Sars explores recouping money earned by Bain
The SA Revenue Service (Sars) is moving to recoup monies earned by consultants Bain & Company and has halted further work with Gartner.
The commission of inquiry into Sars governance and administration, headed by retired judge Robert Nugent, heard from former COO Barry Hore on Thursday that he would not have paid Gartner the near R200m earned for its work on the Sars IT system, which has been described as unnecessary and expensive.
Hore had headed up Sars’s near decade-long modernisation process, shifting it into the digital age, before it was abruptly stopped by suspended commissioner Tom Moyane when he was appointed in 2014.
The contracts entered into with both Gartner and Bain, under Moyane, have been shown to be highly irregular, "improper and unethical".
Evidence before the inquiry showed there were close ties between both consultants and Moyane even before they were awarded the tenders, which amounted to a combined sum of about R400m.
On Wednesday, Sars CFO Johnstone Makhubu told the inquiry he had submitted a request to the tax agency’s legal division and the new head of procurement to determine whether there are grounds for the tax agency to have Bain pay back the money it earned.
He said he has also written to the National Treasury to request that Bain be restricted from further contracts.
This was after he was told by evidence leader advocate Carol Steinberg that Sars officials had given Bain confidential information on how much Sars paid other consultants, which could have determined the price tag on the consultancies’ own work for the tax agency.
Bain said in a statement in September it has set aside the R164m it earned from the Sars contract and will be guided by the Nugent inquiry and other "stakeholders" on what to do with the funds.
Makhubu, who took up his post after the initial contracts with the two consultancies were signed, acknowledged from the documentary evidence he had seen that the "rule book had been thrown out" in both deals.
On Thursday, the inquiry heard further evidence of the shoddy work presented by Gartner, which has left Sars’s IT infrastructure in disarray.
During the hearing, Nugent also addressed criticism that he had overstepped his mandate by recommending Moyane’s removal as commissioner of the tax agency in his interim report.
Moyane was suspended in March, pending the outcome of a disciplinary process, but the embattled tax boss has been fighting his removal based on technicalities. He is still to respond to the allegations he faces in both the disciplinary process and the Nugent inquiry.
Nugent said that his commission’s call for Moyane’s removal was not based on a "disciplinary matter", but was one which dealt with the "management" of Sars.
Nugent’s terms of reference are directly aimed at determining whether the tax agency was being optimally managed to deliver on its legal obligations.
In his interim report, released by President Cyril Ramaphosa this week, Nugent speaks directly to this question.
He highlights how the Sars management had deteriorated; how its relationships with other state institutions, such as the Treasury, the auditor-general and the financial intelligence centre, had broken down; and how its international standing had been eroded under Moyane’s watch. Nugent said his focus was on management and not Moyane’s individual disciplinary process. "This is a matter of management … we came to the conclusion that, whatever those transgressions are [in the disciplinary process], is irrelevant, this [finding] has got to do with management."
The judge said that at Moyane’s level, if the president lost faith in him, he should be "entitled" to remove him. "We say remove [Moyane], because the main issue we are concerned with is management [of Sars]," Nugent said. "We are not going to be diverted by anything … only if a court says we must stop, we will stop. We have got a course and we will act on it unwaveringly … the side things [Moyane’s objections] have become banal after what we have heard here."
Dozens of witnesses have given evidence to the inquiry, publicly or confidentially, on the ruinous effect of Moyane’s reign at the tax agency.