This article first appeared at Accounting Weekly.
President Cyril Ramaphosa has fired former SA Revenue Services (Sars) Commissioner Tom Moyane after receiving the Nugent Interim Report into the tax agency.
The President had little choice, though Moyane is taking his case to the Constitutional Court. It is clear from the report that Moyane was a one-man wrecking crew who instilled fear and distrust in the one state organisation that functioned reasonably well and was relatively untainted by corruption.
Moyane installed CCTV cameras so that staff felt they were under constant surveillance. He trashed the modernisation programme intended to use IT to replace the largely paper-based system that preceded it, thereby making it easier for cigarette smugglers and other tax dodgers to roam relatively unmolested.
Two weeks after Moyane took office in 2014, The Sunday Times reported the existence of a “rogue unit” within Sars, whose members had supposedly placed listening devices in the home of former President Jacob Zuma. A series of similar stories followed, causing immeasurable damage to Sars. It began to look like a set-up, a ruse intended to take the heat off criminals and tax cheats.
Nugent could find no evidence that the setting up of this unit was unlawful. When the press reports were published, Moyane called the Executive Committee (Exco) together and asked what they knew about these allegations. The Exco disavowed any knowledge. Moyane promptly announced he had no confidence in the Exco and disbanded it.
“That response is extraordinary in any rational terms. Mr Moyane had barely arrived at Sars, with no experience of revenue collection, yet almost immediately he denounced and humiliated senior management, with vast knowledge and experience, 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 events of which at least most of the Chief Officers could not be expected to have had any knowledge,” says Nugent’s interim report.
Two senior members of the so-called rogue unit – Ivan Pillay and Peter Richter – were suspended and their reputations smeared. Moyane ordered the disbandment of the rogue unit (called the High Risk Investigation Unit) which had been legitimately set up to chase down smugglers and big-time tax cheats. In December 2014 KPMG was brought in at a cost of R24 million (the money has since been returned to Sars) which made damning allegations against Pillay, former finance minister Pravin Gordhan and ANC secretary general Ace Magashula.
Consulting firm Bain was brought in, and after a perfunctory “diagnosis” with little or no consultation with operational managers, and no communication with employees, a new operating model was devised and implemented. It was a disaster. The new operating model threw operational managers into uncertainty on their jobs. Some 200 employees were eased out and forced to re-apply for posts in the new organisational structure.
Another consulting firm, Gartner, was brought in to review Sars’ IT infrastructure. It was paid R200 million but virtually nothing it recommended was implemented.
By 2017 the Exco that existed when Moyane arrived in 2014 had been demolished. No responsible leader of so complex an organisation would have acted as Moyane did, says the report. Legislative changes were needed to make sure this kind of one-man wrecking crew could never get near the levers of so vital an organisation.
The report says it best: “The trajectory of modernisation, that had been in the making for a decade, was summarily stopped when the current Commissioner, Mr Tom Moyane took office on 27 September 2014, and the systems are degenerating as technology advances. The operating model has been restructured such that fragmentation of functions inhibits co-ordinated action to the benefit of delinquent taxpayers,” says the report.
“The Large Business Centre as it had existed has been eviscerated to the detriment of revenue collection. The restructuring of the organisation displaced some 200 managerial employees from their jobs, many of whom ended up in positions that had no content or even job description, and in exasperation many skilled professionals have left. Others remain in supernumerary posts with their skills going to waste. Measures to counter criminality have been compromised and those who trade illicitly in commodities like tobacco operate with little constraint.
“Relations between the Commissioner of Sars and other state institutions – the Treasury, the Auditor-General, the Davis Tax Committee, the Financial Intelligence Centre – are icy, if there is any relationship at all, and Sars is isolated from its former high status amongst international bodies. Meanwhile, the reputation of Sars continues to be tarnished by reports in the media, many of which are true, to which the only response by Mr Moyane has been to attempt to intimidate the media by spurious litigation.”
The matter was so urgent the Nugent recommended Moyane be removed without delay and a new Commissioner be appointed. At this stage, Sars is being run by acting commissioner Mark Kingon.
Employees with information were afraid to come forward, or even to be seen at the Inquiry premises lest the suspended Moyane resume his position as Commissioner. As the Inquiry gained momentum, more employees came forward. Moyane was given an opportunity to respond to evidence against him, but declined. “It is intolerable that the proper functioning of such a vital public institution should be held hostage by the personal interests and ambitions of one man,” says the report.
“Almost immediately, and then continuously for the next eighteen months, SARS was thrown into turmoil, with tragic consequences for the lives of many people, tragic consequences for the reputation of Sars, and tragic consequences for the country at large.”
An institution that was once revered around the world descended into calamity the day Moyane took office. Now he is gone, the slow process of rebuilding can commence.