COMMISSION OF INQUIRY INTO TAX ADMINISTRATION AND GOVERNANCE BY SARS

FINAL REPORT

The previous part of the report can be read here.

CHAPTER 6: THE RESIGNATION OF SENIOR EMPLOYEES

[1] The most senior employees of SARS are the Commissioner and its Chief Officers, who report direct to the Commissioner. Immediately before Mr Moyane took office they were Mr Ivan Pillay, who was acting Commissioner, Mr Barry Hore (Chief Officer: Operations), Mr Kosie Louw (Chief Officer: Legal and Policy), Mr Gene Ravele (Chief Officer: Tax and Customs Enforcement Investigations), Ms Elizabeth Kumalo (Chief Officer: Human Relations), Mr Bob Head (acting Chief Officer: Finance), and Mr Peter Richer (acting Chief Officer: Strategy, Enablement and Communications).

[2] Two weeks after Mr Moyane took office, on 12 October 2014 a report appeared in the Sunday Times newspaper, alleging that what it called a ‘rogue unit’ existed within SARS, whose members had secretly installed listening devices in the home of then President Zuma. That report was followed in the course of the next year or more by about thirty other reports concerning the alleged activities of the unit. About two years after the first report the Sunday Times retracted its allegations and apologised but by then there had been tragic consequences for SARS and the country and for those employees the Sunday Times reports had implicated.

[3] Prior to its publication the official spokesperson for SARS, Mr Adrian Lackay, had had wind that the report might be in the offing, and had urged Mr Moyane to take steps to counter it, but he had been ignored. The Sunday Times has yet to disclose the source of the report but it could not have come at a better time for Mr Moyane.

[4] Having read the report in the Sunday Times, Mr Moyane called together the members of EXCO and demanded to know what they knew about the reported ‘rogue unit’. All the members disavowed any knowledge.2 The members of EXCO were summoned once again, on this occasion with their subordinates, and were asked once again what they knew, and the members EXCO once again disavowed any knowledge. Mr Moyane promptly announced that he had no confidence in the members of EXCO and that it was disbanded. The unit that was said to be ‘rogue’ was also closed down on the instruction of Mr Moyane.

[22 There is some disparity in the evidence as to precisely when that occurred. In my view the best account, which fits with other events, is that it occurred on 13 October 2014, the day after the first Sunday Times report appeared. It was notified to all employees at ARS in an internal communication on 10 November 2014, which can only have been long after it had occurred.]

[5] In the absence of a rational explanation for having acted as Mr Moyane did, and we cannot think of one, the explanation must necessarily be found elsewhere. Mr Moyane had barely arrived at SARS, with no experience of the organisation or of revenue collection, yet almost immediately he denounced and humiliated his senior management who might be expected to have advised and guided him as he came to grips with his new role, and dissolved the body through which SARS was being managed. All that on the basis of no more than a newspaper report, and moreover, a report on an alleged unit of which at least most of the Chief Officers could not be expected to have had knowledge. I think the inference is inescapable that this was the first step in ‘neutralising’ possible detractors as foreshadowed in Bain’s ‘TM100 days’ presentation.

[6] In short order Mr Hore resigned, Mr Pillay and Mr Richer were suspended and later resigned, and Mr Ravele resigned. Why that occurred so far as Mr Pillay and Mr Richer are concerned requires explanation.

The So-called ‘Rogue Unit’.

[7] The unit concerned was the successor to a unit that had been established in about 2008 to counter the illicit trades in commodities such as liquor, cigarettes, and counterfeit goods. It started in about 2007 when a proposal was considered for funding staff within the National Intelligence Agency to address organised crime and the illicit economy. Mr Pillay was then General Manager: Enforcement.

[8] Mr Pillay and Mr Gordhan, who was Commissioner of SARS, addressed a memorandum to the Minister of Finance, requesting approval ‘to fund a special capability within NIA to supply SARS and law enforcement with the necessary information to address the illicit economy.’ Approval was granted by the Minister but negotiations with the NIA came to nought and a unit within SARS was established instead. Known initially, so it seems, as Special Operations it was then called the National Research Group, which was later disbanded, but six members were retained as the High Risk Investigation Unit (HRIU). It reported to Mr Johann van Loggerenberg who reported, in turn, to Mr Ravele.

[9] Why such a unit was considered to be unlawful is not clear to me. While the National Strategic Intelligence Act prohibits the covert gathering of certain intelligence, that applies to intelligence concerning threats to the safety of the state, which hardly applies to intelligence relevant to collecting tax. That members of the unit might at times have acted unlawfully, that SARS employment policies might have been breached, that members might unlawfully have acquired and used equipment, all of which came later to be alleged, I see no reason why SARS was and is not entitled to establish and operate a unit to gather intelligence on the illicit trades, even covertly, within limits.

[10] Indeed, that was the view expressed to SARS in late 2015, which seems not to have been made public by SARS. An opinion was furnished to the former Commissioner of SARS on about 1 September 2015, in response to the findings of a panel chaired by Adv Sikhakhane SC, by Adv Trengove SC and Adv Nxumalo, who advised that SARS:

- may keep people under surveillance in the public domain but not in private.

- may follow a person or vehicle in the public domain but not in private.

- probably may place an electronic tracking device on property to trace its movements. It may however not place an electronic tracking device on a vehicle to follow the movements of its driver because it impinges on his or her privacy.

- may watch a person or property such as business premises, residences, containers, etcetera but only in the public domain.

- may take photographs or videos of people or property in the public domain but not in private.

- may not listen to or record private conversations unless a SARS official is a party to the conversation.

- may not electronically record third party conversations by using listening devices.

- may record conversations between SARS officials and third parties.

- may accept information from informers on the basis that their identities will not be revealed.

- may accept information from a person even if it knows that the information was unlawfully obtained. It may however not accept stolen property.

[11] It was said to be unlawful by a panel chaired by Adv Sikhakhane SC, but I find nothing in its report to persuade me why that was so. Adv Sikhakhane was asked if he could elaborate but his reply took it no further than what was said in the report. The SARS Advisory Board chaired by Judge Kroon, reported to the Minister, and issued a media statement, saying the unit was unlawful, but in evidence he told the Commission that was not a conclusion reached independently by the Board, but had been adopted from the Sikhakhane panel, and he had come to realise it was wrong. Indeed, he supported the re-establishment of capacity to investigate the illicit trades, which we recommend.

The Panel Chaired by Adv Sikhakhane SC

[12] In early 2014 Mr Johan van Loggerenberg was engaged in what appears to have been a turbulent romantic relationship with Ms Belinda Walter. In about May 2014, in an apparent fit of pique for a breakdown of the relationship, Ms Walter lodged a complaint against Mr van Loggerenberg with SARS. She alleged, amongst other things, that in the course of the relationship Mr van Loggerenberg had unlawfully disclosed taxpayer information to her. The allegations came to the knowledge of the media, which reported on it sensationally.

[13] Mr Pillay was the Acting Commissioner at the time. He appointed a panel to investigate the complaint.3 In August 2014 the panel produced a three-page report that was inconclusive.

[14] In September 2014 Mr Pillay appointed another panel, comprising Adv Muzi Sikhakhane SC, Adv Nasreen Rajab-Bundlender and Adv Patrick Ramano, with terms of reference arising from the complaint against Mr van Loggerenberg. Before its investigation was complete the allegations in the Sunday Times were published, which it then investigated. The reason for doing so was expressed in the report as follows:

‘The existence of the NRG was not volunteered to the panel until it was revealed in the media. The panel independently found sources that had been part of this unit since its inception. To the extent that the existence of this unit has been at the centre of the complaints against Mr. Van Loggerenberg, we investigated its origins. We also investigated its origins simply because our terms of reference included the investigation of any other matter that we deemed deserving of such investigation’

and

‘Shortly after the panel was appointed and commenced its work, the media reports escalated and alleged the existence of a covert unit that had been operating at SARS. By this time, we had already interviewed some SARS officials, including Mr. Van Loggerenberg. It must be stated that the existence of such a unit in any form was not specifically part of the terms of reference. However, the terms of reference extend, in our view, to the consideration of the existence and operations of a covert unit, to the extent that had we not considered such issues once they became apparent, we would have failed in our obligation to fully respond to our mandate’.

[3 The panel comprised Mr Moeti Kanyile, an attorney in private practice, Mr Clifford Collings, Group Executive: Anti-Corruption and Security, and Mr Brian Kgomo: Group Executive: Internal Audit.]

[15] In a report dated 5 November 2014, the panel reported, amongst others things, that the HRIU and its predecessors had been established unlawfully, that the recruitment, funding and practices of the units might have violated SARS’s human resources policy, and that the HRIU should be disbanded (it had already been disbanded in October).

Reviving the ‘Rogue Unit’.

[16] I dealt in the introduction to this report with the repeated attempts, in various ways, to resuscitate the alleged ‘rogue unit’ before this Commission. I have said as well that what members of the unit might or might not have got up to is not the concern of the Commission, and if unlawful acts were committed the remedy is to report them to the authorities. The alleged ‘rogue unit’ is relevant to this Commission only so far as it explains the consequences of the revelations in the Sunday Times.

The Resignation of Mr Pillay

[17] One of the early steps taken by Mr Moyane, which must have been in about mid- October 2014, was to cause Ms Kumalo, the Chief Officer for Human Relations, to obtain an opinion from SARS’ attorneys on the lawfulness of a payment received by Mr Pillay from the pension fund upon taking early retirement, and his subsequent re- appointment under contract. In essence, in the event of early retirement, a member is entitled to the benefits that have accrued to him or her, less a penalty calculated according to a formula. If the member retires with the full benefit that has accrued, the employer must make up the penalty to avoid an actuarial shortfall in the fund. That is what occurred in his case.

[18] Mr Magashula was the Commissioner of SARS at the time and Mr Gordhan was the Minister of Finance. Mr Vlok Symington, a lawyer employed by SARS, with particular knowledge of pension rights, expressed his opinion that the arrangement was lawful. Mr Magashula approved and recommended the arrangement for approval of the Minister of Finance, who was Mr Gordhan, saying that a similar arrangement had been made with other employees many times. According to an affidavit deposed to by Ms Minee Hendricks, who had been seconded to assist Mr Gordhan in his position as Minister of Finance, she brought the request to his attention, and he asked for more information. Mr Gordhan raised the matter with a number of people over the next three months, including the chairperson of the SARS Remuneration Committee, before he granted the request. The opinion furnished by SARS’ attorney on 5 November 2014 was that the arrangement was indeed lawful.

[19] Also by what must have been about mid-October 2014, Mr Moyane had decided to appoint a firm of forensic consultants, KPMG Services (Pty) Ltd, to carry out investigations for SARS. The contract for the provision of its services was first signed for SARS on 27 October 2014, and was signed for KPMG on 29 December 2014. Also on 29 December 2014, a service request was issued by SARS, specifying the scope of the investigation to be undertaken, which was to perform independent investigative tasks that were required to be ‘focused on the conduct of’ Mr Pillay, Mr Richer, Mr van Loggerenberg and Mr Pikie’ (who was subsequently dismissed on unrelated grounds) referred to particularly, but not exclusively, in the report of the Sikhakhane panel.

[20] According to the report produced by KPMG, its investigation entailed an average of 20 to 30 professionals, who together reviewed 860 000 emails imaged from 23 computers that had been seized, and considered in excess of 1.36 million documents, going back as far as 2003, at a cost to the taxpayer of about R24 million (which has since been repaid to SARS). The cost to the taxpayer for the lawyers who participated in the process can be assumed to have been some millions more. We do not consider it helpful for achieving the purpose of this inquiry to delve into questions that arise concerning the preparation of that report.

[21] Meanwhile, on about 11 November 2014, Adv Brassey SC recorded in a memorandum for SARS that he had been instructed, based upon reports that had appeared in the media, that Mr Pillay may be implicated in acts of malfeasance, and he was asked ‘as a matter of extreme urgency to consider whether there is potentially any substance in the suspicion currently entertained and, if there is, make recommendations (of a very preliminary nature) on how the matter can best be investigated and ultimately brought to finality’. I think it is clear that by then the Sikhakhane panel had not yet delivered its report to SARS. Having been furnished with a ‘handful of documents’, and having had a short consultation, Adv Brassey said:

‘In the course of the consultation that I had with my instructing attorneys, they explained that it might be necessary to suspend Mr Pillay pending the outcome of these investigations. I can see little basis for taking so drastic a step at this juncture. If suspension is ultimately invoked, it should only be at the stage when Mr Pillay demonstrates an obdurate refusal to cooperate or when, following the requisite interviews with him and others, it appears that there is indeed a case to answer.

In deciding whether to suspend, my consultant should appreciate that suspension is typically required, in circumstances such as the present, only if there is some reason to suspect that evidence or witnesses will be corrupted. Before Mr Pillay is suspended, I hasten to add, he should be told of the substance of the possible charges against him, and of the reason why suspension is being contemplated. He should be invited to respond to these statements by explaining why suspension would be inappropriate in the circumstances’.

[22] The report of the Sikhakhane panel, signed on 5 November 2014, was later furnished to Mr Moyane, who handed it to Mr Pillay. Mr Pillay responded to the report on 3 December 2014 with a 34 page ‘critique’, taking issue with various findings of fact and of law in the report. He sent the critique to Mr Moyane and requested permission to circulate the critique amongst senior members of management. Mr Moyane’s response the following day was extraordinary:

‘I acknowledge receipt of your envelope with two sets of documents. I have not read the 34 page document.

I cannot approve your request to circulate the report to the Chief Officers. At this stage I do not consider it appropriate that you share your views with the chief officers as this could be construed as an attempt to influence or impose your own views on them’.

[23] Disregarding the advice that Mr Pillay could be suspended only if there was reason to suspect that evidence or witnesses would be corrupted, and that he must be given the opportunity to respond to why he was being suspended, Mr Moyane called Mr Pillay to his office on 5 December 2014 and handed him a notice of suspension. Mr Pillay told him he had responded to the allegations in his 34 page critique, to which Mr Moyane replied that he had not read the critique, and did not intend reading it, as it was no more than Mr Pillay’s opinion.

[24] Mr Pillay challenged the suspension in the Labour Court, which ordered SARS to withdraw it on 18 December 2014, on the following grounds:

‘On the facts of this matter as they have been presented in the papers it appears that the applicant has not been afforded any opportunity to make representations before the decision to suspend him was made. I draw this conclusion despite the Commissioner’s averment that he invited the applicant to make submissions’.

[25] The following day Mr Pillay was invited to make submissions ‘as to why you should not be placed on precautionary suspension pending investigations into various allegations against you’, and given reasons for the proposed suspension to which he was invited to respond. I think it can be taken that this was no more than a formality. Mr Moyane had earlier declined to read Mr Pillay’s critique and there is no reason to think he had now changed his mind. Mr Pillay responded on 14 January 2014. On 21 January 2015 Mr Moyane wrote to Mr Pillay rejecting his submissions and advising that

‘I have decided to place you on precautionary suspension pending an ongoing investigation (including a forensic investigation conducted by KPMG into allegations of unlawful conduct within SARS in which you have been implicated)’.

[26] Thus within weeks of Mr Moyane’s arrival at SARS three things had happened. He had suspended EXCO for reasons not explicable on any rational grounds. He had asked for an opinion on the lawfulness of Mr Pillay’s pension arrangement. He had decided to employ KPMG to conduct investigations, which turned out to be concentrated on Mr Pillay and others. A month or so later, he refused even to read Mr Pillay’s response, but yet suspended him.

[27] There is no apparent reason why Mr Moyane would be asking for an opinion on the lawfulness of Mr Pillay’s pension arrangement, when no issue had arisen around it, from which I think it can be inferred that one of the first things he did was to call for Mr Pillay’s employment file. Why would he then ask for an opinion on the lawfulness of an arrangement long in the past when no issue had arisen around it? Which employer would spend what must have been R30 million or more to investigate an alleged transgression or transgressions on the part of four employees? An employer who genuinely wanted to know whether proper procedures had been followed in appointing staff seven years previously might just as well have asked the employment division. If the employer wanted to know who had bought equipment one might expect the relevant accounts department to be asked. If he or she had wanted to know what the staff had been up to one might expect the head of the division to have been asked to investigate and report. None of that called for KPMG to be the first port of call, at a cost of millions. Mr Lebelo suggested that Adv Brassey had advised on 11 November that a forensic investigation was called for, which is correct, but that was after SARS had already signed the KPMG agreement. And if an employer wanted to know what had happened in 2007, why would its investigators trawl through documents going back to 2003? And which employer acting bona fide would refuse to read the employee’s explanation for his alleged conduct before suspending him?

[28] Then add the case of Mr Richter. He, too, was served a notice of suspension on 5 December 2014, by Ms Kumalo, in the presence of Mr Lebelo, but they were unable to furnish reasons for his suspension, as Mr Richter recorded on the notice of suspension. The notice of suspension is Appendix 8.

[29] Put together those facts and in our view the inference is inescapable that Mr Moyane was bent from the start on getting rid of them and set about finding a basis for doing so, on whatever grounds that could be found. He had, after all, been advised by Bain that he should neutralise those he thought might hamper him, and Mr Pillay was certainly considered to be one.

[30] On 5 February 2015 notice was given of disciplinary steps against Mr Pillay on ten charges. Nine charges related directly or indirectly to the ‘rogue unit’. The tenth charge related to the pension arrangement. The proceedings were to take place before retired Chief Justice Ngcobo.

[31] On 29 April 2015 Adv Brassey and his two juniors addressed a memorandum to their instructing attorney, not included in the files produced by Mr Lebelo, recording a consultation the previous day:

‘Yesterday we recommended to our client, SARS, that of the three sets of charges currently being pressed against Mr Pillay SARS, Deputy Commissioner [it is not clear in which categories each of the charges had been placed], the charges concerned with the so-called rogue unit should be held in abeyance. Our advice was premised on the fact that the evidence, so far as we have been able to gather it, is far from conclusive on these charges and that witnesses who might be called to substantiate the case were proving to be uncooperative. In response our client, represented by Mr Luther Lebelo, has instructed us that all three charges should be pressed together, and we happily submit to such instructions.’

Furthermore:

‘The documentary evidence on the activities of the rogue unit is as presently advised thoroughly unsatisfactory. All we really have are the ‘dashboard’ reports that were made by the unit from time to time to SARS top management’.

[32] Mr Lebelo said in evidence that it was not he who had given the instruction but that it had emanated from discussion amongst them, but I see no reason not to accept what Adv Brassey said in the contemporaneous memorandum.

[33] Meanwhile, Mr Pillay had wanted to resign, and there had been discussions, mediated by an intermediary, of the terms upon which he could do so, but they had been inconclusive. By 6 May 2014 however, soon before the disciplinary proceedings, agreement was reached, and Mr Pillay resigned. A ‘separation and settlement agreement’ was signed by him and SARS in which he agreed to resign with immediate effect. Included in the agreement was what was a called a ‘restraint of trade’, in exchange for which he received payment of a sum equivalent to 18 months’ salary.

The Resignation of Mr Richer

[34] Mr Peter Richer was employed by SARS from August 2003 to July 2006 and then again from July 2009 until he resigned in May 2015. He was Group Executive: Strategic Planning and Risk. From July 2014 to October 2014 he was Acting Chief Officer: Strategy, Enablement and Communications.

[35] Much the same happened to him as to Mr Pillay. The report of the Sikhakhane panel had made no suggestion that Mr Richer might have been implicated in any wrongdoing. Yet on 5 December 2014 Mr Richer was served a notice of suspension at the offices of Ms Kumalo, in the presence of Mr Lebelo, albeit that no reasons could be given for his suspension, as Mr Richer recorded on the notice: ‘unable to provide reasons at this time’.

[36] He, too, approached the Labour Court, and his suspension was withdrawn, only to be imposed again in January 2015. On that occasion allegations were put to him relating to the ‘rogue unit’ and he was invited to make representations, which he did, but they were rejected. Disciplinary proceedings were also commenced against him. Mr Richer resigned at the same time as Mr Pillay and on the same terms. Asked by the Commission to explain his resignation he said that it was ‘in order to remain sane and to proceed with my life’.

The Resignation of Mr Ravele

[37] In November 2014, said Mr Ravele in evidence, he was summoned to Mr Moyane’s office, where Mr Moyane ‘came down on me like a ton of bricks’, accusing him of being a weak leader, and saying he must choose where he stood, either with Mr Pillay or with Mr Moyane.

[38] For a while his relationship with Mr Moyane appeared cordial, but in early 2015, said Mr Ravele, he realised he was ‘on his way out’, when he attended a presentation, where he disputed some of the material that was presented. Sometime later he was summoned by Mr Moyane who said alleged criminal activity on his part was being investigated. A few days later a criminal complaint against him was laid at the instance of Mr Moyane.

[39] On 19 May he was called to the office of Mr Moyane and presented with a letter from the Hawks confirming that a criminal complaint had been laid against him, and he was told the investigation might take months, and that further charges might be made. Mr Moyane said he should expect to be suspended. The following day he was again called to the office of Mr Moyane, where he was presented with a letter of suspension, and he resigned. He was asked to sign a restraint in return for which he was paid six months’ remuneration.

The Resignation of Mr van Loggerenberg

[40] Mr van Loggerenberg was at one time Group Executive: Enforcement Investigations. The HRIU reported to him, and he reported in turn to Mr Ravele. I have related the circumstances in which he found himself being investigated, first by the panel chaired by Mr Kanyile, and then by the Sikhakhane panel, which made findings against him.

[41] Mr van Loggerenberg was suspended on 12 November 2014. On 15 January 2015 disciplinary proceedings were commenced against him. Meanwhile Mr van Loggerenberg had had to contend with relentless media articles humiliating him and advancing allegations to which his terms of employment prevented him from responding.

[42] By then he was considering resigning, and he conveyed that to Mr Moyane. He was asked to present a proposal in writing, which he did. He met once again with Mr Moyane, who insisted that he delete parts of the letter he had written, in which he had protested his innocence. He duly resigned on 4 February 2015, at the office of Mr Moyane, receiving the equivalent of six months’ remuneration in return for signing a restraint. Mr Moyane insisted on a photograph being taken of the two shaking hands and smiling, and the resignation was cynically announced as amicable.

The Resignation of Mr Hore

[43] Mr Hore was recruited to SARS in 2005 to initiate the modernisation programme. Mr Hore clearly has exceptional skills in that field. He was at one time on the board of directors of the Nedbank group of companies and also headed its operations, employing some 10 000 people. He said he had reached a stage at which he felt he should move on in his career. By then he had met Mr Gordhan, who invited him to join SARS. Undecided, Mr Hore agreed to work for SARS for three months, without remuneration, at the end of which he and Mr Gordhan would decide whether he should stay. At the end of that period he agreed to stay, which he did until he resigned on 1 December 2014.

[44] His first role was that of General Manager of Strategy, Modernisation and Technology, his function being to develop and implement technology systems. In 2010 he was appointed Chief Officer: Operations.

[45] Mr Hore was one of those who was humiliated in the presence of his subordinates by Mr Moyane’s announcement that he had no confidence in the members of EXCO and disbanded the body. Then Mr Moyane announced, in an internal communication to all employees, without having said a word to Mr Hore on the subject, that the modernisation process was suspended. Mr Hore said he soon realised that he would not be able to work with Mr Moyane, which is hardly a surprise, given that his work of a decade was suspended without even having been consulted, and he resigned on 1 December 2014 with effect from the end of January 2015. ‘Goodbye Barry Hore …’, wrote Mr Franzen to Mr Massone on 3 December 2014, to which Mr Massone replied ‘Now I’m scared by Tom.. This guy was supposed to be untouchable and it took Tom just a few weeks to make him resign.. Scary..’

The Resignation of Mr Lackay

[46] Mr Adrian Lackay was employed at SARS for eleven years. He was spokesman for SARS, reporting to the Commissioner. He said after Mr Moyane arrived there was a systematic withholding of information from him, in consequence of which he found himself issuing media statements that he later realised were not true. He said the relationship between him and Mr Moyane started breaking down, and there were no regular interactions, albeit that SARS was in the headlines week after week. He said Mr Moyane seemed intent on not defending SARS in the media.

[47] By February 2015 Mr Lackay had been told he was no longer to speak on matters relating to employment, which would be dealt with instead by Mr Lebelo. In exasperation he resigned with effect from 19 March 2015.

[48] On 24 March 2015 he wrote a long letter, in confidence, to the chairman of the Standing Committee on Finance, which was handed on to the Standing Committee on Intelligence, conveying what was happening at SARS. That letter found its way into the public domain, and attracted the civil claim I refer to in Chapter 11.

[49] On 22 November 2018 Mr Yunus Carrim, chairperson of the Standing Committee on Finance, wrote to the Commission, in response to evidence of Mr Lackay that the Standing Committees had done nothing in consequence of his letter. Mr Carrim’s letter is Appendix 9. We have noted his contention that parliamentary committees have no scope for intervening in matters of that kind. If that is so it reinforces our recommendation that the post of Inspector-General, who could intervene, must be created for SARS. It is not acceptable if intervention in what occurred is not possible even by parliamentarians.

[50] The evidence of what occurred at that time, both the oral evidence and that contained in many documents, of which the above is only a stark summary, has a distinct atmosphere of frenzy about the so-called rogue unit, in which even parliamentarians might have got caught up, much like the frenzy at the ‘beast’ in William Golding’s ‘Lord of the Flies’.

[51] Mr Lebelo calls it a ‘media narrative’ that Mr Pillay, Mr Richer, Mr van Loggerenberg and Mr Ravele were driven out of SARS. He says they all resigned because they feared the disciplinary proceedings they were facing, as he wanted to prove with his files and his affidavits. Perhaps that is correct, and for present purposes we will assume that to be so, but it misses the point. It is clear there was an intention at the outset to drive them out of SARS. That disciplinary proceedings might ultimately have achieved that purpose is neither here nor there. Of one thing they could all be sure from the start – there was no place for them at SARS.

[52] It is not helpful to view various events in isolation of one another to determine what occurred. Once put together, including what later occurred systematically to other employees of SARS, presents a clearer picture than isolated events. That Mr Moyane was bent on driving them out of SARS is consistent with all the facts. I also see no other inference that fits all the facts. Nor did it stop at driving them out of SARS. KPMG produced its first report only in June 2014, and its final report in September 2014. I see no explanation for KPMG continuing to trawl back to 2003 after the three had resigned, other than to find information upon which to discredit them. Just as Mr Moyane pursued, and even escalated, a grievance that had been lodged against Mr Hore, even though he had resigned, and then trawled back at great cost to discover whether there had been impropriety relating to the modernisation programme. It is also consistent with the pattern that followed for a year and more, as other employees were marginalised and resigned.

The Resignation of other Employees.

[53] Many other skilled and experienced employees resigned in the course of the next year or two, arising from what happened to them when the new structure of SARS was introduced. Some 200 employees were displaced from their jobs and were required to apply for positions in the new structure. A significant number who had been in management positions were rejected for alternative management posts, and found themselves appointed to supernumerary posts that had no job profile and no job content, ostensibly to avoid retrenchment, but in truth it was the departure lounge. Ms Kumalo, then head of human relations, wrote a long letter to Mr Moyane, complaining of what was occurring, without human relations being consulted, to which Mr Moyane’s immediate response by email was a perfunctory ‘No comment’. Later he replied in a formal letter serving no more than to refute what she had said.

[54] Some stayed, but others succumbed, and it can be inferred that was intended, for what rational employer places skilled employees in supernumerary posts with nothing to do? One who left was Ms Sunita Manik, the head of the Large Business Centre, which was fragmented in the new organisational structure. She is a Chartered Accountant, with certificates or diplomas in Management, Organisational Development, Education Training and Development, as well as Psychology. One day she arrived at work and was summarily removed from her position as head of the LBC, to be replaced by one of her subordinates, and from then she was assigned to an office where she was allocated no work. She applied for the post of Group Executive of Investigative Audit in the new structure. Albeit that she was the only candidate and met the criteria, she was not appointed. She said it was made clear to her that she could not expect a management position, and it was suggested she transfer to the SARS Academy, a post she had occupied when she had first joined SARS. In exasperation she ultimately resigned after 23 years’ service to SARS.

[55] Some attempted to make themselves useful to other divisions. One was Ms Seremane. She joined SARS with a BA degree in 2009 as the executive for integrity promotion, responsible for initiating and managing ethics and integrity initiatives. The new organisational structure demoted her role and she was put to the choice of being appointed a supernumerary ‘domain specialist’ or being retrenched. She questioned the process itself, and why integrity management was being downgraded, and where the position offered to her fitted into the organisation, and what it entailed, to which she received no meaningful response.

[56] Meanwhile, having been displaced from the position she had occupied, she found herself with nothing to do. At her own initiative she approached Customs and made a presentation on integrity management, which was enthusiastically received. She was told by Customs they had no capacity in her field and she was asked to develop an integrity programme. A few days later she was dismissed, with a retrenchment payment of R425 112. We recommend that an integrity unit at a high level be established again.

[57] We have received other accounts in similar vein, both in oral evidence and by affidavit. We think it is clear that to be assigned to the post of ‘specialist’, whether it be ‘domain specialist’, ‘principal specialist’, or even ‘generic specialist’, as the supernumerary posts were called, was to be assigned to the departure lounge. While some resigned, others have hung on, to the benefit of SARS when there is a new regime, their skills and experience meanwhile going to waste.

[58] One is Dr Malovhele, who joined SARS in 2005, and is now in a supernumerary post. He has a BA degree, an MBA and a PhD and headed the compliance division. This is what happened to him:

‘Then later on I was then informed that I am misplaced. I’m no longer having a role, you know. And I couldn’t understand it and if I take you back when the new operating model was being spoken about three individuals, different individuals, they came to me and said, Thabelo, don’t expect to have any management position in the new administration.

And you know, I laughed it off and to say no, it can’t happen to me. It can’t happen to me. You know, I’ve been around here and it can’t happen. But when I was told that I was [affected] I realised that, you know, what I was told was the truth.’

[59] A former staff member who had been in his unit, described events in similar terms in an affidavit and concluded as follows, with which Dr Malovhele agreed:

‘Fear had gripped the organisation and staff were too scared to ask any questions. I believe that the lack of communication was an intentional manoeuvre by the leadership to create havoc and disharmony so that the targeted affected people would leave SARS.’

[60] Yet another is Dr Jozua Loots who, prior to the new operating model, worked in the LBC as an executive responsible for high net worth individuals, large corporate revenue analysis and forecasting, corporate intelligence, and corporate tax compliance risk. Mr Loots has a Ph.D in Business Administration, his thesis being on transfer pricing, a new and critically important area for tax authorities. He found no place in the new structure, and is now in a supernumerary position, confined to desktop research.

[61] Dr Carolissen described the consequences of what happened to people at SARS:

‘At the risk of sounding dramatic I think what we see is typical post-traumatic effects of a severely traumatic event that we went, well that SARS had gone through, that even those people that were appointed subsequently in the new structure even we felt like we suffered from survivor syndrome and that the people that we used to work with that were not appointed, the relationships were strained. There’s no doubt about it. So this is typical of an organisation that has gone through severe trauma, the symptoms that you are describing’.

[62] Public servants who succeed to other public servants in public institutions do not drive out the public servants who remain, whether brutally or by forcing attrition, which occurred in this case. These are indeed institutional factors affecting the performance of SARS in all its areas of operation. Governance breaks down when management is thrown into disarray.

[63] We have heard it said that since the removal from office of Mr Moyane, former employees of SARS have volunteered to return to assist in its rehabilitation. No doubt there are others with experience and skills who might yet be attracted to return to employment at SARS. We recommend that the new Commissioner of SARS evaluates employees in supernumerary posts, and considers their placement in positions in which they are able to add most value to SARS. We recommend as well that posts in the establishment be evaluated and, where appropriate, active steps be taken to recruit former employees to those posts. In addressing the Commission, the acting Commissioner of SARS rightly apologised unreservedly for the damage done to employees and former employees during the period under inquiry. We recommend that SARS consider possibilities for reparation, not necessarily in pecuniary terms.

CHAPTER 7: THE NEW EXCO

[1] By about the middle to latter part of 2015 EXCO had been denuded of virtually all the management experience and skills that had existed when Mr Moyane arrived. Mr Hore, Mr Pillay, Mr Richer and Mr Ravele had all resigned. The contract of Mr Head had come to an end, and after a short extension he had left. Ms Kumalo had retired.

[2] By the middle of 2017, after the restructuring, nothing was left of the former EXCO. Mr Matsobane Matlwa had been appointed Chief Officer: Finance with effect from 19 December 2014. Mr Jonas Makwakwa was appointed Chief Officer: Business and Individual Tax, with effect from 1 November 2015. Mr Hlengani Mathebula was appointed Chief Officer: Strategy and Communications with effect from 1 January 2016. Mr Teboho Mokoena was appointed Chief Officer: Human Capital and Development with effect from 2 January 2016. Mr Jed Michaletos was appointed Chief Officer: Customs and Excise with effect from 4 January 2016. Ms Refiloe Mokoena was appointed Chief Officer: Legal Counsel with effect from 1 May 2017. Ms Mmamathe Makhekhe- Mokhuane was appointed Chief Officer: Digital Information Services & Technology with effect from 1 May 2017. Ms Mogola Makola was appointed Chief Officer: Enforcement with effect from 1 July 2017.

[3] Mr Makwakwa had been employed at SARS for some years. Mr Matlwa and Mr Mokoena had been employed by SARS before. The others were all recruited from outside SARS. The institutional memory of SARS at a senior level was almost entirely eradicated.

Appointments Under the Initial Appointment Policy

[4] The Human Resources Internal Policy on Recruitment and Selection as it existed on 1 April 2014 provided that SARS must endeavour to grow from within but the services of executive search agencies may be contracted from time to time for recruitment at leadership level. Candidates for appointment were to be shortlisted by screening ‘based on the minimum requirements of the job and the requisite culture and values’.

[5] Formal interview of candidates was required by ‘reasonable cross functional teams, representative of the functional department’. Selection for appointment had to ‘take into consideration the weighted outcomes of the following, namely, interviews, psychometric assessments, case studies, employment equity, pre-employment screening, adherence to SARS values and reference checks’.

[6] For roles from Grade 6 ‘applicable psychometric related assessments’ were compulsory. The psychometric assessment scored candidates in three weighted areas, and divided the total score into three categories: ‘80 and above: highly recommended; 70 – 79 recommended; 0 – 69 development required’.

Mr Matsobane Matlwa

[7] Mt Matlwa was appointed under that regime. He was self-employed at the time, but was a Chartered Accountant and had been CEO of the SA Institute of Chartered Accountants. He had been interviewed for the position before Mr Moyane was appointed, and had been rejected, but was interviewed once again. On this occasion, according to the application to the Minister of Finance for approval of his appointment, he was interviewed by a panel comprising Mr Moyane; Ms Kumalo, Chief Officer: Human Relations; Mr Takalani Musekwa: Executive Employment Equity; Mr Moeketsi Shai, member of the SARS Committee on Human Relations; and Ms Auguste Coetzer, a director of Talent Africa, who had recruited Mr Matlwa. The outcome of his psychometric assessment was that he was not recommended for appointment. He was nonetheless recommended to the Minister for appointment, which the Minister approved on 11 December 2014.

[8] The selection policy required the selection panels to be ‘reasonable cross functional teams, representative of the functional department’. It is not apparent to me that the panel was representative of the functional department, nor that it had any financial experience of a large organisation. Moreover, it is most unusual for the recruitment agent, who had a clear conflict of interest, to be on the selection panel.

Mr Jonas Makwakwa, Mr Jed Michaletos, Mr Teboho Mokoena, Mr Hlengani Mathebula

[9] The next four appointments were made simultaneously, following recommendations made by Mr Moyane to the Minister of Finance on 5 October 2015, which were approved by the Minister on 28 October 2015. All the appointees were interviewed by a panel comprising Mr Moyane, Mr Rudolph Mastenbroek, and Mr Meta Maponya, both described in the document addressed to the Minister as members of the then newly established SARS Advisory Board.

[10] Mr Jonas Makwakwa was Group Executive: Audit, and was acting Chief Officer: Operations since the resignation of Mr Hore. Before that he had been Operations Manager, then National Operations Manager: Enforcement. His tertiary qualifications were a Bachelor of Commerce in Accounting, a Certificate in Business Management, and he had undergone a Global Executive Programme. The application for approval of his appointment as Chief Officer: Business and Individual Tax, recorded ‘outstanding’ under the heading ‘assessment’. If that signified to the Minister that the candidate was meritorious, he was wrong. What it meant was that the outcome of the assessment, which had been carried out on 2 October 2015, had not been received. As it turned out, the assessment was that Mr Makwakwa ‘may need development’. He was appointment at a remuneration of R3 700 000 per annum, slightly above the maximum remuneration in that salary range.

[11] Mr Jed Michaletos was appointed Chief Officer: Customs and Excise. He was at that time a ‘Partner/Director’ of Deloitte, with customs experience. His tertiary qualification was Bachelor of Commerce in Financial Accounting. In the application to the Minister his assessment was also listed as ‘outstanding’. He was assessed as ‘requires development’. He was appointed at a remuneration of R3 598 656 per annum.

[12] Mr Teboho Mokoena was appointed Chief Officer: Human Capital and Development, at remuneration, according to his letter of appointment, of R3 million. Immediately before his appointment he was Chief Deputy Commissioner: Human Resources, at the Department of Correctional Services, and had held that position since 2012. His tertiary qualifications were B. Juris, Certificate in Organisational Development, a Diploma in Human Resources Management, he had attended a Management Advancement Programme, and he had a post graduate Diploma in Executive Development. His assessment, too, was recorded as ‘outstanding’. He was also found to ‘require development’.

[13] At the time of his appointment as Chief Officer: Strategy and Communications, Mr Hlengani Mathebula was Head of Group Strategy and Communications at the Reserve Bank, where he had been employed for 10 years. Before that he had occupied various positions in banking. He has the degrees Bachelor of Arts, Bachelor of Theology (honours), has undergone a management development programme, and has a Certificate in Marketing Management. The outcome of his psychometric assessment was ‘Highly Recommended’. He was appointed at a remuneration of R3 598 656.

[14] On the face of it there are extraordinary features of the appointments of Mr Makwakwa, Mr Michaletos, Mr Mokoena and Mr Mathebula. No doubt Mr Mastenbroek and Mr Maponya have expertise in their respective fields, but I don’t see how panels comprising the Commissioner and the two members of the advisory board, can be said to have constituted ‘reasonable cross functional teams, representative of the functional department’, across all the functional fields of business and individual tax, strategy and communications, human relations, and customs and excise. Moreover, one should expect selection of the most senior members of management to be adjudicated by a far larger complement of skills and backgrounds than were brought by only the Commissioner and two members.

[15] Another extraordinary feature is that none of the appointees, other than Mr Mathebula, was recommended for appointment by psychometric assessment. In each case the assessment was ‘required development’. Indeed, in all three cases the outcome of the assessment was not known at the time recommendations were made for their appointment, but was listed as ‘outstanding’, notwithstanding that the policy made psychometric assessment compulsory.

Appointments under the new Selection Policy

[16] A new Human Capital and Development Internal Policy Recruitment and Selection Policy for SARS was approved by Mr Moyane, on the recommendation of Mr Mokoena, on 31 March 2016. There were two significant changes. The shortlisting policy required screening of candidates ‘based on the minimum requirements of the job as well as divisional Employment Equity requirements’. In contradiction, however, both those requirements were now only factors to be taken account of in selection. The Policy provided that

‘selection for appointment of candidates must take into consideration the weighted outcomes of the following, namely, minimum job requirements as per the approved job profile, interviews, psychometric assessments, case studies, employment equity, pre-employment screening, adherence to SARS values and reference checks’.

[17] Formal interviews were again compulsory in the selection process, to be conducted by ‘reasonable cross functional teams, representative of the functional department and must consider diversity where practically possible’. For Grade 6 and above ‘psychometric related assessments’ were compulsory.

[18] At about the same time a new SARS Qualifications Framework was adopted to coincide with the restructuring. Amongst other things it set ‘minimum qualification requirement guidelines’ and ‘minimum years of experience guidelines’. For the position of Chief Officer (Grade 9B) the ‘minimum qualification requirement guideline’ was ‘relevant postgraduate Master’s degree in specified area (i.e. Law, Tax) and/or post graduate qualification in business management (MBA/MBL) and/or professional registration for example CA (SA)’. The minimum ‘years of experience guideline’ was ‘18+ years’ experience in a similar environment, of which 8 – 10 years ideally at executive management level’.

Ms Refiloe Mokoena, Ms Mmamathe Makhekhe-Mokhuane, Ms Mogola Makola

[19] Ms Refiloe Mokoena, Ms Mmamathe Makhekhe-Mokhuane, and Ms Mogola Makola were interviewed for appointment as Chief Officer: Legal Counsel, Chief Officer: Digital Information Services & Technology, and Chief Officer: Enforcement, respectively.

[20] Ms Makhekhe-Mokhuane’s credentials according to the application to the Minister I refer to below were the following:

Work History:

2002-2004 Chief Information Officer: Department of Transport

2004 – 2005 Chief Information Officer: Department of Communications

2006 – 2013 National Provincial Chief Information Chief Officer (North West Province Government)

2013 – current: Chief Information Officer: Department of Water and Sanitation.

Tertiary Qualifications

1997 Diploma Business Management 1999 Advanced Project Management

2000 Information Technology Management 2004 MBA

Assessment: Development required

[21] She was interviewed for the position on 21 June 2016, by a panel comprising Mr Moyane, Mr Zach Modise: National Commissioner: Department of Correctional Services, Mr Lionel October, Director General: Department of Trade and Industry, retired Lieutenant General Solly Ngubane; and Ms Coetzer from Talent Africa. Mr Mokoena attended as an observer.

[22] On 21 July 2016 Mr Moyane sought approval to appoint Ms Makhekhe-Mokhuane from then Minister of Finance, Mr Gordhan. It appears the documents went astray, because the application was replied to, with apologies, on 15 December 2016. The Minister pointed out that while the Commissioner decides on who to appoint to a post, the Minister must approve the terms and conditions of employment. He asked for a copy of her proposed contract, and added the following note: ‘In addition to the above the panel of interviewers did not have anyone with IT experience.’

[23] Mr Moyane replied on 11 January 2017, enclosing a copy of a standard contract. He added that the interviewing panel had included retired Lt General Ngubane, and detailed his IT experience. While he certainly had wide experience, he naturally had had no exposure to the SARS systems.

[24] Ms Refiloe Mokoena’s credentials were listed as follows: Work History:

It is unclear from the application what her position was at the time of appointment. Her ‘current employer’ was said to be Telkom (Pty) Ltd, but under ‘career history’ appeared ‘1991 – date Mageza Raffee Mokoena Inc Attorneys’, and also ‘March 2016 – date Acting judge’.

Tertiary Qualifications:

1985: Bachelor of Arts. Bachelor of Laws (B. Juris) 1987: Bachelor of Laws (LL. B)

2010: Master’s in Business Administration (MBA). (Currently busy with dissertation).

It is difficult to discern whether in 1985 she obtained a B.A., an LL.B. or a B.Juris, as she couldn’t have acquired all three. It is also difficult to see how an MBA would have been awarded if the dissertation was yet to be completed, but none of that seems to have been queried.

Assessment: Development required

[25] Ms Makola’s credentials were listed as follows.

Work History:

She joined Bowman Gilfillan as a candidate attorney in 2001, spent a year on an exchange programme in New York, and at the time of appointment to SARS she was described as ‘Partner in Tax Practice Group (Corporate Department)’. Her position was described as amongst ‘six partners in the Tax Practice Group. Managing a staff complement of 10 to 14 personnel. Works across the divisions in Kenya, Uganda, Madagascar and Botswana’.

Tertiary qualifications:

1998 Bachelor of Arts 2001 Bachelor of Laws 2005 Masters in Law (Tax)

Assessment: ‘Development Required’

[26] Both were interviewed by a panel comprising Mr Moyane, Mr ME Moemi, Director General: Sports and Recreation, Adv Eric Mkhawane (CEO: Tax Ombud); and Ms Coetzer of the recruiting agency, Talent Africa. Mr Mokoena was present as an observer.

[27] On 14 and 28 February 2017 respectively, Minister Gordhan was asked to approve their appointments, but that had not been done at the time he was replaced as Minister of Finance.

[28] Soon thereafter Mr Moyane must have decided he did not need ministerial approval for appointments, because on 24 March 2017 Ms Mokoena and Ms Makhekhe- Mokhuane were appointed to their respective positions by letter from Mr Moyane.

[29] On 3 April 2017 Mr Teboho Mokoena advised Mr Moyane that Ms Makola had declined the offer of the position and requested a renegotiation of her salary package. He recorded that she had indicated ‘an expectation of R3.7 million’, and he recommended offering R3 410 000, which Mr Moyane approved on 10 April 2014. Ms Makola was duly appointed by letter from Mr Moyane dated 18 April 2017.

[30] On 6 April 2017, on the recommendation of Mr Mokoena, Mr Moyane wrote to the Minister of Finance, who by then was Mr Gigaba, asking him to ‘note’ the appointments. He did so in the following terms (a copy of the memorandum is Appendix 10):

‘The purpose of this memo is for the Minister to take note of the appointment of three Chief Officers: Mogola Tsibugo Makola as Chief Officer: Enforcement, Refiloe Mokoena as Chief Officer: Legal Counsel and Mmamathe Makhekhe-Mokhuane as Chief Officer: Digital Information Services & Technology, in accordance with section 5(1)(a) and 18(3) of the SARS Act; and section 4 of the legal opinion provided by Byron Morris, especially paragraph 4.19 of that legal opinion, paragraphs 21 to 28 of the legal opinion provided by Wim Trengove SC and Kate Hofmeyer, and paragraphs 52 to 54 of the legal opinion provided by Vincent Maleka SC and Ndumiso Nxumalo (see attached)’.

[31] Apart from the fact that Ms Makola had not yet been appointed, the memorandum presents only part of the picture and is misleading. I am not able to locate the opinion of Mr Morris, but the other opinions were that the Commissioner of SARS indeed has the power to select managerial employees, but what the Minister was not told was that both opinions were to the effect that the terms and conditions upon which they are appointed required the approval of the Minister, as Mr Gordhan had said in his earlier letter.

[32] Adv Trengove SC and Adv Hofmeyer said the following on 4 February 2016:

‘27. Section 18(3) provides that the Minister must approve the terms and conditions of employment for any class of employee within the management structure of SARS. The Act does not define what the management structure of SARS is. “Management” is defined in the Oxford English Dictionary as “the responsibility for and control of a company or similar organisation”. If this definition is applied, the employees in the management structure of SARS would be those who have responsibility for and exercise control over the institution. The terms and conditions of employment are the entire contract of employment between SARS and the employee’.

[33] The opinion of Adv Maleka SC and Adv Nxumalo, given on 29 February 2016, was even more explicit:

‘50. Our interpretation of section 18(3) of the SARS Act leads us to conclude that the Minister cannot dictate to SARS to employ or not to employ a specific individual. The Minister’s role, as we conceive it, is limited to a consideration and approval of the terms and conditions of employment for the class of employees who fall in management structure of SARS.

51. …

52. We have already pointed out that the powers of SARS include the appointment of its employees, and the determination of their terms and conditions. That primary power is expressly set out in section 5(1)(a) of the SARS Act.

53. The additional requirement of ministerial approval arises in respect of employees in the management structure of SARS. In respect of that class of employees, the employment of such employees and their terms and conditions of employment will not become effective until the Minister approves them in terms of section 18(3) of the SARS Act.

54. It follows that it is SARS first who recruits and employs, and determines the terms and conditions of its employees. Persons appointed in the management structure cannot commence their employment until the Minister approves the terms and conditions … ‘.

[34] On 12 May 2017 Mr Mokoena recommended to Mr Moyane that the remuneration at which Ms Refiloe Mokoena and Ms Mmamathe Makhekhe-Mokhuane had been appointed, being R2 207 078, should, at their request, be increased by 42.23% to R3 139 126. That was approved by Mr Moyane the following day. The motivation was said to be that they should be ‘put on par with other internal employees on the similar role’. The increase in the remuneration of the three appointees placed them on approximately the same level as the other Chief Officers. It is concerning that salaries could be increased so significantly just for the asking. Mr Mokoena motivated his recommendation on no more than that they should be on par with the other chief officers. If the appointees were aggrieved that their remuneration was not on a par with that of other chief officers, they ought not to have taken the appointments in the first place. That is not a rational basis for arbitrary increases to be granted.

[35] Once again there are extraordinary features of these appointments. On the face of it none of the members of the interviewing panel for Ms Makola appears to have had functional experience in tax collection enforcement. The panel for the appointment of Ms Makhekhe-Mokhuane appears to be remarkable for a candidate whose function would be to take charge of SARS’ multi-billion rand information technology systems. Information technology at SARS is not confined to servicing the core-business. It is the very heart of SARS’ core-business. Only one on the panel had qualifications in information technology, but there was none with exposure to the SARS technology. Moreover, her qualifications and experience bear little relationship to the complex information technology she would be required to manage. I have difficulty seeing how these panels could be said to have been a ‘reasonable cross functional team, representative of the functional department’, with sufficient diversity of experience and skills to appoint top management of a large and complex organisation.

[36] It needs to be borne in mind that appointment at EXCO level carries wider duties than those of their specific portfolios. EXCO operates as an advisory body to the Commissioner in relation to the organisation as a whole. None of the appointees appear to have had the management experience required for management of an organisation employing 14 000 people. The guideline for appointment at that level was ‘18+ years’ experience in a similar environment, of which 8 – 10 years ideally at executive management level’. Managing 12 – 14 employees in an attorneys’ practice, for example, does not come near to that.

[37] I have observed that these appointments were made by Mr Moyane, without ministerial approval. He asked only for them to be ‘noted’ by the Minister. The basis for that was said to be opinions furnished by Byron Morris, Advocates Trengove SC and Hofmeyer, and Adv Maleka SC and Ndumiso Nxumalo, in relation to the effect of sections 5(1)(a) and 18(3) of the SARS Act. I observed earlier that I have not been able to locate the opinion of Mr Morris, but the other two opinions advised the Commissioner, explicitly, that while he was entitled to select managerial staff, their terms and conditions of employment required the approval of the Minister, and that must have been known also by Mr Mokoena. In these cases there was no such approval of the terms and conditions upon which they were appointed. Moreover, there was no approval for the increase in their remuneration. I have no reason to doubt the correctness of the two opinions, in which case the appointment of all three was irregular, and their employment was unlawful.

[38] In response to an invitation by the Commission to furnish submissions on why the Commission should not find the appointments to have been unlawful, Mr Mokoena submitted an affidavit, which I have found to be disappointing, because the responses are all an exculpatory afterthought.

[39] He said the Minister had ‘noted and approved’ the appointments. That is not correct. The memorandum did not ask for ministerial approval for the appointments, as Mr Mokoena well knows. It asked only that the appointments be ‘noted’. Indeed, Ms Mokoena and Ms Makhekhe-Mokhuane had already been appointed at the time the memorandum was placed before the Minister. Mr Mokoena sought also to justify the lawfulness of the appointments on the grounds that the Minister had raised no queries in relation to what was placed before him. It is unfortunate that a senior employee of SARS should justify misleading information being placed before the Minister on the basis that it was not queried.

[40] So far as their remuneration was thereafter adjusted, Mr Mokoena submitted that ‘SARS can effect adjustments within salary ranges previously approved by the Minister’, but gives no explanation for that view. Ministerial approval is required for all terms of employment, not only those upon which the employee was first appointed. It would be absurd if approval was required for the initial terms, which may then be altered the next day. Mr Mokoena has not persuaded me that the appointment of all three Chief Officers was not unlawful. Indeed, that was what he and Mr Moyane had been told in the opinions I have referred to, but they went ahead nonetheless.

[41] Ms Makhekhe-Mokhuane asked to give evidence before us. The evidence she gave, and the manner in which it was given, was rather disturbing, coming from the Chief Officer in charge of SARS information technology systems. In the fifteen months of her tenure only one strategy meeting has been held. Of the eleven meetings with her subordinates she attended only four, appearing to see the absence of her signature on the minutes of the other meetings as significant, for reasons that are not clear to us. There has been no material development of the information technology systems since the departure of Mr Hore, and all that is being done, so she said, is to ‘keep the lights on’. We think it is manifest that she does not have the capacity to take control of SARS information technology. The aggressive, indecorous and unusual manner in which she gave evidence before the Commission was also not appropriate for a person in her position at SARS.

General

[42] I have noted that psychometric assessment for appointment at this level is compulsory and I think the intention is self-evident. It is intended as an objective benchmark for assessing the candidate’s capacity for the position, albeit that that is not decisive. The most remarkable feature of all the appointments, other than that of Mr Mathebula, was that in no case, upon psychometric assessment, which was compulsory, was the appointment recommended. Indeed, the fact that in three cases the outcome of the assessment was not yet available shows that assessments were ignored in the selection process, in conflict with the dictates of the policy. I find it troubling that an organisation as large and complex as SARS has been under the management of chief officers all but one of whom was objectively assessed as ‘requiring development’.

[43] As troubling is the size and composition of the interviewing panels. The policy required selection by ‘reasonable cross functional teams, representative of the functional department’. It is not evident to me that any of the panels fell within that category. The mechanisms for selecting top management are themselves important elements of governance, and panels comprising no more than the Commissioner and two others seem to us to be wholly deficient for that purpose.

[44] Good governance calls for senior management with the capacity to restrain abuse of authority but we see no sign of that in those who were appointed by Mr Moyane. Mr Mokoena sought to demonstrate that he had not been compliant by directing the Commission to a reprimand he received from Mr Moyane in consequence of a letter he wrote opposing the return to SARS of Mr Makwakwa after he had been suspended, but I do not find that to be persuasive. The letter was not written to Mr Moyane, but to a firm of attorneys, and came fortuitously into Mr Moyane’s hands. We have not seen evidence of anything but complacency from the members of EXCO appointed by Mr Moyane.

[45] Chief officers at SARS receive substantial remuneration, generous bonuses, and are surrounded by bodyguards and highly paid executive assistants. No doubt any confrontation with Mr Moyane would have cost them all that, but compliant senior management is a large step towards dismantling governance.

[46] The reason the Katz Commission recommended remuneration at SARS in excess of that in government service was to enable SARS to attract the best, and we recommend that the new Commissioner consider whether that was achieved, by conducting a performance review of EXCO members appointed by Mr Moyane, taking account of their capacity for senior management, their appreciation of good governance, and their capacity for inspiring public confidence in the integrity of SARS, bearing in mind these and other matters dealt with in this report. We also recommend that the new Commissioner review the benefits that are accorded to members of EXCO.

[47] For completeness I need to add that at 31 March 2018 Mr Matlwa, Mr Makwakwa and Mr Michaletos had resigned. At the time of this report Ms Refiloe Mokoena was on suspension and Ms Makola had resigned. .

The next part of the Nugent Commission report follows here: