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Stand by for the latest instalment in the extraordinary tale of the Zondo Commission’s most spectacular witness, former Bosasa COO Angelo Agrizzi. The man who captured the public’s attention with a riveting testimony to SA’s official investigation into state capture, is now being sued by the taxman for more than R230m. Agrizzi says that is far beyond his now meagre asset base. The doyen of SA’s investigative journalists, Martin Welz, spent hours poring over court papers to get to the bottom of a case SARS wants kept in camera (i.e. secret) but Agrizzi says it should be heard in public domain. Here is the inimitable Welz’s comprehensive report on the latest chapter in the Bosasa saga. – Alec Hogg
By Martin Welz*
From sworn statements filed at the Pretoria High Court last week, it emerges that the Hawks were not the only state agency in a hurry to “punish” Bosasa whistleblower Angelo Agrizzi for talking out at the Zondo Commission.
Triggered by his evidence before the Zondo Commission, the South African Revenue Service, too, were in hot pursuit of Angelo Agrizzi and his fellow whistleblowers.
With his Zondo evidence in hand, SARS immediately embarked on a major re-assessment of Agrizzi’s tax returns dating from as far back as 2006. This culminated in them presenting him in December last year with a massive R230m tax bill, which was due for payment on 31 March this year.
He has lodged a formal objection to the assessment and denies owing the amount claimed, or any amount at all.
Readers will recall that the Hawks arrested Agrizzi the day after he concluded the first round of his extensive evidence to the Zondo Commission in February 2019. (He was released on R30,000 bail.)
Angelo Agrizzi had been chief operations officer of the Bosasa group of companies headed by Gavin Watson, senior member of the Eastern Cape family that has been famously and controversially aligned with the ANC since the apartheid years.
In their evidence to Zondo, Agrizzi and a few fellow whistleblowers had fingered several influential ANC politicians and senior government officials – inter alia, a senior tax official – for having accepted bribes in cash or kind worth tens of millions from the company.
Agrizzi testified that those bribed were expected to favour the Bosasa companies with government contracts, help solve their tax problems and, if need be, protect the Bosasa directors from prosecution.
In the High Court application launched in Pretoria last week, SARS is the applicant; Angelo Agrizzi and his wife Deborah are the respondents.
The founding affidavit in support of the SARS court application was made by Pieter Engelbrecht, Stream Lead: Illicit Economy Unit based at SARS’ offices in Nieuw Muckleneuk, Pretoria.
First off, SARS wants the court application to be heard in camera (secretly and behind closed doors), “as the application contains confidential taxpayer information, which (in terms of the Tax Administration Act) should not be disclosed and should not be open to public scrutiny”.
Agrizzi’s response in his answering affidavit: “I oppose an in camera hearing. The matter is in the public interest. I have nothing to hide, and have previously at the Zondo Commission published my income and financial information for all to see. Furthermore, the NPA have already taken the liberty to publicly issue out details of my financial affairs.”
The main purpose of SARS’ application is to obtain a court order obliging the Agrizzis to realise and repatriate the cash proceeds of their foreign assets (a farmhouse and bank accounts in Italy) to South Africa. SARS values those foreign assets is has been able to identify at R33m – enough to settle 14% of the tax amount they are claiming.
Agrizzi’s South African assets are estimated by SARS to be worth only enough to settle one per cent of the alleged R230m tax debt.
This is quickly explained by reference to just two paragraphs taken from the evidence extensively summarised in the court papers:
From Agrizzi’s 2016 statement of assets and liabilities SARS gathered, inter alia, that he had at that time owned five luxury motor vehicles:
- a BMW SUV valued at R1.9m;
- a Ferrari 488 GTB valued at R6.5m;
- a BMW 750 valued at R2.5m;
- a Ferrari F12 valued at R6.3m and
- a Ferrari 360 Modena valued at R1.8m.
However, a recent search done by SARS on e-Natis lists no vehicles currently registered in Agrizzi’s name.
In response, Agrizzi confirms they were sold in 2018 to raise cash.
He then transferred R10 million for investment abroad in November 2018. His wife did likewise in January 2019. In addition, they both transferred their legally permitted travel allowances of R1 million per year. All these transfers, he states, were done having received the required clearance from SARS and the permission of the SA Reserve Bank. His investment amount has been invested in a farmhouse in Tuscany – which operates a B&B – and a motorcar. His wife’s investment allowance is still held in an Italian bank account.
Engelbrecht confirms in his founding affidavit: “The testimonies before the Zondo Commission, including that of Agrizzi, revealed a large-scale scheme of fraud, money laundering, racketeering and tax evasion running into millions of rand, perpetrated by various persons within the African Global Holdings Group (previously known as the Bosasa Group).”
SARS had closely monitored the Bosasa whistleblower’s evidence and had obtained a copy of the commission investigator’s 700-page report.
A formal tax enquiry was convened in 2019. Agrizzi was called to testify at the enquiry in August of that year. (In the early hours of 26 August, Bosasa kingpin Gavin Watson was found dead in a car wreck near Johannesburg airport. Many suspect he was murdered elsewhere and the accident was staged. He had been scheduled to testify at the SARS enquiry the next day.)
In the course of its investigation, SARS obtained access to all the records of Agrizzi’s eight bank and credit card accounts held at four major banks. They obtained a record of all his offshore financial transactions from the NPA and the SA Reserve Bank. And they had sight of the information obtained by the NPA from the Italian authorities, which had access to the Agrizzis’ Italian bank accounts and fixed property records.
In December last year, SARS advised him that it had concluded he owes income tax amounting to R83m, plus penalties of R137m and R8m in interest.
The Agrizzis are opposing the court application for the repatriation of their Italian assets, and deny he owes outstanding tax in the amount alleged or at all.
Agrizzi has been contesting the assessments over the past year and his attorneys and tax advisers have, some time ago, filed a formal objection to the assessments. Those objection proceedings are still pending.
In effect, SARS is wanting to enforce the so-called ‘pay now, argue later’ tax rule but Agrizzi argues, on several grounds, that he will be caused irreparable harm should the court grant the order sought by SARS, and it subsequently be found that SARS’ tax claims are unfounded.
“Despite my comprehensive objections, SARS insists that I simply pay the disputed tax – all R230m of it – immediately. SARS has even gone to the extreme lengths of applying for an order under the seemingly rarely used Section 186(2) of the Tax Administration Act, forcing me to sell a property and other assets in Italy, and repatriate the proceeds to pay the disputed tax,” he declares in an answering affidavit.
“All of this, despite it being far from established that I actually owe the disputed tax.”
The Tax Administration Act allows a properly designated senior SARS official to suspend payment of tax on application. Agrizzi applied for a suspension but SARS refused the application; a decision, he argues, that was “unlawful, irrational and unreasonable”. He has applied to the court to review this decision.
Agrizzi also argues in his answering papers that in any event, he cannot sell his Italian assets and repatriate the proceeds as those assets were ceded to the National Prosecuting Authority in lieu of bail to secure his release when he was arrested (for the second time) in October 2019 on new charges related to his later Zondo evidence.
“As part of my bail conditions, I was required to ‘hand over the original property deed of [the property in Italy] … to Lt Col. Lazarus of the Investigating Directorate, Corruption’. I am accordingly unable to alienate the property in Italy.”
(For the record: the cession of R33m worth of foreign assets to secure bail in a criminal matter makes it possibly the highest bail figure ever set by a South African court.)
SARS concedes in its court application that South Africa has no tax treaty with Italy that would enable it to collect tax there. However, the Tax Administration Act allows the court to order the taxpayer to repatriate his offshore assets in order to satisfy the tax debt.
SARS first issued him with a ‘notice of audit’ on 21 July 2020. But from 14 October 2020 to 7 December 2020, he was in hospital in intensive care, much of the time in a coma. (“I am of the view that I was poisoned as retribution for my testimony at the Zondo Commission,” he says in his court statement.) As a result, he was unable to attend to any legal affairs, including the objection proceedings and SARS’ attempt to repatriate his assets.
On the same day he was released from hospital, SARS issued its ‘letter of audit findings’. Further assessments were raised in March this year.
On 13 August Agrizzi’s tax consultants filed his formal objections – 1,251 pages of them – to SARS’ revised assessments for the tax periods 2006 to 2019.
The tax assessments, Agrizzi’s consultants found, overstate his income because SARS had erroneously treated numerous bank deposits as undeclared income when they were not in fact received as income. A few of the numerous examples he quotes in his recent answering affidavit:
# “[SARS treated as taxable income] inter-account transfers made by me between [bank] accounts under my control, including payments into credit card accounts amounting to over R69 million. [A SARS search found that he has six bank accounts at four banks and three credit card accounts.]
# “my Bosasa salary, which I had declared in the relevant tax returns each year, was included to be taxed a second time amounting to R1.3 million;
# “payments of dividends that were already subject to withholding tax, amounting to R1.8 million;
# “repayments of loans that I advanced to various individuals and repayment of shareholder loans amounting to approximately R16.7 million.”
If the complete list is totalled up – and should it be found to be correct – Agrizzi would appear to owe SARS only R64,778.48.
He argues: “The far more sensible, convenient and just approach is for payment of the disputed tax to be held in abeyance pending the objection process and any further appeals.”
He also notes: “The objection process has cost me approximately R2 million so far.” Further in his affidavit he suggests: “SARS ought to deal with the objections and correct its incorrect calculations instead of applying draconian measures like an asset repatriation order.”
Elsewhere in his affidavit he declares: “SARS is unable to provide accurate and substantiated figures. This supports a reasonable inference that the reason why SARS will not deal with the objection is because the facts contained in the objection clearly indicate an agenda and narrative that SARS harbours against me.”
SARS has yet to respond to the objections. Last week, SARS’ attorneys informed Agrizzi that SARS would be in a position to respond to his objections only on 22 February next year.
A date is also yet to be set for the hearing of SARS’ High Court application with regard to the repatriation of the Agrizzis’ Italian assets.
Ever heard the phrase, ‘No good deed goes unpunished’, Mr Agrizzi? According to Wikipedia, it’s a sardonic commentary on the frequency with which acts of kindness – doing the right thing, if you like – backfire on those who do them.
FOOTNOTE: In March last year, SARS successfully opposed a court bid by Watson family members to have some of the Bosasa companies placed under business rescue, rather than be put into liquidation. The group of companies are now in liquidation. In its court papers, SARS revealed its investigations into the group of companies had concluded that it owed SARS R849 million in tax and penalties on undisclosed income.
SARS senior investigator Pieter Engelbrecht reported that, during a tax enquiry held in 2019, “SARS’ reasonable belief that companies within the Bosasa group had failed to comply with their obligations and committed offences in terms of the tax acts, or had disposed of, or concealed assets, which may be used to satisfy an outstanding tax debt, was confirmed in all material aspects.”
- Stellenbosch and Pretoria University educated Martin Welz (76) has dedicated his life to exposing malfeasance and abuse by the rich and powerful, occasionally ending up in court as a result of his disclosures. After decades of producing award-winning exposé‘s for major newspapers, Welz founded Noseweek in June 1993.
- Best of 2019: Bosasa Files – Gavin Watson’s defence: Timeline and documentary evidence
- Jared Watson: How Agrizzi and Van Tonder stole from Bosasa
- The Editor’s Desk: The Guptas, Angelo Agrizzi, and Iqbal Survé
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