SARS ADVISORY BOARD MEDIA RELEASE ON THE SIKHAKHANE REPORT

Pretoria, 28 April 2015 - SARS ADVISORY BOARD media release 

1. The SARS ADVISORY BOARD (SAB) was appointed by the Minister of Finance in terms of section 11 of the SARS Act. The SAB was requested as a first priority to advise the Minister and the Commissioner on how to deal with the allegations of a secret intelligence unit operating within SARS.

2. The SAB has studied and discussed the Sikhakhane Report. It has sought and received extensive feedback from SARS on the progress made in implementation of the recommendations contained in the report.

2.1. The SAB has noted that KPMG and an independent senior counsel have been commissioned by SARS to look further into the full detail surrounding the establishment of the unit. This investigation has not yet been completed. 

2.2. The SAB has further noted that the Inspector-General of Intelligence has investigated this matter, and has made certain findings in this regard. (The SAB has not been provided with these findings.)

2.3. It has been noted that the primary subject of the Sikhakhane report, Mr Johann van Loggerenberg, upon being served with disciplinary charges, resigned from his employment with SARS, and can accordingly not be subjected to any disciplinary proceedings. SARS reserves its right as far as other contraventions are concerned.

2.4. It has noted that disciplinary proceedings were initiated against Messrs Pillay and Richer, and that these processes are underway. SARS has appointed the Honourable former Chief Justice Ngcobo to preside over the disciplinary proceedings.

2.5. It has further been noted that the disciplinary process against Mr Pikie has been completed, and the sanction of dismissal has been issued to him.

3. While cognizant of the fact that, save for the disciplinary action against Mr Pikie, the above disciplinary processes and investigations remain to be completed, the Board has, on the strength of the Sikhakhane report and other reports, satisfied itself that:

3.1. a secret unit was established within SARS in 2007, which among others had the purpose of the covert collection of intelligence;

3.2. the establishment of such a unit was unlawful;

3.3. the unlawfulness derives from the fact that SARS does not have and did not have the statutory authority to covertly gather intelligence;

3.4. the application of financial and human resources by SARS to this end had no legal basis, and thus constituted wasteful and fruitless expenditure;

3.5. this unit has since been disbanded by Commissioner Moyane. (Under the auspices of SARS’s Human Resources division a programme of reintegration of members of the unit into normal SARS operations has been in progress for some months);

3.6. no SARS members are currently engaged in activities that are unlawful or outside of the SARS statutory mandate.

4. The SAB recommends that the individual members of management who erred in the unlawful establishment of the unit above should be held to account. 

4.1. In this regard, the disciplinary proceedings against the SARS members who were suspended following the receipt of the Sikhakhane report, namely Messrs Pillay and Richer, should be finalised as a matter of urgency. 

4.2. To the extent that crimes may have been committed pursuant to the establishment of the unit, the SAB recommends that SARS report the matter to the SAPS with the request that the necessary investigation be accorded priority and any persons who may have contravened the law, speedily brought to book.

5. As far as the future is concerned, the Board has recommended to the Commissioner of SARS that the organisation should urgently embark on a process to determine:

5.1. the exact role that SARS should be playing in combatting tax and customs related crime, and whether the current statutory powers and functions of its officials, as well as the budget and capacity allocated to this function, need to be amended, reduced or increased; 

5.2. the exact role that SARS, as a civilian revenue and customs agency, should be playing in supporting law enforcement agencies in the fight against crime in general, and organised crime in particular.

6. The establishment of this covert intelligence unit has harmed the public’s confidence in SARS. SARS needs to win back and maintain the trust and respect of all taxpayers in South Africa. This unfortunate episode needs to be placed behind SARS, so that its members and leadership can focus all their attention on the execution of the organisation’s core mandate. 

7. In this regard, the SAB has begun to engage the executive leadership of SARS on issues pertaining to optimising the business model that should be in place and the strengthening of its governance practices in general. It hopes to be making certain recommendations in this regard soon.

8. In conclusion, the SAB congratulates all of SARS’s 14000 members on reaching the 2014/15 revenue target. It trusts this achievement will assist in building confidence and   pave the way for even better results in the coming tax year.

9. The SAB considers that it would be in the public interest and promote transparency, for the full Sikhakhane report to be made public. It is noted that SARS has no objection thereto. Click here to access the report. SARS may be approached to obtain copies. The SAB is engaging with SARS in respect of the recommendations in the report. It is to be emphasised that the most important recommendation has been implemented, namely the disbandment of the covert unit. 

Statement issued by SARS, April 28 2015