JOHANNESBURG - In late 2008 a Pakistani-led criminal syndicate defrauded the South African Revenue Service (SARS) of just over R50m.
The fraudsters registered a duplicate of SBC International Management Services on the Companies and Intellectual Property Registration Office (CIPRO) database on July 10 2008. They then set up a bank account in the company's name and in October 2008 R31,6m in SARS tax refunds due to the legitimate company were diverted into this bank account and stolen.
In turn a duplicate of Sun Microsystems South Africa Pty Ltd was registered through CIPRO on November 5 2008 and in December 2008 R19,3m of tax refunds were stolen in the same way.
In October 2009 Finance Minister Pravin Gordhan stated in answer to a question in parliament that "SARS has lost a total of R50 949 743.80 in Income Tax Refund fraud as a result of [these] duplicate companies registered at CIPRO."
This case was successfully investigated and nine members of the Naqvi syndicate were arrested. Among these were Samuel Gouwe, a GijimaAst employee who pleaded guilty to corruption and theft and Audelia Makhubu, a SARS employee.
It appears that SARS and CIPRO failed to fix their systems to ensure that such frauds never occurred again for the problem returned tenfold (if not a hundredfold) this year. From early 2010 onwards a syndicate - or syndicates - repeatedly targeted SARS through a similar tax refund scam.
This time instead of cloning companies the legitimate directors were deregistered through CIPRO and replaced by a syndicate member. This person then used the altered details to set up a bank account in the targeted company's name. The main purpose was, it seems, to attempt to divert tax refunds due to the legitimate company into these fraudulent accounts.
Following the publication of the first details of this new scam the DA MP, Jacques Smalle, submitted a parliamentary question to Pravin Gordhan on October 29 2010 asking how many of these cases SARS was aware of and how much tax money had actually been stolen.
On December 13 Gordhan's answered that "since April 2009 SARS has recorded 16 cases where registered particulars were changed at CIPRO with the apparent intention to defraud SARS" and there "has been an actual loss of R50 949 743.80 in diverted refunds."
The number of cases given is implausibly low. Politicsweb has published the names of twenty seven companies that had their directors deregistered, almost all by the same syndicate (we know of at least thirty one). And this is by no means a comprehensive list.
Meanwhile, the figure for the money stolen cannot be correct. Gordhan has just repeated the sum of ‘R50 949 743.80' that was stolen in 2008 by the Naqvi syndicate.
It is also not clear whether the mention he makes - in his reply - of the arrest of a SARS employee and a SARS contractor refers to this latest scam or the Naqvi syndicate case.
We are thus no left no wiser by Gordhan as to the extent of this latest CIPRO based scam, what the cost has been to the taxpayer, and whether any SARS officials were involved.
For SARS to allow itself to be defrauded in this way - once - can be counted as misfortune. To allow it to happen again looks like carelessness.
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