sa revenue service
The consultants in Moyane’s pocket
A phalanx of consultancies, auditors and law firms would seem to have assisted suspended Sars commissioner Tom Moyane in gutting the revenue service during his devastating reign
The Nugent commission of inquiry into the SA Revenue Service (Sars) has turned a spotlight on the arsenal of law firms, consultancies and auditors that suspended commissioner Tom Moyane used to bring the tax authority to its knees.
The work by consultancies Bain & Co and Gartner, auditor KPMG, and law firms Mashiane Moodley & Monama and Hogan Lovells, set the stage for Moyane’s ill-fated reign over the tax agency. In many ways, the firms acted as his henchmen, working to neutralise all aspects of the revenue service’s functioning.
Sars was hardly in need of external consultants in the first place — it already employed some of the most skilled, experienced and dedicated professionals in the public service.
And Moyane did not need to look far if he wanted Sars to continue on its successful path — he simply had to consult the incumbent executive committee when he took office in September 2014. Instead, he disbanded that committee, bringing in private sector henchmen to do his bidding.
As is now well-established, Bain & Co played a central role in weakening Sars. Its hack-job overhaul of the receiver’s operating model — described by nearly 100 senior employees as severely destructive — resulted in the displacement of 200 skilled Sars employees and the resignation of dozens of key officials.
IT advisory firm Gartner, which appeared before the commission on Tuesday, also had a hand in the destruction. Moyane had ended the modernisation programme at Sars, effectively blocking the IT development path the authority had been on for more than a decade and halting its migration to a fully digital environment. Its once state-of-the-art IT systems went into reverse. Gartner was brought on board to pick up the process but its recommendations were never fully implemented and its work was heavily criticised by former and current SARS IT employees.
What it means
Auditors, lawyers and consultants contracted by Sars during Moyane’s tenure have much to answer for
It was revealed at the inquiry last week that Sars has not conducted an IT refresh since 2014. The authority’s Moyane-appointed head of IT, Mmamathe Makhekhe-Mokhuane, was forced to apologise for the testimony she delivered at the inquiry after she could not answer basic questions and instead went off on tangents about the Drakensberg Boys Choir, smoking areas and breastfeeding.
More ominously, evidence led by advocate Carol Steinberg showed that Gartner, along with the CEO of advisory company Rangewave — Moyane’s longtime friend, Patrick Monyeki — wrote the specifications for the same Sars tender that was awarded to Gartner, which then subcontracted Rangewave.
As for Mashiane Moodley & Monama, its role goes back some way at Sars. It was this firm — described as Moyane’s own legal counsel — that compiled a memorandum for KPMG during the consultancy’s forensic investigation of the "rogue unit". In it, the law firm recommended outcomes to KPMG and these were then presented, without amendment, as part of KPMG’s findings on the unit.
KPMG has since withdrawn its report, acknowledged its failings and reimbursed Sars the R23m it was paid.
Despite a subpoena that instructed one of the partners at Mashiane Moodley & Monama, David Maphakela, to appear at the inquiry, the law firm refused to provide oral evidence to the commission on Monday, saying the affidavit it had put forward was sufficient. An angry commission chair, judge Robert Nugent, ruled that Maphakela be compelled to make oral submissions. After a tense stand-off, Maphakela, through his own attorney, said he would approach the courts to challenge Nugent’s ruling.
What did emerge was that Mashiane Moodley & Monama had been paid R120,000 just for reading a book to determine if it had defamed the tax boss personally. Sars, of course, footed the bill for this.
Sars was hardly in need of external consultants in the first place — it already employed some of the most skilled professionals in the public service
In an astounding turn of events, Luther Lebelo, Sars head of employee relations and a Moyane ally, effectively threw the suspended commissioner and the law firm under the bus on Monday, saying he had raised concerns about a number of invoices from the law firm and its exorbitant bills. Moyane’s response? "Just pay them."
But it would seem Lebelo was himself complicit in making wasteful payments to Mashiane Moodley & Monama. Steinberg introduced evidence that he had asked the law firm to compile information on the "rogue unit" for him to present at the inquiry, and to help him personally to "clear his name" before it. Sars was billed about R1m for this personal work for Lebelo.
Sars acting commissioner Mark Kingon distanced the revenue authority from Lebelo’s request to the law firm during his appearance before the inquiry on Friday. He said Lebelo’s personal use of the law firm’s services would be investigated.
Hogan Lovells has not yet appeared before the inquiry. The law firm has, however, submitted an affidavit detailing its role in regard to Jonas Makwakwa, Moyane’s lieutenant and the former head of business and individual taxes at Sars, who was accused of money laundering.
Makwakwa, who has resigned from Sars, has yet to account for about R1.2m that flowed into his personal bank accounts from a number of firms and through ATM deposits. Moyane had earlier reinstated Makwakwa after a lengthy suspension, saying Hogan Lovells had cleared him of all charges. The law firm denied this — but it has not, until now, explained exactly what did happen.
Nugent’s final report, due at the end of November, is not likely to be kind to these private sector players. His interim report has already recommended Moyane’s immediate axing; it’s unlikely Moyane’s henchmen will be spared in the final version.
*Correction: The print version of this story stated that Gartner halted the modernisation programme at Sars when it was in fact Tom Moyane.