Sars man in R5.5m tax fraud

By Time of article published Sep 12, 2011

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NOELENE BARBEAU

A Pretoria SA Receiver of Revenue customs manager has pleaded guilty in the Durban Magistrate’s Court to fraud of R5.5 million, and has also implicated businessman Priyen Naidu, who is also on trial for murder.

Philemon Madingwane, 45, stood nervously in the dock as his attorney read out his guilty plea last week.

He admitted to defrauding Rhema Clothing Manufacturers when he told the company that a duty credit certificate was valued at R8.9 million, when he knew it was only valued at just more than R2.9m.

According to his plea, Madingwane’s job in Pretoria involved verifying transactions, capturing, filing and making amendments to duty credit certificates. He explained that Sars received certificates from the International Trade Administration Com- mission.

Certificates

These certificates are sold to textile companies and used to import fabric.

A company would use it when collecting goods from cargo ships. The certificate would reflect its value and the Sars computer system would reflect the balance of the value after the goods were taken. It was Madingwane’s job to capture these certificates on to the Sars computer system.

“Priyen Naidu and I had never met face to face, but we concluded fraudulent dealings over the telephone. Naidoo would call me and tell me that cargo was coming and that his certificate had a lesser amount. He’d ask me to add value to the certificate with the promise that he would pay back the added amount,” the plea read.

Naidu, 31, is on trial with his coaccused, Ruwain Meer, 34, for the murders of Zainool Fakir, 32, and his nephew, Akbar Sudhoona, 27, who were found shot dead in Fakir’s red VW Golf in Sherwood on May 14, 2009.

Both died from gunshot wounds to the head.

Naidu and Meer have pleaded not guilty to charges of robbery with aggravating circumstances and the murders. They are due back in court in November.

Madingwane said he had manipulated the system as Naidu had requested, and that was how their relationship started.

“He never paid back the amount I added to the certificate. He used to say: ‘I’ll sort it out.’ In September 2010, Naidu asked me to amend another certificate, but I said I wasn’t available because it was my birthday. He asked for my bank details.”

He said Naidu had deposited R60 000 and R100 000 into his wife and brother’s account respectively.

He said there were other amounts, of about R2 000 and R1 500, which Naidu had told Madingwane was a special favour for future purposes.

According to Madingwane, Naidu applied to the International Commission for a certificate and it would be issued with a value, and Naidu would contact him to speed up the capturing so that he did not have to pay storage for his goods.

“I unlawfully prejudiced Rhema Clothing Manufacturers (by inflating the duty certificate) by R5.5m.

“I assisted Naidu by defrauding Rhema. The final certificate value after manipulation reflected R8.9m when it was in fact only valued at just over R2.9m.”

Rhema Clothing hired private investigator Sean Pierce, who worked closely with Sydenham Police detective Warrant Officer Sujit Rohan, which led to Madingwane’s arrest in June.

The case was adjourned for sentencing on November 3.

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