Gordhan was the first witness to testify before a commission led by retired Judge Robert Nugget, which is probing the lax tax administration, following a directive from President Cyril Ramaphosa last month.
Gordhan said he was not aware of the magnitude of the rot at Sars until 2016 and the publication of the Gupta leaks.
“The Gupta leaks helped me to understand what was happening at Sars. In December 2015, I gave the commissioner 10 questions to answer as to why the modernisation plan at Sars was discarded. I did not get an answer.
“It was only after the leaks appeared that I understood what was really happening there,” Gordhan said.
He said he ordered Moyane to stop making changes to the modernisation plan that he (Gordhan) had introduced when he was the commissioner at Sars, prior to his initial appointment as finance minister in 2009.
In one of the Gupta leaks, it was reported that Moyane allegedly authorised the payment of a R70 million VAT refund to a Gupta-linked company.
The report stated that the Oakbay director Ronica Ragavan had emailed Moyane on May 22, 2016, requesting him to pay the first of the three VAT payments amounting to R70m into the Terbium Financial Services account for Oakbay.
Terbium was a payment agent of the Guptas to manage the payment of staff salaries after the country’s four major banks in 2016 severed ties with the family, following accusations of state capture and corruption against them.
According to the leaks, the payments were made, despite warnings that the law did not permit the payment of VAT refunds into third party accounts to prevent fraud and money laundering.
At the time, Moyane was adamant he did nothing wrong in approving the transactions.
He had said: “As commissioner, I exercised my discretion in terms of section 72 of the VAT Act due to the anomalous situation created by the closure of the Oakbay bank accounts, particularly in view of the fact that the refunds were due and payable in law to Oakbay.
“The allegation of illegality therefore has no basis.”
On Tuesday, Gordhan told the commission “what I learnt in 2016 with the Gupta leaks was to connect the dots”.
In cross-examination, Gordhan said he was appointed finance minister in December 2015 after then-president Jacob Zuma fired his predecessor, Nhlanhla Nene.
He said one of his immediate duties, following his appointment on December 13, 2015, was to secure a meeting with Moyane on December 15 to find out why the “modernisation plan” set up by Sars in 1997 had been abandoned.
According to Gordhan, the “modernisation plan” comprised a set of rules implemented to ensure effective revenue collection and that Sars had the ability to recruit the best people with skills to do that job.
He said while he was commissioner at Sars, after being appointed in 1998, he had set up an investigation team to probe the illicit trade in cigarettes and abalone, and ensure that everyone was tax-compliant.
Gordhan said tax collection between 2006 and 2009 was good, adding that during the 2006/07 financial year, Sars collected R541.2billion in revenue; in 2007/08 it collected R627.6bn; in 2008/09 R625.1bn, and in 2009/10 it collected R657.5bn.
The minister also testified about how he was accused of having influenced the early retirement package of Ivan Pillay, saying the accusations were meant to tarnish his image for asking about the problems at Sars.
Gordhan also denied accusations that his modernisation plan was reversed due to its alleged failure in terms of black economic empowerment.