Johannesburg - Former SA Revenue Service (Sars) commissioner Pravin Gordhan has broken his silence on the controversy engulfing the institution, vehemently rejecting allegations that it ran an illegal “rogue spy unit” on his watch.
His comments come after Sars’ long dispute with deputy commissioner Ivan Pillay and the head of strategic planning, Pete Richer, came to an end this week, with both resigning after months of acrimony since their suspension in December.
Gordhan told Independent Media the allegations were unacceptable and could not go unchallenged as some people were using them to cast aspersions on his integrity and record in public service. He also slammed Judge Frank Kroon’s finding that he oversaw the formation of an illegal unit which carried out covert intelligence gathering.
“At the outset let me state that I have never approved, as commissioner of Sars, of any illegal activities.
“The establishment of an additional unit within the Enforcement Division was entirely legal.
“Any suggestion to the contrary is rejected emphatically.”
He said that during his tenure, Sars implemented a range of institutional checks and balances to ensure that no individual had “unfettered powers and discretion” in applying tax laws.
Gordhan defended the establishment of a high-risk investigating unit at Sars because enforcement in the tax and customs context required investigation of both legitimate and illicit trade.
“Risk assessment of taxpayers and traders is an essential part of enforcement – primarily because no authority in the world can audit every taxpayer or examine every container. Selection on the basis of objective risk criteria is a crucial part of compliance work,” he said.
Situating its establishment around 2005, Gordhan said a specialised capacity was needed due to an increase in the smuggling of abalone and cigarettes in the mid-2000s.
His staff believed that a partnership with the intelligence agency, in addition to collaboration with other law enforcement agencies, would enhance South Africa’s compliance capacity.
Independent Media has seen the proposal, which was made in about 2007 to then-finance minister Trevor Manuel to approve co-operation between the National Intelligence Agency and Sars to establish a “unit” with specialist knowledge of customs and illicit trade matters.
“The reason for this partnership was precisely the fact that only an intelligence agency may collect covert intelligence and that this assistance and collaboration would enhance Sars' capacity to deal with illicit trade. This did not materialise.
“I understand that people were formally and legitimately hired and deployed by the relevant senior officials to perform specific tasks within the enforcement context described above, to combat smuggling of various commodities such as abalone and cigarettes,” said Gordhan.
He said current Finance Minister Nhlanhla Nene received regular updates from Sars’ management team while he was deputy finance minister.
“Reports, in general terms, on the implementation of Sars’ strategic and operational plans were presented both at the management meetings outlined above and in the form of monthly performance reports,” said Gordhan.
He claimed the reports showed that the enforcement unit formed on his watch had resulted in the collection of billions of rand in revenue and had prevented the loss of billions of rand to the fiscus.
Spokeswoman for the National Treasury, Phumza Macanda, declined to comment.
Sars spokesman Luther Lebelo said the revenue service was not aware of Gordhan’s comments.
“From Sars’ side, the intended hearings which would have shed light on (Gordhan’s comments) have ceased, given the resignation of those who were accused and we intend not to engage in what would have been the outcome should the hearing have continued,” he said.
Sunday Independent