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A shaky basis for findings on SARS

Wednesday, 29 April 2015   (0 Comments)
Posted by: Author: Editorial BDlive
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Author: Editorial BDlive

On Tuesday the advisory board established by Finance Minister Nhlanhla Nene to probe the goings-on at the South African Revenue Service (SARS) gave a public update of its work so far.

Included in its update was its view on the covert unit that has hogged news headlines for months for all the wrong reasons. Led by retired judge Frank Kroon, the board said it endorsed the findings of the Sikhakhane panel’s conclusion that the establishment of the unit was unlawful as Sars did not have the statutory authority to gather intelligence "covertly".

While unequivocal in this respect, the public is still left with more questions than answers.

Judge Kroon and his board members are well regarded and hard-working, and there is no reason to think they are anything other than independent. Yet the manner in which they have reached their conclusions on the matter of the "covert unit" is somewhat puzzling.

By its own admission, the board did not conduct its own independent review of the issues pertaining to the unit, but instead relied heavily on the Sikhakhane panel report. It also drew on two incomplete investigations by KPMG and an independent legal counsel; and interviews with some current and former SARS staff. Neither has the board seen the findings of an investigation that the inspector-general of intelligence had conducted into the matter.

It never spoke to any of the suspended and former employees who are said to be at the centre of the formation of the unit, raising more questions about the completeness of its position.

Further, while the Sikhakhane panel report concluded that the formation of the unit was unlawful, it stated that it could not find any evidence of unlawful activity.

It also did not make clear whether the unlawful formation of the unit was malicious in that proper legal counsel was ignored, or the result of mistaken interpretations of legislation.

Since the board never gave itself a deadline by which it needed to report to the public, it is not clear why it chose to state its position now and not when it had all the facts it needed.

The board concluded that any spending on the unit would therefore have been fruitless and wasteful; that the individual members of management who "erred" in setting up the unit should be held to account; and the police should look into the possibility of criminal charges.

But the judge did not answer most of the further questions of detail, on the grounds that these were sub judice given disciplinary proceedings against Pillay and Peter Richer, to be presided over by former chief justice Sandile Ngcobo.

We trust Judge Ngcobo will ask some probing questions in the course of the hearing, and hear voices from all sides. Apart from the obvious issue of fair labour practices, the political, fiscal and organisational issues involved are too important to gloss over.

Judge Kroon himself acknowledges that a revenue service may need a special investigations unit of some sort. But he and his committee seem in the meantime to have switched their focus to the other aspects of their mandate, SARS’s strategy and operations.

On Tuesday, they were rushing off to be briefed by Bain Consulting, which has come up with extensive recommendations on modernising and restructuring SARS, including a new vision statement, which sounds like pure consultant-speak.

Then there is US consultancy Gartner, which is doing equally extensive (and no doubt expensive) work on SARS’s information technology systems.

We can only hope a better SARS will emerge from all of this. But the jury is still very much out.

This article first appeared on



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