JOHANNESBURG — SARS Commissioner Tom Moyane is keeping his press team busy these days. On Monday, Moyane “broke his silence” about SARS’ controversial number two in command, Jonas Makwakwa, in a lengthy and defensive statement. Questions are swirling about why and how Makwakwa is still in the employ of SARS despite being flagged by the Financial Intelligence Centre (FIC) for a series of suspicious transactions totalling R1.2m. Investigators further flagged three cash deposits, totalling R450,200 to Makwakwa’s girlfriend Kelly Ann Elskie, who also works at SARS. Amazingly, Makwakwa and Elskie are now back at SARS following a probe and disciplinary hearing, which have been criticised for being flawed. This is just the latest scandal that Moyane has tried to defend. In September, Moyane went on a weird rant in which he lashed out at auditing firm KPMG for disavowing its SARS rogue unit report. Despite clear problems with the report, Moyane denied that the report was flawed. Amid Moyane’s latest rant regarding Makwakwa, I’ve decided to deconstruct his statement. Moyane’s text is in plain font while my notes are square brackets, bolded and in italics. – Gareth van Zyl
Press statement from SARS:
Moyane breaks silence on Makwakwa
[First thing’s first. Why does the title of Tom Moyane’s press statement read like a sensationalist news headline? Also, does SARS think it’s doing us taxpayers a favour by telling us that he is ‘breaking’ his silence on an issue which, quite frankly, he should have broken his silence on a very long time ago already?]
SARS notes with deep concern media reports spreading the allegation that there has been impropriety on the part of Commissioner Tom Moyane in dealing with the disciplinary investigation into Chief Officer: Business & Individual Taxes, Mr Jonas Makwakwa.
[I don’t know if the media has directly alleged impropriety on the part of Moyane regarding Makwakwa. But the media has questioned Moyane’s judgment in this matter as well as the disciplinary proceedings that followed. Here are the facts. The FIC flagged Makwakwa for a series of suspicious transactions totalling R1.2m. In one instance, Makwakwa was even caught on CCTV camera. I would like to hear if Moyane thinks there’s nothing wrong with this and why? SARS has to display a clean image.]
SARS finds it necessary to address the unsubstantiated tone and the blatant misrepresentation of facts. In fact, this is a predictable and monotonous media narrative that is aimed at casting aspersions on the integrity of the organization.
[With the constant drama surrounding SARS these days from the rogue unit report to Makwakwa and the under-collection of revenue by R51bn; I think that SARS is doing a good enough job on its own of casting aspersions on itself.]
It will be appreciated for reportage and analysis to be balanced, fair and accurate. While SARS supports media freedom, we cannot allow such low standards of journalism to go unchallenged and wish to set the record straight.
Firstly, it is not true that Hogan Lovells did not investigate the Financial Intelligence Centre (FIC) suspicious transactions. Neither is it true that Hogan Lovells issued a media statement to that effect.
[Why did Hogan Lovells then issue a statement in which it said that it didn’t investigate the FIC’s flagging of suspicious transactions? Here is what Hogan Lovells said (you can read their full statement by clicking here): “The scope of the investigation conducted by Hogan Lovells was limited to identifying whether any misconduct had been committed by Makwakwa and Elskie as employees of SARS. It did not seek to directly investigate the financial transactions identified by the FIC. We understand that all criminal related allegations arising from the FIC report were referred to the relevant authorities for investigation.”]
All transactions as per the FIC suspicious report were put to Mr Makwakwa to respond and he did. It was those responses which lead to Hogan Lovells concluding that an act of misconduct could not be found from the transactions and their sources.
[Again, this statement appears to contradict what Hogan Lovells said. Hogan Lovells said it did not seek to “directly investigate the financial transactions identified by the FIC”. So, are you saying they did actually try to investigate this or not? Also, law enforcement agencies should really be the ones asking Makwakwa about those transactions. I don’t think internal investigations by SARS, even if they’re carried out by a third party, would be sufficient in dealing with the allegations levelled against Makwakwa. The allegations levelled against him are fundamentally of a criminal nature.]
SARS wishes to assist with a factual and chronological account of events. Mr Moyane received the Financial Intelligence Centre (FIC) Report in May 2016.
After seeking advice, he placed Mr Makwakwa on precautionary suspension on 15 September 2016 so as to investigate whether or not any possible misconduct may have been committed by Mr Makwakwa relating to the FIC report.
[It would be interesting for Mr Moyane to answer why it took around five months for SARS to act on these allegations regarding Mr Makwakwa.]
The firm Hogan Lovells, an international and renowned law firm, was appointed to conduct this investigation.
In essence, their mandate which clearly reflects in their terms of reference was to determine whether any misconduct had been committed by Mr Makwakwa and/or Ms Kelly-Anne Elskie in their capacity as SARS employees.
Whilst on suspension, Mr Makwakwa committed what SARS believed to be a breach of his suspension conditions. This arose from a telephone call he made on 13 January 2017 to a SARS employee regarding an active tax matter.
On 20 January 2017, whilst the main investigation was still ongoing and whilst on suspension, disciplinary charges were served on Makwakwa relating solely to this breach of his suspension conditions.
[This (rather brief) mention of this breach of his suspension is interesting. Why is SARS not providing more light on what this active tax matter was and what the phone call was about?]
Hogan Lovells concluded its investigation based on the mandate stated above and delivered an investigation report to Mr Moyane in June 2017. The Hogan Lovells report concluded that there was no prima facie evidence that Mr Makwakwa had committed any misconduct in relation to the financial transactions emanating from the FIC report.
[Again, Hogan Lovells itself has said that its report was limited in scope. I know that I’m repeating myself, but here is Hogan Lovells’ statement in which it distances itself from the FIC investigations: “The scope of the investigation conducted by Hogan Lovells was limited to identifying whether any misconduct had been committed by Makwakwa and Elskie as employees of SARS. It did not seek to directly investigate the financial transactions identified by the FIC. We understand that all criminal related allegations arising from the FIC report were referred to the relevant authorities for investigation.”]
However, the recommendation was that Mr Makwakwa be charged for violating the SARS Conflict of Interest disclosure provisions as well as the SARS Code of Conduct.
A decision was then taken to expand the existing charges already served on Mr Makwakwa in January 2017 to include charges relating to the allegation of non-disclosure.
Mr Moyane appointed Advocate Terry Motau, SC, a senior counsel from the Johannesburg Bar, to chair the disciplinary enquiry with the guidance and assistance of Hogan Lovells.
[At least this appears to correlate with what Hogan Lovells said. Here is Hogan Lovells’ statement detailing as much: “As a result of that independent investigation, Hogan Lovells produced a report which contained recommendations for the management of SARS. One of those recommendations was that disciplinary action should be taken against Makwakwa for non-disclosure of external interests. No action was recommended against Elskie. SARS subsequently followed its own internal disciplinary procedures which included charges relating to Makwakwa’s breach of his suspension conditions and the failure to disclose. A hearing was convened and chaired by an independent senior counsel, Advocate Terry Motau SC.”]
The expanded enquiry concluded on 15 August 2017 and the outcome was received from the chairperson on 13 October 2017.
Accordingly, Mr Makwakwa was found not guilty of all charges. Contrary to media reports spreading the allegation that the processes were tainted and that Mr Moyane had a hand in allegedly tainting the processes, the above clearly demonstrates a patently fair, unbiased and independent process.
SARS is concerned that wide spread media reports seem to suggest that SARS erred by allowing Mr Makwakwa back into his employ given that there is a criminal matter pending. This assertion displays a lack of understanding of the difference between a misconduct investigation by an employer and a criminal investigation.
[Ordinarily, there is a difference between a misconduct investigation regarding an employer-employee matter and a criminal investigation. But in this particular case, Makwakwa’s suspension was directly related to the fact that the FIC have flagged him in a potential criminal matter. Therefore, the two matters are interlinked and cannot be divorced from each other. As SARS, you take the risk of continuing to employ somebody who has a dark cloud of possible criminal prosecution hanging over him.]
It is common knowledge that FIC – not SARS – referred the matter to the South African Police Service for an investigation on possible criminal acts.
Thus in September 2016, upon enquiry, Mr Moyane was advised by the Directorate for Priority Crime Investigation (DPCI) that an enquiry into Mr Makwakwa and Ms Elskie, arising from the FIC report, was on-going under enquiry number 03/06/2016.
In law, disciplinary proceedings and criminal proceedings are distinct and are governed by different legislation.
[What is legal is not always ethical. Surely, the right thing to do would be to demand that criminal bodies investigate the matter fully and get to the bottom of it. The sooner this is done, the better for SARS and South Africa.]
As an employer, Mr Moyane’s jurisdiction only goes as far as determining whether or not there is any misconduct related to the employment relationship. The responsibility to pursue criminal charges in a court of law lies with the National Prosecuting Authority based on investigations by the SAPS or DPCI.
Given the outcome of the SARS disciplinary process and the fact that no decision had been taken by DPCI on whether or not Mr Makwakwa should be criminally prosecuted at that time, Mr Moyane was advised that there was no legal justification for SARS not to lift Mr Makwakwa’s suspension.
[Again, what is legal is not always ethical.]
As a result, he was allowed to resume his duties with effect from 1 November 2017. Any other action would have amounted to a violation of Mr Makwakwa’s legal rights as an employee.
It is important to be aware that SARS’s rights have been reserved to initiate possible new internal disciplinary proceedings should the outcome of the criminal process dictate so.
SARS notes that the media reports seem to insinuate incorrectly that SARS has refused to release the report by Hogan Lovells.
Mr Moyane has sought legal guidance regarding the release of the FIC and Hogan Lovells investigation reports. The advice he has received suggests that a crime would be committed should these reports be made public.
[Please explain what crime would be committed? Surely, this matter is in the public’s interest. After all, it is the public from whom SARS largely depends on for its revenue.]
Similar observations were made by the chairperson of Standing Committee of Finance (SCOF), Mr Yunus Carrim in his letter addressed to the Commissioner Moyane dated 6 November 2017, in which he noted the possibility that legal reasons may exist for the non-release of the reports.
To reach consensus and ensure closure on this matter, Mr Moyane has written to SCOF chairman Mr Carrim, making the following proposal:
- That a team consisting of legal representatives from SARS, the National Assembly, Treasury and FIC meet urgently to collectively engage and agree on a seasoned Senior Counsel to deliver an opinion on the legal permissibility of disclosing the reports
- That the National Assembly facilitate the process bearing in mind the urgency to get clarity on this matter.
[Another delay in this matter is not what is required right now. South Africans are asking questions and would like answers sooner rather than later.]
The above detailed background and the process we are requesting of SCOF demonstrate our willing to always be transparent to the public so that we are forever beyond reproach.
As stated before, SARS has no objection to making these reports public, but as an organ of state would not want to violate the rights of an employee in doing so.
SARS is deeply concerned about apparent bias, irresponsible and mischievous attitude to cast aspersions on the character of the organization to perpetuate a negative narrative of an organization that is undermining the rule of law.
SARS finds it regrettable that some media reportage and analysis continues to promote the perception that an outstanding revenue collection agency is falling apart.
[If SARS was efficiently meeting its revenue collection targets and was seen to be dealing with controversies like Makwakwa and KPMG’s now-canned rogue unit report in a reasonable, rational manner; it would have many supporters behind it. Unfortunately, this is not the case and SARS needs to realise that it is solely responsible for its own image. Also, describing your organisation as “outstanding” while question marks hover over it makes SARS look disingenuous.]