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SARS’s reputation needs urgent repair, say business bodies
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13 October 2014:

URGENT repairs are needed to the South African Revenue Service’s reputation if it hopes to retain the trust of the taxpaying public, after reports it is running a rogue unit to gather personal tax information, leading tax and business industry bodies said on Monday.

The South African Revenue Service (SARS) has been battling to restore its integrity ever since former commissioner Oupa Magashula left in disgrace a year ago following an investigation into his propriety.

Its reputation suffered another blow at the weekend with reports it may have been running a rogue unit to illegally intercept personal tax information, including that of Jacob Zuma before he became president.

The South African Institute of Tax Practitioners (Sait) — the largest body of tax professionals in the country — said it hoped rogue SARS officials had not “crossed the line” by illegally gathering intelligence on taxpayers, as this could lead to taxpayers themselves justifying less moral practices.

South African Chamber of Commerce and Industry CEO Neren Rau said SARS was going through a period of challenges to its reputation and the new commissioner — Thomas Moyane, who was appointed only two weeks ago — needed to deal with them as a matter of urgency.

“As a chamber we encourage our members to abide by the law, so it would be unfair if regulatory authorities were performing in an illegal manner. SARS needs to be seen as an institution of integrity,” he said.

Sait CEO Stiaan Klue said while he could understand why SARS should be allowed to gather intelligence — as it had a tough job of catching crooks who did not operate according to any laws — this needed to be legal.

“It is important they are empowered to do so and enforcement is in compliance with laws,” he said.

Mr Rau said he was concerned by allegations that a secret fund may have been used. A Sunday Times exposé published at the weekend said a special unit within SARS had illegally intercepted the e-mails and phone calls of taxpayers, flouted internal policies to secretly recruit agents, and agents were paid from a secret cost centre.

“If you are an institution embracing transparency and integrity, then all reporting and funding should be disclosed. You can’t demand transparency and openness from (taxpayers) if you are not,” he said.

SARS spokesman Adrian Lackay said on Monday it would “not respond to Sunday Times news articles”, other than to say: “There were a number of factual inaccuracies.”

Advocate Muzi Sikhakhane was appointed in early September to lead an external committee of investigation into complaints of impropriety against Johann van Loggerenberg, SARS enforcement head. This committee was instructed to conclude its investigation within 45 days of being established, but SARS said on Monday the report could be expected towards the end of October, or early November, as the committee only started working more than a week after being established.

“They may even request more time,” said Mr Lackay.

The weekend article held proof that the unit intercepted phone calls and e-mails, contained in WhatsApp discussions, seen by Sunday Times reporters, between Mr van Loggerenberg and his former lover, Pretoria-based attorney Belinda Walter. At the time the pair were romantically involved, she represented a number of high-profile tobacco producers under investigation by Mr van Loggerenberg.

Sait said SARS had to remain independent from any political interference — this was why SARS was now a separate unit of government (it used to be housed within the National Treasury).

“SARS is seen as the morally outstanding state department, so they must be independent. It will be prudent if they come out with a strong statement on their independence,” said Mr Klue.

The “rogue” unit — allegedly set up by former acting commissioner Ivan Pillay as far back as February 2007 — was reported to have broken into Mr Zuma’s private home to plant listening devices. At the time Mr Zuma was in the running for the ANC presidency, but had been fired as deputy president.

Allegations of a secret meeting between SARS and Economic Freedom Fighters leader Julius Malema, when he was still president of the African National Congress Youth League, over an intelligence dossier, surfaced a year ago.



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.

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