SARS RESPONSE TO M&G ARTICLE TITLED “SARS CHIEF TOM MOYANE NEPHEW LINKED TO PLUM R220 MILLION TAX DEBT COLLECTION CONTRACT”
Pretoria: 14 October 2016 - SARS has noted the M&G article “SARS chief Tom Moyane nephew linked to plum R220 million tax debt collection contract” which relates to the appointment of Lekgotla Trifecta Consortium (“LTC”) following an open tender process (see here).
We wish to categorically state that the report contains factual inaccuracies and untruths. SARS thus wishes to set the record straight by presenting the correct chronology of events.
SARS issued an open tender, RFP 28/2015, for the establishment of a panel of debt collection service providers. 11 (Eleven) service providers made it onto the panel, whereafter they were invited to submit proposals for the 6-month Pilot Project. LTC with another 2 (two) service providers, was subsequently appointed to collect oustanding tax debt older than 4 (four) years for this Pilot Project.
The allegation that LTC’s fee “could be about 10% or up to R220 million” is malicious and untrue. Each of the 3 (three) service providers for the Pilot Project were given R2.2 billion debt to collect with an agreed commission of a mere 3.88% plus VAT of actual debt collected by them.
On 18 August 2016 , SARS received a media query on the relationship between SARS Commissioner and Mr Ndhlela. SARS was not aware of the relationship and instituted an investigation into the tender award. The SARS investigation revealed that LTC failed to disclose the relationship between 1 (one) of its shareholders, Mr Nhlamulo Ndhlela, and the Commissioner on the required National Treasury mandatory SBD 4 (Declaration of Interest) form, despite the SBD4 form specifically requesting such disclosure.
Upon the matter being brought to the attenditon of the Commissioner, he immediately instructed to initiate the process to cancel the award to LTC with immediate effect.
A letter was sent by SARS to LTC on 22 August 2016, in which they were requested to indicate why they did not disclose the relationship between Mr Ndhlela and the Commissioner. On 25 August 2016, SARS received a response from LTC in which they stated that, according to legal advice obtained by them, they were not required to disclose the relationship. This despite the mandatory requirement as contained in the SBD4 form. This clearly demonstrates an indisputable fact that LTC knew of their legislative and procedural requirement to disclose this relationship.
SARS subsequently obtained a formal legal opinion from counsel on 12 September 2016 and a further letter was sent to LTC on 16 September 2016, in which they were requested to make formal representations regarding their failure to disclose the above-mentioned relationship.
After receiving LTC’s representations on 10 October 2016, SARS decided that it is not persuaded by LTC’s submissions. SARS has written to LTC to give them an opportunity until Monday, 17 October 2016 to terminate the contract by mutual consent, failing which SARS will commence with an urgent application to the High Court for the review and setting aside of the tender to LTC.
SARS places on record that as a result of the deliberate non-disclosure by LTC, when the tender was awarded, its Commissioner was not aware that his nephew was a shareholder in LTC.
SARS’ position is that as a result of LTC’s material and deliberate non-disclosure, the LTC award is fatally defective and therefore requires to be set aside in terms of a legal process, which is underway.
SARS assures the South African public in executing its mandate, it is committed to a transparent and accountable process and compliance with the Constitutional principles of fairness, cost-effectiveness and equity in its procurement process.
Statement issued by SARS, 14 October 2016
