EDITORIAL: Nugent is a clear example of how an inquiry should be run
Fast, thorough, decisive: the Sars inquiry sets a new standard for how commissions should be conducted
This is how commissions of inquiry should always happen: fast, thorough, decisive. The Nugent commission has not only examined the debacle at the SA Revenue Service (Sars) with speed and determination, but it has also set a new standard for how commissions should be conducted.
By contrast, the Seriti commission intended to examine the infamous arms deal, sat for five years, cost R80m and it came up with no discernible findings or recommendations, except to say there was nothing untoward about the arms deal.
The Nugent commission — consisting of former judge Robert Nugent and assistants Michael Katz, Vuyo Kahla and Mabongi Masilo — has sat for less than a year, and made a host of recommendations and findings. It has done SA a major service in shining the relentless spotlight of truth into a classic example of institutional degradation, and thereby forcing SA and particularly the government to confront an uncomfortable truth; it failed.
One of the remarkable things about the commission’s findings is that they have all the characteristics of a novel; what happened was incredible and reprehensible, but also a consummate lesson.
The organisation that comes out most poorly, apart from the interloper Sars management itself, is international consultancy Bain & Co. The commission records how the SA head of Bain SA, Vittorio Massone, developed personal contacts first with then president Jacob Zuma and then soon-to-be-appointed former Sars commissioner Tom Moyane.
While the recommendations are welcome, the problem is that avoiding ‘state capture’ is not just a functional affair; it’s about appointing people of real integrity.
It records how these mutated into a fake bidding process in which Bain & Co was appointed to “fix” Sars, despite the fact that there was really nothing to fix. That bidding process was split into phases, the first of which was cheap and quick, and then “deviations” from normal bidding procedures were instituted to allow a hugely expensive secondary process to be implemented, all with the connivance of an organisation which preaches and teaches “ethical business practices”.
In that process uncooperative employees were identified, sidelined and culled. Many left of their own accord. A new organisational structure was created in which perfectly functioning divisions were more or less arbitrarily moved or changed, and hosts of loyal employees suddenly found themselves with no real jobs.
The result was that Sars, which had for year upon year collected more tax than was estimated at the budget time, began falling behind in collections. In desperation, it began to block VAT refunds in order to boost its supposed collections.
Perhaps the least well-known was an attempt to sell the collection process of the huge Sars debtors book, estimated to be worth about R90bn, to an organisation in which Moyane’s nephew was a shareholder, which was scrapped in fact by Moyane himself but only after it came to light in the news media.
From a functional point of view, the commission’s ire was focused on the “Large Business Centre” which Bain recommended should be integrated into other structures for reasons no-one, least of all Bain itself, could explain. The Large Business Centre was aimed at working with large taxpayers to facilitate the process, and the commission recommended it should be re-established.
Overall, the result was, what the report called a “massive failure of integrity and governance”, and it made a series of recommendations on how to avoid it. Broadly, the recommendations are three-fold and are eminently sensible. They are to create an inspector-general to focus on Sars; to clarify the process of the appointment of the Sars commissioner; and to create the post of deputy commissioner. Interestingly, the commission rejects the notion of a Sars board.
All of the recommendations are transparently aimed at avoiding a recurrence of the devastation that has been inflicted on Sars by a paranoid, zealous and overbearing commissioner. While the recommendations are welcome, the problem is that avoiding “state capture” is not just a functional affair; it’s about appointing people of real integrity.
In truth, no rules and stipulations and structures can realistically prevent what happened at Sars. They may help and they could very well assist in identifying the problem more speedily. Yet, the existing rules worked without issue for just under 20 years before Moyane arrived.
In the end, avoiding “state capture” is not about rules, it’s about character. If Bain, and IT company Gartner, and the parliamentary portfolio committee recognised that, commissions to try and fix the mess would not be necessary in the first place.