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Tax boss moves to block finance minister

25 January 2016   (0 Comments)
Posted by: Authors: Piet Rampedi and Mzilikazi Wa Afrika
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Authors: Piet Rampedi and Mzilikazi Wa Afrika (Sunday Times)

South Africa's tax chief has taken legal advice in an extraordinary bid to prevent Finance Minister Pravin Gordhan calling the shots at the South African Revenue Service.

The standoff between Gordhan and SARS boss Tom Moyane is potentially embarrassing for President Jacob Zuma, who is close to Moyane but who has to be seen to be backing Gordhan as South Africa attempts to get its public finances in order to counter the threat of a ratings downgrade.

So serious is the tension between the two men that they have met at least three times in less than a month - with no resolution in sight - over Moyane's new operating model, according to three independent sources, two of them senior SARS officials.

Gordhan has constitutional powers for political oversight of SARS while Moyane has administrative powers as the accounting officer.

The Sunday Times has seen a copy of the legal opinion that Moyane obtained from law firm Mashiane Moodley and Monama.

A SARS source said Moyane sought legal opinion over what he sees as Gordhan's attempt to usurp his powers, stop the public release of a damning KPMG report and halt restructuring at SARS. The report was commissioned by Moyane.

Insiders at SARS said Moyane obtained the legal opinion on December 18, just five days after President Jacob Zuma re-appointed Gordhan and following the minister's unannounced visit to SARS's Pretoria headquarters, where he raised concerns about Moyane's restructuring processes, among other matters.

Moyane sought clarity from the law firm on whether SARS had an obligation to seek approval from Gordhan in respect of SARS's operating model and the deployment and control of staff.

The law firm said the SARS Act gave Moyane the powers to formulate a new operating model to control, organise and deploy staff, as long as this was done within the scope of the law. These powers could not be delegated, assigned or shared with the minister, it said.

It added that Moyane had the power to appoint senior officials, including the deputy commissioner, chief enforcement officer and chief operating officer, and to delegate management duties to them.

"There is no obligation to consult and/or seek the approval of the minister with regard to the new operating model. The commissioner may inform the minister in the spirit of collegiality and for information purposes," the law firm said.

Intervention by the minister in the office responsibilities of the commissioner would be overstepping his authority .

However, Moyane was required to submit a copy of the terms and conditions of employment of senior managers to Gordhan "merely for record purposes and no ministerial approval is required". The minister had no say over who was appointed at SARS, but had some say over senior managers' terms and conditions of employment, it said.

The Sunday Times this week obtained the KPMG report, whose release and contents are believed to be at the heart of the tensions between Gordhan and Moyane.

The report confirms previous reports by the newspaper that "a covert and rogue intelligence unit in contravention of the rule of law was established in SARS" under the guidance of former SARS deputy commissioner Ivan Pillay, who is close to Gordhan.

Gordhan ran SARS as commissioner between 1998 and 2009, and later oversaw it politically as finance minister between 2009 and 2014.

Two independent probes that preceded the KPMG report forced several former SARS officials close to Gordhan - including Pillay and former risk and enforcement executive Johann van Loggerenberg - to resign after the rogue unit was uncovered.

Moyane was appointed in 2014 to clean up the mess at SARS amid on-going probes into the rogue unit.

He and Zuma know each other from their days in exile. Zuma and Gordhan, who worked together in the ANC's underground operations in the 1980s, fell out a few years ago.

A SARS insider said trust issues between Moyane and Gordhan also fuelled the tensions.

He said Gordhan had had three meetings with SARS officials already - one with Moyane alone, one with Moyane and some executive committee members, and one with Moyane and all exco members.

Another source said Moyane sought an urgent meeting with Zuma last month to raise concerns about the implication of Gordhan's reappointment.

A top SARS source claimed Gordhan and Moyane fell out politically because the minister wanted to stop the release of the KPMG report.

Gordhan's spokeswoman Phumza Macanda yesterday confirmed the minister had ordered Moyane to halt his restructuring, but would not comment on the alleged falling out.

"The ministry's concerns regarding the restructuring are about making sure that any overhaul that's done will strengthen SARS capability. It is in this context that SARS has been asked to halt the process," Macanda said.

"The ministry will not respond to this legal opinion you're referring to. We are not aware of it."

Macanda said Gordhan "maintains the KPMG report is still draft at this stage". She said a planned meeting between SARS and the ministry was delayed "by the developments in December". Concerns included the "removal of taxpayer information. It is a violation of tax legislation to disclose the information."

Moyane yesterday would not respond to specific questions on the KPMG report and talk of his fight with Gordhan.

"KPMG submitted the final report to SARS. The commissioner will apply his mind and decide on the next steps," said SARS spokesman Sandile Memela.

In a joint statement issued yesterday, Pillay, Van Loggerenberg and other former SARS officials said they had never been approached by KPMG in the compiling of the report.

"Allegations that a particular unit in SARS was unlawful and illegal, operated front companies including a brothel, spied on taxpayers and entered into illegal settlements for tax disputes, gave certain taxpayers preferential treatment, infiltrated taxpayers, broke into homes and planted listening devices and the like, are all false and unsubstantiated," they said.

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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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