R13m tax debt waived - with just a scribbled note

The senior tax official fingered in recent news reports for the large number of “suspicious and unusual” cash deposits into his bank accounts (totalling at least R1.2 million) also featured prominently in the suspiciously bungled tax fraud case brought against notorious Durban tenderpreneurs Shauwn and S’bu Mpisane.

Noseweek has undertaken an extensive examination of the tax and other cases brought against the Mpisanes in Durban. What has emerged is a web of intrigue punctuated by cash deliveries in parking lots, forged tax invoices, houses and cars being offered as bribes, wiretaps, former police commissioner Bheki Cele’s giving a helping hand to some less salubrious friends and extortion. And, yes, we almost forgot to mention: the story begins with a murder on the steps of the high court in Durban, with S’bu Mpisane, (then a police constable, now, recently retired), driving the getaway car. (The murderers were never arrested, and S’bu was never charged.)

S'bu and Shauwn Mpisane

Jonas Makwakwa, Chief Officer at SARS and career taxman, is being probed by the banking regulator for a large number of suspicious cash deposits made into his bank accounts between February 2010 and January 2016, according to a Sunday Times report by the AmaBhungane Centre for Investigative Journalism.

More curious still: while SARS was informed of these suspicious transactions in May, Makwakwa was still at his desk at SARS in September, when the AmaBhungane report appeared in the press.

These developments cast a whole new light on his role and his occasional appearances in the documents and other evidence in the aborted Durban tax case against the Mpisanes.

S’bu and Shauwn Mpisane are well known to Noseweek readers (see noses 103; 109; 125; 150; 195 & 203) and are rated founder members of KwaZulu-Natal’s “Teflon Club” (motto: “No charge sticks”).

Nowhere in the tax trial records is it suggested that Makwakwa deliberately sabotaged the tax probe and prosecution of the Mpisanes, but there are some disturbing incidents that compounded the problems that brought their politically charged criminal trial to an abrupt end. In 2011 Shauwn, along with her company Zikhulise Cleaning Maintenance and Transport cc, faced 119 criminal charges including forgery, tax fraud and the under-declaration of VAT.

Husband S’bu, while not a director, is directly involved in the business and was present in court behind his wife from the time she was charged in June 2011 until 30 January 2014 when she was acquitted of all charges.

Taxman Makwakwa’s involvement in the Mpisane matter raised several red flags, the most notable being the couple’s claim that, at an informal, out-of-the-office meeting, he had agreed to knock R13m off their R33m tax bill. He had calculated and scribbled the reduced payment, down to the cents that SARS would allegedly accept in settlement, on a piece of paper that happened to be available – and which was tendered as evidence in court. The bulk of the tax debt was for VAT refunds the Mpisane company had fraudulently claimed on their purchase of a Lamborghini, a Porsche, a Rolls Royce and a BMW.

Being rich and famous the Mpisane’s had easy access to Makwakwa, who obliged them by agreeing to an “informal” meeting on 25 March 2009, ostensibly to work out a payment plan.

Jonas Makwakwa

At this meeting Makwakwa jotted down – on the cover of the Zikhulise 2008 annual report that the Mpisane’s had brought along for the meeting – the tax amounts owed by their company under eight headings, including income tax, STC, PAYE, UIF and VAT on fringe benefits.

After point eight, he scrawled, in larger handwriting than the rest, the figure R20,074,273 – which was not the total of the amounts listed. It was, said the Mpisanes, the reduced amount he agreed to accept in settlement of their total tax debt.

The trouble is, Makwakwa had no mandate to conclude such a settlement. In fact, no SARS official, not even the Commissioner, is legally authorised to make such a deal.

By March 2010 the couple had paid the just-more-than-R20m “settlement” figure, allegedly on the assumption that Makwakwa had waived the balance of R13m.

But SARS could not have waived the R13m. There was no official paper trail to confirm such a concession and eventually the Mpisanes were forced to hand over  two Lamborghinis and a Rolls Royce to SARS as security in order to get their Tax Clearance Certificate – a must-have for anyone doing the large-scale business with the state they are accustomed to doing.

Upon receiving the vehicles, Makwakwa texted S’bu: “Thanks a lot. The TCC [tax clearance certificate] will be issued today. Good luck with your tender.”

Makwakwa admitted in court that the assumption by Shauwn that she only owed R20m was correct, but then he claimed he had only calculated the figure “as an example”. An example of what, was neither asked nor explained. The detailed listing of the correct figures in his scribbled note does not look like the setting out of a mere hypothesis.

The issue over the reduced tax was eventually highlighted as "another inconsistency" in the State’s case to justify its withdrawal by the NPA.

One more bungle on Makwakwa’s watch was his allowing the couple’s tax file – which had been kept under lock and key in Pretoria due to the high profile of the case – to be moved to Durban where it was handed to a compromised rookie auditor to compile an audit report into Zikhulise Cleaning’s financial affairs. The incompetently compiled report created so much reasonable doubt that eventually the NPA and SARS could agree to ditch the entire case – falsely blaming the lead prosecutor, Advocate Meera Naidu, for the mess.

Noseweek, in a coming issue, will publish a detailed report on just how the State and SARS destroyed a solid case against the Mpisanes, and we will attempt to draw some conclusions on what their motives might have been for doing so.

Jonas Makwakwa as seen by SARS

Jonas Makwakwa’s qualifications include a B Com Accounting degree and a diploma in Business Management. He also completed the Global Executive Development Programme with GIBS, where he studied in Singapore and Malaysia.

Makwakwa joined SARS in 1995 and started his career as an auditor. During this time he played a major role in the transformation and advancement of young black people. After serving as regional auditor responsible for Gauteng, Makwakwa became the general manager for Enforcement. Jonas was responsible for benchmarking and aligning both the Audit and Enforcement divisions with international standards and he introduced training programmes for auditors. He is now the Chief Officer for Business and Individual Taxes.

Makwakwa represents SARS and South Africa at international forums like the OECD, CIAT, WCO, Global tax forum and ATAF. He also represents management in all engagements with organised labour.

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