The massive inter-governmental search and seizure operation led to the preventative loss of revenue to the fiscus amounting to more than R500 million.
The alleged coal-smugglers and their related entities — who have been active in Gauteng, Mpumalanga, KwaZulu-Natal, the Free State and Limpopo — were allegedly involved in the diversion of high-grade coal.
The sophisticated network of coal smugglers are suspected to consist of local and foreign nationals, and include former Eskom employees who facilitated procurement fraud.
According to Sars, coal trucks destined for power stations were diverted to designated coal yards where high-grade coal was replaced with low-grade or sub-standard product.
The high-grade coal was then exported or sold to willing buyers. The low-grade coal was often blended with scrap or other materials and then delivered to power stations.
“The low-grade coal damages the infrastructure at the Eskom power stations, which is a major factor in crippling the power utility’s ability to generate electricity for the South African grid.”
The revenue service said it managed to establish links between the individuals and related entities and confirmed possible gross contraventions from a tax perspective in terms of non-registration for Income Tax, VAT and/or PAYE, failure to submit tax returns, under-declaration of income, claiming undue VAT refunds and making false submissions.
Sars Commissioner Edward Kieswetter commended the country’s law enforcement agencies for this massive breakthrough in its ongoing investigations.
He said it was because of such “naked greed” that the country had experienced unprecedented load shedding, which harmed business, undermined foreign direct investment and lead to job losses – all of which negatively affect revenue collection.
“All law enforcement agencies must continue their aggressive fight against criminality, each according to its mandate. For its part, Sars will continue to pursue taxpayers involved in intentional and wilful non-compliance – without fear, favour or prejudice,” Kieswetter said.
He added that Sars’ message was clear and unequivocal to all those involved in organised crime – “you will be hunted down and brought to book”.