Nhlanhla Nene: Picture: REUTERS/JOSHUA ROBERTS
Nhlanhla Nene: Picture: REUTERS/JOSHUA ROBERTS

Finance minister Nhlanhla Nene approved suspended SA Revenue Service (Sars) commissioner Tom Moyane’s overhaul of the Sars operating model because he believed at the time that the motives were noble.

It appears the minister took Moyane’s suggestion for the restructuring on good faith and did not anticipate that it would end in the weakening of the key state institution

Nene gave evidence before the commission of inquiry into governance and administration at Sars chairs by retired judge Robert Nugent on Friday.

He said he was told that the overhaul was necessary to boost revenue collection and revitalise the organisation, among other things. He said he believes the word “overhaul” was too strong. Nene said he only endorsed the process to review the structure but not its outcome — or any specific proposals

He believed the intent was to strengthen revenue collection and improve Sars’s efficiency.

But Nene said he was disappointed that this did not happen. He also revealed that Sars could have gone ahead with the restructuring without his approval as it was an operational matter.

He said with hindsight it was clear that the original intention of the overhaul was not achieved.

Senior officials at Sars have said that restructuring by Moyane and international consultancy Bain & Co constibuted to the destruction of the tax agency and the R49bn hole in revenue collection in the past year.

Nene said he found it “very strange” that the outcome of the Bain restructuring was “different” this time around as the same company conducted a very successful restructuring at the Development Bank of SA.

Bain had admitted on Thursday that in hindsight the company could see how its work could have been “used” for other purposes.

The company’s managing partner, Vittorio Massone, will continue giving evidence on Friday afternoon.

Nene said all he is looking for from Sars is “revenue, revenue, revenue”.

He further explained his lack of suspicion about the overhaul saying that previous commissioners had conducted similar work when they took over Sars, including Pravin Gordhan and Oupa Magashule.

Nene revealed that at some point during his tenure, he believed Moyane was becoming “distracted” by issues around the rogue unit. He therefore appointed an advisory board under retired judge Frank Kroon to deal with this matter.

He said before his removal as minister in 2015, he and Moyane held robust monthly meetings, but the relationship between the commissioner and the minister was not formalised in law and often depended on “personalities”.

Former finance minister Malusi Gigaba, who recommended a judicial inquiry into Sars last year, said something had to be done about the tax agency’s ability to collect revenue.

He felt the government could not simply “tinker with leadership” but had to undertake a more in-depth approach to deal with the credibility of the tax administration.