What is more, I submitted my practice to an independent audit by an accredited auditor as recommended by the Law Society of the Northern Provinces at the same time. I furthermore, voluntarily, submitted myself to a full tax audit by the South African Revenue Services. In addition to this, even though not required, I also completed a number of statutory disclosures in this regard as an attorney and which I am not prepared to elaborate on here.
…We have always gone out of our way to keep our relationship absolutely private and are desirous to maintain it that way. Not only because of the misconceptions that we contemplated could possibly arise, but also because we are both intensely private people by nature and character. What we do in our private lives we consider to be sacred and wish to keep it so…” (emphasis added)
- In light of the above, it is quite clear, that when the relationship started, our client knew very little of the lady. As he became aware of potential perceived conflicts, he dealt with them ethically and decisively, as did she.
- Therefore, the later “findings” by the so-called “Sikhakhane panel” that he did not disclose the relationship to his employer, or did not receive communications from her that she had resigned as lawyer for one tobacco firm, and as chair of a tobacco body, are false.
- It is also clear to our client that in this respect, the panel had no regard for the annexures to his affidavit submitted to them.
- The initial complaint and its subsequent elaboration against our client (and later others) made no reference to any unit or “rogue unit” at SARS. The allegations were directed against him personally, his personality, him abusing his office and suggested that he was corrupt. This is most evident in the terms of reference of the first “panel”, the so-called “Kanyane panel” (July 2014 to August 2014 when the panel functioned).
- Insofar the “Kanyane panel” and its report our client wants the public to know:
- Our client was never heard by “Kanyane panel” or allowed to make submissions to them nor was he afforded a right of reply as required by fundamental legal principles.
- Our client has consistently denied all allegations against him at this time.
- Our client has always maintained, and said so in writing to SARS at the time, that had the panel heard him, they would not have made the adverse comments about him. The “panel report” concedes as much that they had not heard him, not afforded him an opportunity to make representations nor a right of reply.
- Despite this trampling of his rights, the panel in any event found, with respect to allegations as they stood at that time (August 2014) “…we are unable to conclude the evidentiary material presented [by the complainant] in support of allegations is credible or reliable…”.
- Our client believes it is notable that the “Kanyane report” was leaked to the media on the day after it had been finalised but our client, the subject of the complaint who should have been among the first recipients, only received a copy thereof a week later after asking for it.
- When our client received the recordings of the interviews of various persons who did appear before the panel, our client came to learn how several had blatantly lied, including one member of the panel.
- Our client did two post facto replies to the report, which were never considered by the subsequent “Sikhakhane panel”, nor the so-called “Kroon advisory board” nor KPMG South Africa.
- With respect to the so-called “Sikhakhane panel”, our client wants the public to know the following:
- Whilst our client was reluctant to put himself through another “panel” for fear of his rights being abused and disregarded in the same manner as the “Kanyane panel” did, he ultimately, in good faith, did agree to submit to the subsequent “Sikhakhane panel” on advice of then acting Commissioner Ivan Pillay.
- When this panel came into being, there were still no allegations of a “rogue unit”. The terms of reference of the panel are clear that there was no allegation of a “rogue unit” or any unit at all at this stage (The panel commenced in September 2014).Our client has consistently denied all allegations against him as they stood at this point in time (September 2014).
- Our client has always maintained, and said so in writing to SARS at the time, that had the panel heard him, they would not have made the adverse comments about him. The “panel report” concedes that the panel did not hear him on most aspects they pronounced upon or afford him a right of reply in any form.
- The panel, on its own account as per their paragraph 29, disregarded anything before the prior Kanyane panel. “As stated above, we were furnished with the report of the internal panel led by Mr. Kanyane, but did not have regard to the findings contained in that report.” Needless to say, this panel then also had no regard to our client’s two post facto replies to that report despite him formally asking that they do. (emphasis added)
- It has been stated on record, wrongly so, by SARS spokespersons at various times, that Ivan Pillay had initiated investigations into allegations of a “rogue unit” at SARS when he was still there. This is false.
- SARS Commissioner Tom Moyane started at SARS on 1 October 2014.
- The panel concluded its report on 5 November 2014.
- The notion of a “rogue unit” in the scope of the panel’s report was introduced by the panel itself, sometime later in October 2014. The “Sikhakhane panel” states this in their report. Their paragraph 57 says in no uncertain terms: “.…It must be stated that the existence of such a unit in any form was not specifically part of the terms of reference. However, the terms of reference extend, in our view, to the consideration of the existence and operations of a covert unit, to the extent that had we not considered such issues once they became apparent, we would have failed in our obligation to fully respond to our mandate”. (emphasis added)
- Paragraph 57 further states: “…Shortly after the panel was appointed and commenced its work, the media reports escalated and alleged the existence of a covert unit that had been operating at SARS…” (emphasis added)
- Since the first such “media report” dated 12 October 2014 in the Sunday Times newspaper, entitled “SARS bugged Zuma”, one can pinpoint the precise moment when the panel decided to unilaterally extend its mandate to this date or soon thereafter.
- Therefore, contrary to what some would want the public to believe, the “Sikhakhane panel” was not instituted to investigate allegations of a “rogue unit” or any SARS unit and clearly, on their own account, took this upon themselves on a date after 12 October 2014 without hearing our client.
- Our client’s submission to this panel was based upon his understanding of their mandate and terms of reference and the allegations as they stood (as at September 2014) and therefore limited to such. It is noteworthy that our client was the only person to go under oath before the panel.
- The “Sikhakhane panel’s” paragraph 57 also admits that by the time the panel had decided to extend its mandate to include allegations of the “unit”, they had already interviewed our client and therefore did not hear him on any of these allegations. “By this time, we had already interviewed some SARS officials, including Mr. Van Loggerenberg.” (emphasis added)
- In other words, the panel did not afford our client a hearing on these allegations because, on their own version, they had already interviewed him.
- Our client must ask, how then could the panel have properly considered these fresh allegations if they did not interview the persons concerned to ventilate them?
- Furthermore, our client maintains that the panel had given him a firm undertaking to a right of reply at his first appearance before them. Our client was specific in his request because he wished to avoid a repeat of what happened to him during the “Kanyane panel” process wherein he wasn’t heard, nor afforded an opportunity to make submissions or a right of reply. However, the panel reneged on this understanding and stated that by doing so “would make a mockery of the process”.
- Since the interviews were recorded, our client is of the view that this dispute can easily be resolved by the release of this interview.
- Our client is on record as stating that the “Sikhakhane panel” report is profoundly flawed in fact and law in more ways than can be dealt with here. Our client can refute the report on a factual basis in a line-by-line manner.
- Not only does our client take issue with the factually flawed and contradictory nature of the content of the report, but also with what the report ignores and omits:
- Here our client is specifically referring to serious criminality and the motives of those behind the allegations against our client and others.
- Our client here also specifically refers to the obligation which rested on the panel to report evidence placed before it by our client in terms of Section 34 of the Prevention and Combating of Corrupt Activities Act 12 of 2004 as amended and the failure to do so being a criminal offence.
- Our client considers himself for all intents and purposes, and has placed this on record at SARS, as a whistle-blower as defined in the Protected Disclosures Act 26 of 2000 as amended.
- In addition, despite what some would want the public to believe, the “Sikhakhane panel’’ made no adverse findings against Messrs Ivan Pillay and Pete Richer.
- This was confirmed publicly by the instructing attorney of the panel, Mr Imraan Mohamed, who stated that the panel had made “no findings against Pillay or Richer”. “No such findings were made against any third party. So no findings were made against the deputy commissioner Mr Ivan Pillay or Mr Richer.” See: http://ewn.co.za/2014/12/11/First-On-EWN-Ivan-Pillay-Pete-Richer-cleared-from-Sars-rogue-unit-scandal ‘
- This panel did not reflect on allegations concerning Mr Yolisa Pikie at all.
- Our client was never afforded sight of the report until after he had left SARS in February 2015 and when SARS published the report in April 2015.
- Notably this report was also leaked to the media in December 2014.
- Our client uses a simple example to demonstrate the factually flawed nature of the report: Contrary to so-called “findings” by the so-called SARS Sikhakane panel, i.e. that our client attended his first meeting with the lady alone, and therefore contra SARS policy, he was in fact assisted during this meeting by a manager that reported to him. The lady in question confirmed this factual error (and a few others) by the so-called “Sikhakane panel” in a later affidavit, which is public record, before the Gauteng High Court in a matter concerning Martin Wingate-Pearse vs Commissioner for SARS and Others in 2015.
- In early 2015, a third so-called “panel” came about, known as the “Kroon advisory board”. Our client wishes to ensure that the public is made aware of material facts regarding this process:
- This board conducted no interviews and no investigations.
- The board did not issue a report of any kind. It issued a media statement only.
- The board merely considered the prior “Sikhakhane panel” report and endorsed it in a very short space of time after coming about.
- The board was the first instance where guilt was suddenly pronounced upon Mr Yolisa Pikie.
- On advice of the board, SARS uncritically published the “Sikhakhane panel” report in April 2015, thereby disregarding confidentiality clauses in tax and Customs laws and the privacy of employees as per labour law.
- Notably the board did not advise that the annexures referred to in the report, nor any of the written submissions and affidavit submitted by our client and its annexures, be published. Our client must ask why this was the case?
- Our client formally requested of the board and SARS to be afforded a hearing by the board. Our client received no reply to his requests.
- After the board had released its “statement”, our client again addressed retired Justice Kroon who chaired the board. The only reply our client received was that Justice Kroon would “revert if necessary”. Our client never heard anything from Justice Kroon again.
- Our client has always maintained, and said so in writing to the board at the time, that had the board heard him, they would not have made the adverse comments that they did.
- During December 2014, SARS also brought into being two other processes, one being led by a firm of attorneys, Mashiane, Moodley & Monama, assisted by advocates Nadine Fourie and Mike van As (seemingly to advise on labour law matters) and parallel or dually (depending on which version can be believed) to this, a “forensic investigation” or “documentary review (again depending on whose version you can believe) by KPMG South Africa under lead of Mr Johan van der Walt CA(SA) and between “25 to 30” employees of KPMG South Africa. The KPMG South Africa brief seemed to have ended in January 2016.
- The KPMG South Africa “findings” and “reports” consistently leaked to the media throughout 2015.
- Our client had kept a list of incidents on his official computer and shared this with several ranking SARS officials at the time, indicating where SARS was attacked in the ways as described earlier, listing events dating back to 2003. Notably neither the “Sikhakhane panel”, nor the “Kroon advisory board” or KPMG South Africa reflected on any of these, despite being under an ethical duty to do so and having been in possession thereof.
- Between 12 October 2014 and 9 November 2015, a particular narrative had by then been entrenched in the public’s mind of a so-called “SARS rogue unit” through over 30 media reports, and on a television show Carte Blanche. This extensive media coverage was, in our client’s view, deliberately orchestrated to advance that narrative. They appeared mostly as headlines, above the fold or in prominent articles and editorials and on posters which stated as if fact (which they were not) that a certain small unit in SARS (known by then as the High-risk investigations unit and which comprised of at most 26 officials in 2007 when it started, but had dwindled to 7 officials by early 2010) had:
- Broken into the home of President Zuma;
- Planted listening devices in President Zuma’s home;
- Broken into taxpayers’ homes and conducted “house infiltrations”;
- Spied on President Zuma and another at the Beverly Hills hotel in Durban;
- Conducted lifestyle audits on prominent politicians;
- Infiltrated politicians and the ANC as bodyguards;
- Bought new homes and cars;
- Spied on “top cops”;
- Spied on late, former national police Commissioner Jackie Selebi;
- Illegally intercepted telecommunications and emails of taxpayers;
- Unlawfully spied on taxpayers;
- Was an illegal and unlawful unit, denied, and so secret that nobody had ever heard of them before;
- Had secret funds of over R 560 million;
- Operated front companies;
- Operated a brothel as a front company;
- Used CCTV to spy on a former and late SARS official at a restaurant in Muldersdrift;
- Purchased a list of very sophisticated spy equipment and used this to spy on taxpayers;
- Tasked Mr Peega to infiltrate a rhino-poaching syndicate and when he was arrested by the police, “disavowed” him;
- Received training and bought equipment from a former Apartheid-agent’s company;
- Used fake names and ID’s in their work;
- Entered into questionable settlements with taxpayers.
- Had a so-called “grabber” and sophisticated interception software called “FinFisher”;
- Wanted to “swing elections”;
- Used a crowdfunding charitable fundraiser as a front of some sorts and received questionable donations from suspect donors;
- Was a “rogue unit”;
- Plotted against President Zuma;
- Was deployed to “destroy careers of SARS officials”;
- Was involved in the deaths of colleagues; and the list goes on.
- None of the above allegations are true. Our client notes that all of these allegations appeared in the media prior to and/or during the period in which KPMG South Africa was “investigating” and compiling their report (12 October 2014 to 9 November 2015).
- Our client believes it significant that KPMG South Africa notably failed to deal with virtually all these allegations in their report, bar one or two (such as confirming that there was no brothel). And even then, they did so in a lacklustre way that resulted in no definitive finding. More importantly, the report expresses no reflection or findings on why persons made these allegations, their credibility, on what basis they did so, for who and to what end? Our client believes this to be material to their understanding of the facts, their assessment of the allegations and their report as a whole.
- Throughout this period, none of those affected by this narrative were ever allowed to meaningfully defend themselves in the media.
- Our client believes it fair to say that following complaint-processes before the Broadcasting Complaints Commission of South Africa and the Press Council, both Carte Blanche (June 2015) and Sunday Times (April 2016) amicably settled with those affected by their reporting and corrected their erroneous reports subsequently.
Question: At what point did things go wrong in your job? Please summarise events, developments.
See above and the statements issued by SARS as published in July 2014 here:
Insofar the official position of SARS as at 31 July 2013 reflected in this media article, our client highlights the following aspects as quoted:
- “There are people who have a vested interest in creating confusion among state institutions. Sars is in no doubt that they are behind these allegations, as they have been in the past,” Lackay said.
- “He indicated that the accusations against their officials began in earnest since a letter was sent to the tobacco industry last November indicating the taxman would be clamping down on non-compliance in the industry, and that they were aware of all the means being used to avoid prosecution.”
- “A second letter was sent in March and was copied to Lieutenant-General Vineshkumar Moonoo and the head of the Hawks, Lieutenant-General Anwa Dramat, giving further examples of the way the law was being broken and the spying and allegations against Sars officials.”
- Lackay said that while conducting these investigations, it has become commonplace “for certain individuals with an interest in perverting the course of justice to compile dossiers, files and information which purport to uncover corruption, but are in fact a concoction of some fact and much fiction”.
- “Such dossiers are then distributed to the media, certain law enforcement agencies and political players in the hope of disrupting or thwarting a Sars action,” he added.
- He said Sars now had significant and credible evidence showing incidents of spying, double agents, dirty tricks, leaking of false allegations and the discrediting of officials.
At this point in time, our client came to realise by July 2014 that something horrible was going to follow out of the “complaint” against him and that the “complaint” was going to be the pretext and prelude for more to come from others who saw this as an opportunity to further their own nefarious agendas. It was around this time that certain persons associated with the intelligence services also began to feature and play a role in the matter, and when the media campaign commenced from 12 October 2014 onwards as set out above, our client’s fears were confirmed.
Question: What was the outcome?
Question: What were your next steps?
Our client placed his trust in the Kanyane panel and the Sikhakhane panel. At least up to that point, at each time of their existence, our client believed the panels would ultimately reveal the truth. Our client believes that they dismally failed to do so. The same applies to the “Kroon advisory board” and KPMG South Africa.
By January 2015, our client had reached the end of his tether. Our client believed the original “complaint” to have been tantamount to a private dispute which should have been treated as such. Instead matters snowballed to where they were at that point in time. The intended disciplinary process by SARS, effectively wanted to use our client’s own submission and protected disclosures to the “Sikhakane panel” against our client. Whereas our client was a whistle-blower of serious acts of criminality which implicated the tobacco industry and senior officials in various state institutions, corruption and money laundering, instead of dealing with what he had disclosed, he and others were victimised to the extent that they suffered significantly. By then our client had been subjected to several unfair processes, been isolated and publicly humiliated. He had lost his father due to terminal illness in this period and his mother whom he was taking care of had also fallen ill. His own health was also suffering. Many of his colleagues and friends had also cut ties with him as a result of the media narrative for fear of reprisal for being associated with him. By this time, yet another “probe” had commenced through KPMG South Africa, and given his bad experiences with these “probes” up to that point he sought counsel from persons whose judgement he trusted. Our client was consistently disappointed with the manner in which the persons involved and these processes (“panels” and “probes”) trampled on his (and others’) rights, withheld facts from the public, misconstrued matters or expressed views of fact when they are not. Our client had no desire to be subjected to yet another “process” by KPMG South Africa. Similarly, he had no appetite to enter into a disciplinary process that was bound to end up like a “bad divorce case” where dirty private laundry was to be aired in public between him and someone he once had a relationship with for a brief time. In the result, our client addressed a private and confidential letter to the newly appointed SARS Commissioner Mr Tom Moyane and on 5 February 2015, our client resigned from SARS.
Question: What did you discover?
Question What is the KPMG report about? What are the key problems with this report?
Please see our client’s media statement of 27 September 2017.
The KPMG report seems to, for reasons unknown to our client, only reflect upon Ivan Pillay, Pete Richer, Yolisa Pikie, our client and the unit described as “subjects of the investigation”. For some further unknown reason, the now withdrawn “findings and recommendations” also sought to drag former Finance Minister, Mr Pravin Gordhan into the fray. One version of the report, again for unknown reasons, also appear to have sought to implicate former Minister of Intelligence, Mr Ronnie Kasrils.
Every time I hear about another company or organisation dumping KPMG I wanna ask, 'has this company been auditing everyone in SA?'
— Justice4All (@Unathi_Kwaza) October 4, 2017
What exactly informed the specific focus on these particular individuals, the scope and terms of reference are unknown to our client and cannot be clearly determined from the report itself.
In essence our client avers of the KPMG report:
- The report contains significant and material factual errors.
- The report omits material and relevant facts.
- The report makes misrepresentations of facts.
- The report makes facile comments and statements.
- The report shoehorns information to suit the narrative of a “rogue unit”.
- The report conceals or omits evidence and facts of serious criminality.
- The report seeks to rely on the Kanyane and Sikhakhane panel reports, but fail to meaningfully reflect on their factual inaccuracies, contradictions, omissions and flaws, instead, seeing to rely on selective aspects thereof.
- The report is unfair and untruthful and lacks integrity.
- The report uses loose language and makes flawed assumptions that are unsubstantiated and unsupported by any evidence (in some cases false and defamatory and/or wrongly attributed), in cases using sweeping phrases such as “it may be”, “could be”, “possibly”, “we understand to be”, “may have”, “there is reason to believe” and so forth.
- The report ignored exculpatory facts and evidence.
- The report ignored publicly available facts and evidence that contradicts content.
- The report ignores basic facts which could have easily been obtained and which are material to the topics it expresses views on.
- The process followed to compile and publish the report is legally questionable.
- Our client here also specifically refers to the obligation which rested on KPMG South Africa to report evidence in terms of Section 34 of the Prevention and Combating of Corrupt Activities Act 12 of 2004 as amended and the failure to do so being a criminal offence. KPMG South Africa not only failed to adhere to this, but in our client’s view, concealed evidence or ignored it deliberately.
- The report ignores the basic tenets of natural justice, the fundamental right of reply before being judged and does not reflect on the views and responses of those they pronounce judgement upon. Our client asks why this is the case, if the report allowed others to approach KPMG and uncritically engage with them? Our client believes that if the process was truly independent and the report was intended to get to the truth of matters, it would certainly have sought the views of those affected, because this would have made the process more robust, fair and proper.
- In this regard, our client finds it rather ironic and hypocritical of the lead KPMG South Africa accountant, Mr Johan van der Walt, who signed off on the report, to reportedly say to the Mail & Guardian on or about 22 September 2017 “I think it would be unfair to say things about me and I don’t get an opportunity to respond”, considering he did not think it unfair when he did so to our client and others.
- Our client has always maintained, and said so in writing, that had KPMG South Africa heard him, they would not have made the adverse comments that they did.
- Our client doesn’t only take issue with the content of the report, but also with what is not contained in the report. Even at a most basic level of simple facts, the report is factually wrong and does not reflect upon material and exculpatory facts and acts of serious criminality, the disruption of state institutions and actions and the manipulation of state officials and their offices. As stated, our client is on record as stating that the initial attack on him and SARS originated from persons associated with the tobacco industry and a Tobacco Task Team and their spies. Our client believes that there are now more than sufficient facts and evidence in the public domain that support his contention.
- Our client is equally astounded as to how the allegations kept on morphing over time and how these were not dealt with by KPMG South Africa. The initial allegations against our client and specifically against a particular SARS unit, (known respectively as the Special Projects Unit, later National Research Group and finally the High-risk Investigations unit) which commenced in the media from 12 October 2014 onwards, were that they had broken into homes, conducted “house infiltrations”, broken into President Zuma’s home, planted listening devices there, were involved in the deaths of former SARS officials, used “secret funds” of over R 560 million, “bought new homes and cars”, conducted lifestyle audits on prominent politicians, infiltrated politicians as bodyguards, spied on “top cops” and late, former National Police Commissioner Jackie Selebi, spied on President Zuma and another at the Beverly Hills hotel in Durban, entered into dodgy settlements with taxpayers, wanted to “swing elections”, owned and used a so-called “grabber”, operated a brothel as a front, used a fundraising initiative for charities as a front, operated front companies, were deployed to “destroy careers of SARS officials”, purchased sophisticated spying software and used this, intercepted taxpayers’ telecommunications and emails and so forth. Our client has always denied these allegations emphatically, but finds it no coincidence that the report failed to reflect on most of these allegations in any meaningful way. Instead, only a few of these allegations are briefly mentioned but not properly dealt with. Loose language again is used to refer to some aspects only, but none are dealt with in the manner one would expect of a firm such as KPMG South Africa. The report introduces concepts foreign to our client, such as a “virtual unit” and “unit by association”. These are, in our client’s view, figments of a creative imagination.
Our client believes it would have been reasonable to expect of KPMG South Africa, in such a process which cost the taxpayer R23 million, with such serious consequences, to act independently, fairly and with integrity, and to list all of the allegations, and then reflect upon each and every one, either confirming them or disproving them or expressing some sort of definitive view on them. Those not confirmed should then have caused KPMG South Africa to reflect upon what exactly led to these being bandied about with wanton care in the media. Our client must ask the obvious questions: if none of these allegations are true, who were the people behind these allegations, why did they leak it to the media, for who and to what end? The KPMG report is silent on all of this and our client has to ask why this is the case?
Our client is able to refute the KPMG report in its entirety on a line-by-line basis, but does not consider the media to be the appropriate forum to do so. Our client refers you to his statement issued on 27 September 2017 and the answers therein for now.
Our client believes he has sufficiently demonstrated to KPMG (to the extent he was legally capable of doing so) why the report should be withdrawn in full. To date, neither KPMG South Africa nor KPMG International has responded to our client in any meaningful manner.
Question: What were the key allegations against you – and why were they false?
The allegations against our client continuously morphed and adapted over time. Our client has found it difficult to keep track of the allegations as they changed, adapted and were added to over time, eventually culminating in the ‘rogue unit’ narrative, and he hasn’t been given complete access to all of these. In addition to the above listed allegations regarding the unit, the primary allegations made on various occasions against our client also included:
- The initial “complaint” on 28 May 2014 was actually a response to an email our client had sent warning someone he had dated earlier of media interest in their relationship and how he intended to reply. In turn in her reply, she copied in various SARS managers at the same time. Her response at this time centred around three main allegations against our client, being a) that he had supposedly shared taxpayer information concerning two prominent politicians with her, namely President Zuma and EFF leader Julius Malema, and that of British American Tobacco with her unlawfully, that b) he had unlawfully shared operational information of SARS with her and c) that he was generally unfit for office.
- The “complaint” was later added to in June 2014 to include allegations that our client:
- Was corrupt;
- Unlawfully and illegally infiltrated the lady as a spy and that the relationship was a ruse for this;
- Unlawfully and illegally obtained records of her communications from service providers for a period of 3 years prior;
- Unlawfully and illegally intercepted her communications for a period of 3 years;
- Was a “free-loader” in December 2013 whilst on holiday and didn’t pay his way;
- Conspired with tobacco manufacturer Amalgamated Tobacco Manufacturers to bring criminal complaints against a member of the Tobacco Task Team, Lt Colonel Hennie Niemman;
- Was likened to a paedophile, mentally ill, an alcoholic and unfit for his position at SARS;
- Conspired in an assault of the lady at a time before he even knew her;
- Used a fundraiser club to receive corrupt payments, and that it was a “SARS charity” and such donations were irregular;
- That this fundraiser received donations for own use and disposal;
- Had secret shares in a wine farm;
- Bragged to people that she was a source for SARS and endangered her life as a result (the complainant alleged that she had a iPod recording of both visual and audio to this effect that was anonymously delivered to her offices);
- That our client used a crowdfunding charitable fundraising effort to receive donations from “SARS service providers”, significantly an audit firm and law firm for its own use and disposal or via itself;
- Note: Several innocent people and companies were dragged into these allegations and we are withholding their names purposefully.
- During this time, “anonymous dossiers” also alleged:
- Our client was a member of the Apartheid hit-squad known as Vlakplaas;
- Our client was somehow connected to the Apartheid-regime’s chemical warfare programme;
- Our client was a “hatchet man” for Ivan Pillay who did his “dirty” for him;
- Our client was an Apartheid-spy and former Security Branch official;
- Our client conspired to ruin the careers of former SARS officials who had left SARS in years prior;
- Our client did not possess a law degree and that this should be “looked into”;
- By July 2014 the allegations also included that our client:
- Conspired with the lady’s former State Security Agency handler to meet with her on 20 July 2014 to threaten her and her family;
- Conspired with her former State Security Agency handler to illegally intercept her phone calls at this time;
- Coerced her into bringing legal action against British American Tobacco for GBP 5 million in the United Kingdom to cause discord between them and their South African part;
- Admitted to her that he had lied during the trial of Jackie Selebi;
- By August 2014, the allegations included:
- That the reason for our client leaving the police in 1998 when he joined SARS was somehow untoward;
- That our client’s promotions and advancement of his career at SARS since 1998 were untoward;
- That our client advanced criminal activities and criminal’s agendas, caused criminals to contact the lady and threaten her;
- Conspired with Ivan Pillay and tobacco manufacturer Carnilinx to bring an interdict application against her and British American Tobacco SA in exchange for tax leniency;
- Our client possessed illegal fire-arms;
- That our client had provided illegally intercepted communications of her to a newspaper;
- That our client provided some sort of “secret affidavit” of her to a newspaper;
- That our client provided taxpayer information of her to a newspaper;
- By February 2015 onwards the allegations morphed again to include:
- That our client shared confidential SARS information unlawfully with the media and specifically to certain journalists;
- That our client was dissipating his assets;
- That our client was “in hiding” in the Western Cape at a wine farm;
- That our client committed qualification fraud;
- That our client used a crowdfunding charitable fundraising effort to receive donations from “lawyers, spin doctors and people who had received untoward tax settlements from SARS”;
- That our client and the unit in question owned and used a so-called “grabber”;
- That our client and SARS wanted to “swing elections”;
- That former Finance Minister Pravin Gordhan “knew that the unit was illegal” and that she had “seen documents” to this effect;
- That the unit in question was small and “hidden” and few knew of its existence;
- That our client and the unit in question or SARS had “tasked” Mr Peega to infiltrate a rhino-poaching syndicate and that when he was arrested by the police, “disavowed” him and “knew this was illegal”.
- More allegations surfaced during 2016 and 2017, but these occurred after the various “panels” and the KPMG South Africa process and they are therefore not listed here.
- The list of allegations against the former SARS unit which our client managed between 2008 and 2014 are listed earlier in the answers.
As stated, KPMG South Africa in their report reflected on very few of these allegations against our client and the list of allegations against the SARS unit. The list of allegations made by KPMG South Africa to which our client objects is very long and difficult to fully set out herein completely. Our client also has no desire to do so via the media for now. Ultimately the KPMG South Africa process and its report expressed views adverse of our client including but not limited to:
- “Emails of unknown origin” found on his official computer and implies guilt on the part of our client (our client denies the adverse suggestions in the report emphatically);
- Seeks to rely on selective aspects concerning the “Kanyane panel report” and implies guilt on the part of our client (our client denies the adverse suggestions in the report emphatically);
- Seeks to rely on selective aspects concerning the “Sikhakhane panel report” and implies guilt on the part of our client (our client denies the adverse suggestions in the report emphatically);
- Our client supposedly “denying that the unit was ‘covert’ and aspects concerning the recruitment of officials and implies guilt on the part of our client (our client denies the adverse suggestions in the report emphatically);
- Implies guilt on the part of our client about supposedly “disbanding” the unit and the fact that it according to them it did not have two offices at a certain time (our client denies the adverse suggestions in the report emphatically);
- Implies the unit was “covert” and implies guilt on the part of our client (our client denies the adverse suggestions in the report emphatically);
- Expresses views on our client’s private life and relationships and implies guilt on the part of our client (our client denies the adverse suggestions in the report emphatically);
- Expresses views on legally privileged communications between our client and his lawyers at the time and implies guilt on the part of our client (our client denies any adverse suggestions in the report emphatically);
- Expresses views on information shared by our client and implies guilt on the part of our client (our client denies the adverse suggestions in the report emphatically);
- Expresses views on a crowdfunding fundraising initiative that our client was but one person of many and implies guilt on the part of our client and others (our client denies the adverse suggestions in the report emphatically);
- Expresses views on our client’s testimony during the S v Selebi trial and implies guilt on the part of our client (our client denies the adverse suggestions in the report emphatically);
- Expresses views about our client going on special leave following the initial allegations against him on 28 May 2014 and implies guilt on the part of our client and others (our client denies the adverse suggestions in the report emphatically);
- Expresses views on our client’s interactions with the media and implies guilt on the part of our client and others (our client denies the adverse suggestions in the report emphatically);
- Expresses views on our client supposedly “interfering” in the tax affairs of a particular person, and others, and implies guilt on the part of our client and others (our client denies the adverse suggestions in the report emphatically);
- Expresses views on our client financial affairs and implies guilt on the part of our client and others (our client denies the adverse suggestions in the report emphatically);
- Expresses views on the unit they preferred to refer as a “rogue intelligence unit” and implies guilt on the part of our client and others (our client denies the adverse suggestions in the report emphatically);
- Expresses views on our client supposedly having had interaction with a certain private security company and owner and implies guilt on the part of our client (our client denies the adverse suggestions in the report emphatically);
- Note: In some cases, in the above categories, the report makes statements of fact which implies guilt on the part of our client (our client denies these emphatically).
Our client has always denied these allegations emphatically. Our client finds the question “why are they false?” rather odd. They are false because they are not true. One would have imagined that the question would rather be: “why are they true?” and then expect of those making these allegations, such as KPMG South Africa, to prove them.
Our client also questions why KPMG South Africa would place the strange disclaimer that reads: “it was not prepared for the resolution or disposition of any disputes or controversies thereto and is not to be disclosed, quoted or referenced, in whole or in part”, if indeed this process was independent, transparent, fair, truthful, precise, factual and intended to surface the truth?
Our client also believes it notable that none of the “panels” and processes, ever appear to have meaningfully reflected on the bulk of the allegations as they stood at the time of their operation nor did they express any definitive view on these. Neither did KPMG South Africa, considering they sought to rely on and take into account aspects of these “panels”. In the result, these allegations still hang in mid-air and remain unresolved. Our client believes it very significant how these allegations ultimately led us down to the road of the “rogue unit” narrative and that even when one reflects on those primary allegations that had featured in the media as listed above, very few were actually dealt with by any of the “panels” or processes in any substantive manner.
None of the “panels” or “processes” (nor KPMG South Africa) lists the complete set of allegations against our client, others affected and the unit in question, and none set out systematically and thoroughly, to express definitive views on these as one would have expected of such processes albeit a “forensic investigation” or “documentary review”. Our client believes that had these panels, and in particular KPMG South Africa, truly acted independently, and intended to determine facts and the truth, it would only have been reasonable to expect of them to act fairly, truthfully and with integrity and to have done at the very least three things:
- To have listed each and every allegation made and reported on in the media over the periods they existed and to then have reflected on these by way of either confirming them on a factual basis with supporting evidence, finding them to be false or to give some sort of definitive view of some kind;
- In those instances where the allegations were to have been found to be false, to have expressed a view on those persons who made these allegations, their motives, their intent and their credibility;
- To have afforded those affected by the processes and who stood accused of these allegations, a fair hearing on all these allegations, and a right of reply and to consider such reply meaningfully. Doing so isn’t just a fundamental tenet of natural justice, but would have enhanced the process of determining the truth.
Our client suggests the public to ask the basic questions here: what exactly it is that these processes sought to keep away from the public and why?
Why did people lose their jobs?
For now, our client does not wish to speculate on this issue in the media. Our client believes the public quite wise to form their own views in this regard. One only has to reflect on how the entire saga started, how things morphed from a simple complaint into a “rogue unit” story, who were involved, the controversies around these and the false allegations in this respect and the consequences arising from this. It is plain for anybody who cares to see.
What I miss from the #KPMG submission is a sincere apology to those at SARS whose reputations & careers their report had destroyed
— Max du Preez (@MaxduPreez) October 5, 2017
Why is the role of KPMG in this report problematic?
It is also our client’s considered view that the report was crafted to fit a set narrative and its authors did just that. KPMG South Africa lent their brand and name thereto, in order to give it a veneer of credibility and accepted the fee of R 23 million paid for by the taxpayer.
Our client uses a simple example in the report by way of illustration of the misleading nature of the report. It says: “There were allegations of the existence of a foreign bank account for the entity [a fundraising initiative for charitable causes of which our client was but one person associated thereto] in Lichtenstein. No evidence confirming this could be found by us.” Our client believes this should have then settled the matter. If there is no evidence of something, then there is no evidence of something. Our client denies this allegation in any event. However, apart from this allegation being unattributed and the report not explaining why it attached any credence to it, whilst ignoring others, our client finds the next sentence to be astonishing in its lack of logic and that it actually appears in a report that KPMG South Africa still seems to want to stand by. It reads: “It may be possible that it has a foreign bank account.” There is no substantiation, no evidence and no reasons provided as to why KPMG South Africa believes, “it may be possible”.
KPMG income from government in the last 3yrs alone:
2015 = R579m; 2016 = R485m; 2017 = 456m
# of active contracts in 2017 = 222
— Solly MOENG – APR (@Solitoliquido) October 5, 2017
Our client asks whether KPMG South Africa really expects the public to accept this sort of “finding” in a R 23 million “forensic report” by professional registered auditors and chartered accountants paid for by public funds? With this logic, our client considers such a finding to be tantamount to saying that despite any evidence of any kind to support this, only because some unknown people allege that “little green people live on the moon”, this may be so.
There are too many “may have’s”, “could be’s”, “we have reasons to believe” and similar loose language throughout the report, with absolutely no substance or supporting facts underpinning these. Our client asks, if this is the case, what level of surety and belief can one possibly put to the report at all?
Question: Who is behind the KPMG report?
For now, our client does not wish to speculate on these matters in the media. Our client believes the public sufficiently capable to form their own views in this regard.
Question: Were you interviewed for the KPMG report?
The short answer is no. Our client was not interviewed for purposes of the compilation of the report and KPMG have admitted to this publicly.
It must however be noted, and contrary to the suggestion by KPMG South Africa that they did not engage with those affected by the report, KPMG South Africa, via Mr Johan van der Walt CA(SA), did interact with our client physically on two occasions during 2015 after our client had already left SARS.
- On one occasion, late on a Friday afternoon, months after having left SARS, our client was instructed to go to SARS and open his old safe. KPMG South Africa attended to this process and took inventory of documents from the safe. The process lasted until after midnight. On that day, our client requested of Mr Van der Walt to note and record the fact that certain documents had been removed by our client on a prior date at the request of SARS senior management. The KPMG report makes no mention of this.
- Furthermore, our client agreed with Mr Van der Walt to keep certain documents separate, as our client did not want to give KPMG access thereto and left it to be decided upon by SARS Commissioner Moyane. These were sealed separately for this purpose. Our client requested of Mr Van der Walt to note and record the fact. The KPMG report makes no mention of this.
- At a later date, at the behest and convenience of KPMG South Africa and Mr Van der Walt, our client attended almost an entire day at the KPMG offices in Parktown to go through multi-media.
- No pertinent questions or aspects which would later be reflected in the report were put to our client at any of these occasions.
- Our client further offered to provide KPMG South Africa with any facts or information they may need, an offer they never took up. Furthermore, there were a few text exchanges and telephone calls between Mr Van der Walt and our client, which demonstrated our client’s availability and willingness to cooperate with the process. KPMG South Africa did not make use of this opportunity at all.
- To further demonstrate our client’s assertion of the problematic nature of the report [a comment concerning a crowdfunding fundraising initiative that our client was but one person of many], the KPMG report acknowledges that “Van Loggerenberg [our client], during his interactions with us offered that we could request information if need be, we did not consider it applicable for purposes of this investigation”, but yet the KPMG report then goes on to dedicate an entire chapter of eight (8) pages to the topic, making several statements as if fact, which they demonstrably are not. (emphasis added) Our client finds this shocking behaviour that should be condemned by all who care for the rule of law.
Our client has also noted that KPMG South Africa gave audience to several persons, some external or former SARS officials, whilst at the same time not using the ample opportunity to engage with our client or any of the others the report pronounces judgement upon. Our client finds this very strange, considering the process was intended to be independent, fair and truthful.
By way of example: KPMG South Africa appears to have uncritically given audience to a Mr Gary Porrit, who, according to the report, “during a meeting he requested”, handed select documents to them. (emphasis added) KPMG South Africa then expresses views in this regard in their report which are false. Notably, Mr Porrit has been facing serious charges for one of the largest share fraud schemes in South Africa’s history, since 2001, and remained a subject of a SARS investigation and National Prosecutions Authority prosecution during this time. The prosecution commenced in 2016 and the matter has been before various courts for the last 16 years, resulting in at least 47 judgements. It is now no longer a mystery to our client, why Mr Porrit then sought to introduce and rely on the very same KPMG report in 2016, to ask the Gauteng High Court (Johannesburg) to discontinue the prosecution against him. Fortunately, our client believes, this attempt failed. Our client must ask of KPMG South Africa, why, if they afforded Mr Porrit a meeting and hearing and opportunity to hand them documents, and then reflect upon these in their report, they did not think it necessary or proper to afford those they pronounced judgement upon the same opportunity? Our client believes this example alone, speaks volumes of the lack of integrity of the entire process conducted by KPMG South Africa.
What other things happened behind the scenes that make it evident that there was a campaign to taint former finance minister Pravin Gordhan and push him out of politics and even into jail if necessary?
See above. Our client believes in particular the later so-called “intelligence dossiers” named “Spider Web” (sic) and “Check Mate” (sic) were extensions of these disinformation campaigns and both were interlinked with the others. Amazingly, to this day, our law enforcement agencies appear to have been unable to identify those who authored these bogus reports. Questions pertaining to the KPMG report also featured in the infamous “27 questions” to Mr Gordhan by the Hawks. Our client invites the public to connect the dots themselves.
Who was KPMG trying to protect or assist? Why? What’s the real story?
See above. Our client would also like to know the real story.
Why is the tobacco industry of relevance? Who is benefiting? What is at stake?
Our client’s view is that the tobacco industry attracts significant profits from a variety of unlawful and illegal practices. It is estimated that the South African fiscus and SARS loses between R 3 billion to R 5 billion per annum as a result of these practices. At the same time, and conversely, the ability of the state to detect and deal with maladies troubling this sector are limited and the punitive consequences if caught are mild. Our client has found the industry to be manifest of a mixture of the business of tobacco trading and manufacturing, organised crime, sophisticated tax avoidance schemes, various roles played by certain state officials (including their informants) in this trade to advance certain agendas, and politics. Money, influence, avoiding detection, the ability to direct law enforcement actions (towards enemies or away from themselves) and power are at stake.
SARS, under its well-known project “Honey badger”, had made significant inroads to deal with this sector across the board well into 2014. After that, from all that our client has been able to see and come to learn of, the impetus created out of this project has come to a virtual standstill. Our client’s own recent research into the tobacco industry has found that smuggling and tax avoidance in this sector to be back to very high levels, similar to those last seen in the late 1990’s and early 2000’s.
In this respect, did you investigate the cigarette business operated by Mr Yusuf Kajee and Mr Edward Zuma and if so, were there any consequences from this investigation?
Confidentiality provisions in law prohibit our client from elaborating on detailed aspects of taxpayer affairs. Our client does not wish to speculate on this matter via the media in any event as he lacks substantial facts to do so.
Describe what life has been like for you since the vendetta against you started? How have you been harassed, intimidated, threatened?
Our client still finds it difficult to deal with the trauma these events have brought upon him and those close to him and for now doesn’t really want to elaborate on this in the public domain. Our client will simply give a few examples as follows:
- Many innocent people were harmed and traumatised as a result of these events, including families, friends and children;
- Many of the unit members (including our client) have been and continue to be threatened with criminal charges, legal suits, and other actions which have cost them significantly in financial terms to date;
- People have lost careers, their homes, and events have led to broken families and distrust and disharmony among good people who once worked shoulder to shoulder to make the country a better place for all;
- Our client’s and most unit members’ homes had been broken into with only laptops, hard-drives, notebooks and memory sticks stolen, many have been followed aggressively on occasion (all these instances have been reported to the authorities when they occurred), their private affairs and lives have been flayed open in a brutal and public manner, their rights have been trampled upon, they have been publicly humiliated via the media in a sick way to mention a few.
- In one case, a mother of a small boy who doesn’t even really know our client, but was mainly associated with the fundraiser our client was involved in, was brutally attacked and then asked questions about our client that she wasn’t even able to answer. She suffered from internal bleeding and was hospitalised as a result. Out of fear, she did not want to report this to the police.
- In another case, the wife of one of the unit members was being followed by car. The registration number was provided to the police and found to belong to a police vehicle. The police declined to take her complaint down.
- Our client and others have been publicly made out as “rogues”, criminals and unsavoury characters.
Our client believes that nothing will truly ever remedy the effects that these events have had on the individuals concerned.
Have you engaged with the SARS Commissioner Tom Moyane either before or since the KPMG report was released?
Our client engaged with Commissioner Moyane on four occasions only in person. All instances transpired between January 2015 and 5 February 2015 and pertained to his resignation from SARS. Our client found these interactions to be civil.
Our client has also corresponded with Commissioner Moyane as follows:
- 2014 – a request for access to the Sikhakhane panel report – this was denied;
- 2014 – a denial of media reports in the Sunday Times as they stood at that time – our client believes Commissioner Moyane accepted this document;
- 2014 – a request to respond to media questions after the Sikhakhane report was leaked – this was denied;
- 2015 – a letter of resignation – this was accepted;
- 2015 – a private request concerning media reports – Commissioner Moyane dealt with the matter;
- 2015 – a request to be heard by the Kroon advisory board – no reply received;
- 2015 – correspondence dealing with legal actions brought by people under investigation of SARS which had come up and concerned SARS and the unit – no reply received;
- 2015 – a post facto reply to the Sikhakhane report – no reply received.
No, our client has not engaged with Commissioner Moyane regarding the KPMG report. Our client believes this will serve no purpose and he has no desire to do so in any event. Our client takes issue directly with KPMG as the paid manufacturers, authors and publishers of the report which they lent their name, reputation and brand to, and as a result, lied to SARS.
How many other people have been affected? Can you give some examples/anecdotes of how this matter – in particular the KPMG work – has affected the lives of your former colleagues (good and bad)? How are they surviving?
See above. Our client doesn’t wish to elaborate in detail on this aspect publicly at this point in time. People have been and remain traumatised. Lives, friendships and families were ruined and harmed and an important state institution was damaged. The KPMG report was used by some media as “vindication” for their salacious and false stories they had published in 2015. Our client and others have been struggling to start over with their lives with respect to their work, careers and employment opportunities. Our client has on occasion had to hear from prospective clients and employers how the KPMG report was a hinderance in consideration of employment or using his services.
Our client notes that the fall-out of these events are not limited to SARS. A reported 55 officials left SARS in the wake of the saga. Several journalists are no longer employed where they were. The same goes for employees at KPMG South Africa. Our client believes even those who had been advancing these fake stories have also to some extent or another suffered and the country, state and private institutions and individuals affected by these events are all poorer for it in many ways.
And while #KPMG is being fitted for a coffin, the sounds you hear from PWC, Deloitte, Ernst etc are paper shredders & formatting hard drives
— Jack Devnarain (@JackD157) October 3, 2017
On the positive side, our client has found great comfort and hope from within civil society bodies and human rights movements and ordinary people who have reached out to offer their support to him and others affected, and how these events have galvanised ethical businesses and people to take a brave stand. During the course of these events, our client has come to meet amazing brave South Africans who are prepared to do the right thing, regardless of circumstances. Some of these people are well known, whereas others are less so. In this regard our client wishes to thank all people, businesses, civil society bodies and human rights organisations who have organised and rallied around these issues and who have continuously supported our client and others.
In this same vein, our client also wishes to thank the media for their continued investigations into the matters and revealing aspects of the truth without fear or favour. It is our clients’ belief that the media should not give up on this and continue doing so for the sake of a better future for all in our country.
Has KPMG engaged with you and/or others whose lives have been affected by its now withdrawn report?
KPMG South Africa and KPMG International have engaged and met with Messrs Pravin Gordhan, Mcebisi Jonas, Ivan Pillay, Adrian Lackay, Yolisa Pikie and Pete Richer.
Our client has been trying to reason with KPMG South Africa and their lawyers Norton, Rose, Fulbright as far back as 15 October 2015 when their “findings” leaked to the media and he has asked to comment thereon, and with KPMG International since 14 August 2017 when he learnt they were going to conduct a review of the KPMG report, with no success. Our client did so personally and ultimately through our offices.
To date, apart from acknowledging receipt of some of the correspondence, our client has received no substantive response or meaningful engagement from KPMG and they have not sought to engage with our client.
Our client has noted media reports suggesting that KPMG has indicated that our client “declined to meet” with KPMG. This is inaccurate and misleading. Our client has never “declined to meet” with KPMG and in fact our client would welcome the opportunity. Our client, through our offices and KPMG’s lawyers, have been in contact for some time now and we received no invitation from KPMG South Africa or KPMG International. When our client came to hear of a supposed meeting informally, we immediately addressed KPMG South Africa and KPMG International through their lawyers, Norton, Rose, Fulbright seeking clarity and specifics on the meeting. The letter remains unanswered to date.
What does KPMG need to do to fix its wrongs? Can it do enough to fix these wrongs? Who are the individuals who work/worked for KPMG that you believe need to be held accountable – and why?
Our client believes the answer to be simple and can be found in law. It is our client’s considered view that the report contains many instances of at worst fraud, or at best negligent and careless factual errors of a material nature, and was not compiled or published in the interests of justice or the country.
The new KPMG CEO is becoming the face of a scandal she was far away from when it was happening. Dicey this entire thing.
— Anele Mdoda (@Anele) October 6, 2017
Our client insists that KPMG South Africa and its employees who are chartered accountants, registered auditors or registered candidate auditors, are legally, morally and ethically bound to dissociate themselves from the entire so-called KPMG report which he has sufficiently demonstrated to them (to the extent he was able to do so lawfully) to contain materially false and misleading statements, statements and information furnished recklessly, and which omitted and obscured information required to be included where such omission and obscurity would be misleading. On KPMG’s own version, as per their press statement dated 15 September 2017, they concede and admit that “the language used in sections of the report is unclear”. Our client questions why KPMG is not specific insofar which “sections” are so “unclear” and why this is the case?
Our client has been at pains since as far back as October 2015, to point out that KPMG South Africa is legally bound by Section 42 of the Auditing Profession Act 26 of 2005 which imposes on them the duty to comply with rules published by the Regulatory Body. Section 110 of the published Rules Regarding Improper Conduct and Code of Professional Conduct for Registered Auditors (Revised 2014) published March 2014 obliges them to take steps to disassociate themselves from the report once they become aware of deficiencies contained therein. The rules describe these deficiencies clearly. Our client has been making them aware thereof since 15 October 2015. This applies to KPMG South Africa as corporate entity and registered auditor, as well as the individual registered auditors and candidate auditors. Incidentally, the South African Institute of Chartered Accountants has an almost identical rule which applies to all individual registered chartered accountants involved in the process.
Our client has emphasised the fact that the partial withdrawal by KPMG South Africa did not come about by accident. It was the result of public outcry and active citizenry by brave South Africans. This resulted in KPMG International coming to South Africa, them reviewing the report and in a short period of time (about two weeks), finding the report wanting, so much so that the essence thereof, namely the “conclusions, findings and recommendations” were withdrawn. This occurred when at all times, KPMG South Africa has held the stance with our client, that there was nothing wrong with the report. This being the case, our client then asks what exactly is KPMG “apologising” for? Why is KPMG South Africa not taking the public into its confidence and saying in exact terms, what they are apologising for? In the same vein, why does KPMG South Africa not state to South Africans precisely what “harm caused” they are referring to when they say they are “sorry” and “sorry can never be enough”? Our client wants to know exactly what KPMG South Africa is so sorry for, and specifically what harm caused by them, they are accepting responsibility for? Our client believes that the nation, other KPMG employees and clients of theirs, deserve better than these broad and unspecific phrases.
Our client has noted that KPMG now wants to conduct yet another “review” of some kind, ostensibly to be chaired by (an) independent legal person(s). Our client agrees with the statutory Independent Regulatory Board for Auditors’ statement on 4 October 2017 that “…any investigation by KPMG into itself can never be independent, regardless if it is done externally”. Our client is further of the view that this is just a further delay which perpetuates the continued harm the report has caused to individuals and state institutions. Our client has had many bad experiences with similar supposedly “independent legal reviews” and as a result, has little faith in these. Our client believes this second “review” to be KPMG’s own internal issue and none of his concern. Our client is of the view that he has (to the extent that he was legally able to) put sufficient examples of facts and evidence before KPMG to demonstrate the profoundly flawed nature of the report. Notably KPMG hasn’t yet replied to what our client has put to them.
Our client believes that all “25 to 30” KPMG South Africa employees, and their managers should take accountability for the report and its consequences. Those who are registered chartered accountants and/or registered auditors and/or candidate registered auditors, should follow the law and their professional codes and rules and disassociate themselves collectively and individually from the report at the very least. It has now also come to light that some of the KPMG South Africa employees who resigned in the wake of the scandal have been paid “severance packages” and our client finds this shocking to say the least.
Furthermore, our client specifically refers to the obligation which rested on KPMG South Africa to report evidence in terms of Section 34 of the Prevention and Combating of Corrupt Activities Act 12 of 2004 as amended and the failure to do so being a criminal offence. Our client believes that those KPMG South Africa employees who have violated this statutory obligation need to be reported to the authorities immediately.
— Annika Larsen (@AnnikaLarsen1) October 3, 2017
Our client accepts that there is new management at KPMG South Africa and further accepts that the process that led to the compilation and publication of the report should not reflect on all KPMG employees. Therefore, our client hopes that the new management at KPMG South Africa will do the right thing and consider the interests of justice and that of the country, sooner, rather than later. This will require, at the very least, for KPMG South Africa to disassociate from the report as the law requires of them, to take the public into their confidence and explain what went wrong and apologise to the country and the innocent individuals that were harmed, personally.
Our client believes that KPMG should do so sooner rather than later, so that the country and all those affected, including KPMG, can move on to focus on the issues that should matter to our nation; such as building our nation, growing our economy, undoing the deeply structural and socio-economic consequences of Apartheid, dealing decisively with racism, patriarchy and LGBT-prejudice, dealing with service delivery to underdeveloped areas and communities, stemming the tide of corruption and state capture, improving education and health services, building a strong tax system and focusing on job creation. Our client believes it is time for all involved to resolve this matter speedily and move on. The continued delay on the part of KPMG is unhelpful
Behind this saga, who are the key beneficiaries – and why?
See above. Our client does not wish to speculate on this matter via the media for now as he lacks substantial facts to do so.
What type of evidence is there that there has been a concerted campaign to take control of the SARS?
See above. For now, our client does not wish to speculate on these matters via the media and believes the public quite capable of connecting the dots.
To what extent is SARS captured? How does this impact on taxpayers?
Our client prefers not to respond to the term “captured” for now. Our client believes that by far, the majority of SARS officials are good people who are trying to do their job to the best of their ability and do the right thing at all times. It is them who should be supported and our client believes that by suggesting the entire service is “captured”, it does great injustice to them all.
Time will have to tell as to the impact these events have had on taxpayers and the tax compliance culture. Our client doesn’t wish to speculate on this topic via the media. Our client believes that perhaps, as part of rectifying the harms caused, KPMG South Africa should consider doing a proper study on this question and inform the public accordingly.
How does evidence link to KPMG?
See above with respect to our client’s views on the shortcomings of their report, their partial withdrawal and the “rogue unit” narrative, our client’s press statement of 27 September 2017 and the part where our client lists the three things that KPMG South Africa should have done but did not do. Beyond this, for now, our client does not wish to speculate on these matters via the media.
How does the Zuma family feature in all this?
Our client does not wish to speculate on this matter in the media as he lacks substantial facts to do so.
How does the Gupta family feature in all this?
Our client does not wish to speculate on this matter in the media. Confidentiality provisions in law prohibit our client from elaborating on detailed aspects of taxpayer affairs in any event.
— Simon Grindrod (@SimonPGrindrod) October 5, 2017
Our client draws your attention to the following which is in the public domain:
http://www.news24.com/SouthAfrica/News/guptaleaks-guptas-tipped-off-about-sars-investigation-unit-20170607 and https://www.dailymaverick.co.za/article/2017-08-28-scorpio-how-sars-gupta-investigations-bit-the-dust/
Did you make any mistakes? Are you ‘guilty’ of any wrongs at SARS? If so, what?
Our client prefers to approach the matter pragmatically and believes the perfect science of hindsight to be a luxury he cannot afford to pontificate on. Our client in any event has no desire to reflect on a brief, past relationship that ended so acrimoniously. It is our client’s view that it may well be easy for someone else to form an arm-chair view of what he “should have” done or not and “could have” done or not.
Our client is of the view that when it comes to private relationships, things are unfortunately more complex to navigate than what meets the eye, and he believes it too easy to cast judgement in a one-dimensional manner, especially when on the back of a relationship that ended on bad footing. Our client believes that context matters.
Our client asks why none of the “panels” or KPMG South Africa have ever bothered to reflect on the simplest question of them all: Why, between 25 October 2013 to 26 May 2014, did the lady not “complain” about our client and what exactly happened on the day of 27 May 2014 that led to the so-called “complaint”? Our client asks this, considering all of these “panels” and KPMG South Africa did have access to and supposedly studied the text exchanges of this day.
Beyond the above, our client has no desire to go into any detail concerning this relationship in the public domain in any event and has long put it behind him.
If anything, our client believes that he placed too much trust in a person whom he allowed into his private and family life and friendship circle, and this is something he regrets. Our client also regrets not having properly corrected some preconceived ideas in her mind at the time. Having said that, our client believes that he had no way of knowing upfront what exactly he was dealing with and what would ultimately follow.
With hindsight, what would you have done differently – and why?
See above. Our client believes it to be of no value to reflect on the “could have’s” and “should have’s” via the media as it would serve no purpose.
Any other comments you’d like to make that you believe relevant to this matter would be greatly appreciated.
No further comments.
- We trust that you find the above order.
Per: Brett Murison
Boqwana Burns Inc.
Sent by email therefore unsigned.