All president's men brought in to bat

Former SARS chief to confront Pravin Gordhan about efforts to derail probe.

Former commissioner of the South African Revenue Service, Tom Moyane, is preparing to confront Public Enterprises minister Pravin Gordhan with allegations that government ministers, including President Cyril Ramaphosa, attempted to derail investigations and prosecutions concerning the so-called rogue unit at SARS.

Gordhan is likely to face some tough questions [to which we too would like to know the answers – Ed.] when Moyane’s lawyers cross-examine the minister at the Zondo Commission of Inquiry into State Capture. His appearance set down for March 19. Deputy Chief Justice Raymond Zondo gave the go-ahead for the grilling last November, although his ruling has come with a caveat – questions must relate to allegations made against Moyane.

Moyane is likely to get a rough ride too. Then president Jacob Zuma appointed him to the commissioner’s seat at SARS in 2014. A long-time Zuma ally, Moyane came with no other more obvious qualifications that might have fitted him for the taxing job. He will forever be remembered for his tempestuous four-year reign, notably for bringing in Boston-based consulting firm Bain & Company for a ruinous R204-million reworking of the tax collector’s operating model and structure.

Retired judge Frank Nugent (who called for Moyane’s dismissal in his Nugent Commission report) and Ramaphosa (who fired Moyane in November 2018) are two of  Moyan e’s particular targets. His forthcoming cross-examination of Pravin Gordhan at the Zondo Commission promises to be a fiery face-off.

Judge Nugent

In our last issue (nose243) we told how, in 2015, then deputy president Ramaphosa and deputy finance minister Mcebisi Jonas secretly pressured SARS to secure multi-million-rand exit settlements for SARS’s former deputy commissioner Ivan Pillay and its head of strategic planning and risk, Peter Richer. Both were facing serious internal disciplinary charges for their alleged roles in the “rogue” covert surveillance unit.

That, it emerges, was only the tip of the iceberg. According to Noseweek’s sources, Jessie Duarte, deputy secretary-general of the African National Congress was also involved in the secret intervention. And the involvement of deputy finance minister Jonas was at the request of minister Gordhan, former SARS commissioner and Pillay’s principal “protector” in his battle for survival.

(Gordhan could hardly be seen to be directly involved in the intervention, since he had been replaced as finance minister by Nhlanhla Nene and was now Minister of Cooperative Governance and Traditional Affairs.)

As well as securing multi-million- rand pay-offs (and an escape from having to answer serious internal charges) for Pillay and Richer, the ministerial intervention team, it is alleged, demanded deletions and the “watering down” of the about-to-be released Sikhakhane Report, which found that the “rogue unit” had been unlawfully established.

There was also pressure on former SARS commissioner Moyane to appeal to then NPA boss Shaun Abrahams to drop charges against SARS executives over the 2007 bugging of the offices of the National Prosecuting Authority.

These secret ministerial interventions raise serious questions of legality, the separation of powers and even of conspiracy, as the government’s revenue-collecting agency SARS was established as an administratively autonomous organ of the state, outside the public service but within the public administration.

Appointed by the president, the commissioner is responsible for all agency functions and the exercise of its powers, but exercises these under the policy control of the finance minister.

But whether the president, the minister of finance or his deputy minister – let alone the deputy secretary-general of the ANC – can properly seek to influence decisions relating to internal disciplinary or criminal matters at SARS is open to question.

This, according to Noseweek’s sources, was the build-up to the alleged intervention.

In the early months of 2015 Ivan Pillay had been blowing hot and cold over whether he wanted to resign from SARS or stay on and fight the 10 internal charges that he faced, both over the “rogue unit” as well as his controversial early retirement on full pension and immediate reinstatement as deputy commissioner. (See nose242 for the pension saga and the online edition of nose242 for Pillay’s original charge sheet).

Suspended, then reinstated by order of the Labour Court, Pillay’s disciplinary hearing had originally been set for 26 February 2015. But it was postponed while negotiations dragged on. In nose243 we reported on how a meeting in the chambers of advocate Nazeer Cassim SC in January to “facilitate” his departure had failed. And on 2 February, when Pillay met with then commissioner Tom Moyane at the Kgosi Mampuru II Correctional Centre, Pillay refused to shift on his demands.

In late April 2015, former Chief Justice Sandile Ngcobo, who had agreed to preside over Pillay’s internal hearing, told SARS that he would be available between 22 and 29 April (for a fee of R30,000-a-day). And a final date of 22 April was set for Pillay’s hearing to begin.

It was then that Ramaphosa and his intervention team are said to have stepped in, wielding the big stick of government and ANC. One meeting was held at Luthuli House, headquarters of the ANC, just days before Pillay’s scheduled disciplinary hearing. Those present, according to Noseweek sources, were then deputy president Ramaphosa; ANC deputy secretary-general Jessie Duarte; SARS’s then commissioner Moyane; and Ivan Pillay.

Ramaphosa instructed Moyane not to proceed with Pillay’s hearing, but to settle the matter.

“Moyane told Ramaphosa that the charges were serious, with criminal elements, and he implored the deputy president to let the disciplinary proceedings against Pillay continue,” says a Noseweek source.

“Pillay said at this meeting that they should also do a deal with his colleagues Peter Richer and Yolisa Piekie [his R900,000-a-year special adviser who resigned after facing charges for faking his academic qualifications]. A R4m settlement, which was based on 18 months’ salary, was agreed upon for Pillay, and a slightly lesser amount for Richer.”

Several days later the pressure was piled on at a meeting at the National Treasury offices in Pretoria, say our sources. Those present were finance minister Nhlanhla Nene (who had replaced Pravin Gordhan in Finance the previous May); deputy finance minister Mcebisi Jonas; SARS commissioner Tom Moyane; and two members of the SARS Advisory Board who produced the Kroon Report, Judge Frank Kroon himself and Bonga Mokoena (who hailed from Alexander Forbes, where he was managing executive).

Deputy minister Jonas’s concern was the Sikhakhane Report, with its unfavourable findings about the SARS rogue unit. The report, with advocate Muzi Sikhakhane SC’s finding that the unit was established unlawfully, had been circulating within SARS for months. It was also leaked to the Sunday Times, which published extracts in its issue of 12 October 2014. Now it was about to be released for public consumption.

“Deputy minister Jonas told Judge Kroon and Tom Moyane that before Sikhakhane was released to the public they must water it down and remove some parts,” says Noseweek’s source.

“Minister Nene made no comment about this instruction, but Judge Kroon was outraged. He made it clear to deputy minister Jonas that what he was asking was completely against the law and could get him struck off the roll of judges. Mr Moyane supported Judge Kroon and said he disagreed with any tampering.”

Within days, on 28 April 2015 Judge Kroon took it upon himself to hold a press conference and announced the public release of Sikhakhane. The judge’s press release stated that “a secret unit was established within SARS in 2007, which among others had the purpose of the covert collection of intelligence.”

The Advisory Board had satisfied itself that “the establishment of such a unit is unlawful” as SARS “does not have the statutory authority to covertly gather intelligence”, and that crimes may have been committed that SARS should report to the police.

Eight days later, on 6 May 2015, deputy finance minister Jonas summoned commissioner Moyane to Cape Town for a meeting at his offices in Parliament. Ivan Pillay was present. “Jonas confirmed he had received instructions from Cyril Ramaphosa regarding Pillay’s settlement amount of 18 months’ salary, and Richer’s settlement as well,” says our source.

“The settlement documents were there and Pillay signed his [under the name of Visvanathan Pillay]. Richer signed his at a meeting with Luther Lebelo (SARS group employment head) at Johannesburg’s OR Tambo International Airport the following morning. That same day, 7 May 2015, Pillay and Richer resigned from SARS and all disciplinary charges against them were withdrawn. A statement issued by SARS confirmed that the parting of the ways was amicable. Luther Lebelo said that all charges and related investigations against the pair had been withdrawn.

Lebelo is a controversial character in the “rogue unit” saga and as SARS’s head of labour relations has endured much venom and vitriol in the media, being described as Moyane’s enforcer and hitman. In his book The President’s Keepers, Jacques Pauw describes him as “head of suspensions” and “adept at changing his loyalties as the winds blow”.

Others see him more realistically for what he is: an ambitious but well-intentioned 42-year-old who tried to do his job under Moyane’s tempestuous sway. Highly intelligent, he holds a bundle of degrees, including a Master’s in Business Leadership. Lebelo arrived at SARS in 2006 from Telkom, where he was a manager in the accounts department. At SARS he worked his way up from a grade 7 specialist in employment relations to senior executive grade 9b, two levels before commissioner. A former chairman of the ANC’s famous Liliesleaf Farm branch, he is a declared supporter of Cyril Ramaphosa.

Nine days after the Pillay/Richer resignations, on 16 May 2015, commissioner Moyane lodged a complaint (CAS 427/5/2015) at Brooklyn, Pretoria, relating to the “rogue unit’s” alleged bugging of the NPA offices and Project Sunday Evenings.

The final meeting of the government’s ministerial interventionists, as far as we know, was held on a Sunday afternoon in July 2015, just weeks after the appointment of Shaun Abrahams as national director of the NPA. It took place at Hilton House, SARS’s satellite offices next to the Revenue’s headquarters in Brooklyn, Pretoria. Present were deputy finance minister Jonas, SARS commissioner Moyane, the Revenue’s then chief operating officer Jonas Makwakwa, and employment head Luther Lebelo.

“Deputy minister Jonas said he had met with Ivan Pillay, Johann van Loggerenberg and Yolisa Pikie at the request of Pravin Gordhan,” says our source. “They had asked him to meet with Mr Moyane and his team to persuade Moyane to drop criminal charges against them.

“Deputy minister Jonas said he had already spoken to (NPA prosecutions boss) Shaun Abrahams, who agreed to cooperate. But Moyane refused this request, saying the charges were serious. Deputy minister Jonas gave up insisting, but asked Moyane to think about it.”

The Hawks proceeded with their investigation into the “rogue unit,” as well as Pillay’s early pension, and in October 2016 Abrahams announced that Gordhan, Pillay and former SARS commissioner Oupa Magashula would face charges of fraud relating to Pillay’s early pension.

As recounted in nose242, the summonses were withdrawn after the fortuitous emergence of the Symington Memorandum, authored by the SARS legal department’s Vlok Symington, that declared Pillay’s early retirement, the waiver of the early retirement penalty and his request to be reappointed on contract were all “technically possible”.

Judge Kroon suddenly changed his tune on the legality of the SARS surveillance unit in his testimony to Judge Nugent’s Commission of Inquiry into Tax Administration and Governance by SARS on 28 September 2018. He now declared he had made a mistake when he found the unit had been established unlawfully.

Kroon told the commission that in March 2016 he had been summoned to a meeting with Pravin Gordhan (by then reinstated as finance minister) to discuss “the aspect of the wording” of his bombshell press release the previous year.

“As Mr Gordhan was the commissioner at the time of the establishment of the unit I thought that he was entitled to an apology and I tendered it,” went Kroon’s testimony. “We should not have made that statement. We should have restricted our comments to the members of the unit having engaged in unlawful activities.”

Judge Nugent, appointed by President Ramaphosa to head the Commission of Inquiry into Tax Administration and Governance by SARS, pounced on this. “As you sit here today would you perhaps withdraw that conclusion too?”

Kroon: “I’m sure it would have been better if we had ventured into an investigation of the allegations and requested persons who were implicated in the allegations to appear before us and give us their version.”

Today Ivan Pillay, Johann van Loggerenberg and Andries “Skollie” van Rensburg are waiting to hear whether they must face trial over the activities of the SARS covert surveillance unit. Last October City Press reported that a review panel of prosecutors at the NPA had recommended that NPA national director Shamila Batohi should abandon the case against them since “there is no prospect of a positive prosecution”.

It is widely expected that Batohi, appointed to the top prosecutor’s post by President Ramaphosa in December 2018, will toe the line and announce the abandonment of charges any day.

Readers may peruse the following  documents free of charge on Noseweek’s website:
1. Confidential Separation and Settlement agreement between SARS and “Visvanathan” Pillay in deputy finance minister Mcebisi Jonas’s office in Parliament on 6 May 2015.

2. Correspondence between Ivan Pillay, SARS Commissioner Tom Moyane and both parties’ attorneys.

3. At the 2018 Nugent Commission Judge Frank Nugent concluded – apparently wrongly – that a memo written by Martin Brassey SC to SARS recommended that disciplinary charges against Ivan Pillay in connection with the “rogue unit” should be dropped.

Nugent, appointed by President Ramaphosa to head the 2018 commission of inquiry into tax administration and governance by SARS, clung to his questionable interpretation, which assisted him to declare in his final judgment: “Why such a unit was considered to be unlawful is not clear to me.”

Although members of the unit might at times have acted unlawfully, said the judge, “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.”
Brassey was retained by SARS to investigate, formulate the charge sheet and prosecute at Pillay’s disciplinary hearing before former Chief Justice Sandile Ngcobo. And Nugent considered that in an opinion by Brassey, dated 11 November 2014, the advocate considered he had a winnable case.

In fact, all that Brassey said about the rogue unit in that opinion was that his prima facie view was that undercover activities of the nature undertaken by the unit were the province of the SA Police Service and not of SARS. The Revenue’s interest, he suggested, might better be “confined to exacting tax on trading activities, whether lawful or unlawful, rather than actually combatting the activities themselves”.

And in the subsequent memo dated five months later on 29 April 2015, there is nothing to indicate a change of mind. The advocate merely recorded his recommendation made the previous day to SARS employment executive Luther Lebelo that the set of charges relating to the rogue unit should be “held in abeyance”.

Lebelo’s response, says the memo, was that the rogue unit charges should remain with the two other sets of charges: Pillay’s early retirement and the R3m goodbye settlement to rogue unit leader Andries “Skollie” van Rensburg. “We happily submit to such instructions,” said Brassey in his memo.

Signed by Brassey and his juniors, advocates Michael van As and Nadine Fourie, the memo says the team was ploughing through a large collection of emails, statements and evidence compiled for advocate Muzi Sikhakhane’s earlier internal investigation, as well as 4,000 documents received from KPMG (busy at the time with its own forensic investigation). But they add: “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”. Witnesses were proving to be uncooperative.

Brassey did not give testimony at the Nugent Commission, but in his public grilling of Luther Lebelo the judge said: “I’ve spoken to Mr Brassey, I’ve seen his opinions, and I remember that Mr Brassey said there is not a strong enough case to go on with… The witnesses are uncooperative and the case is by no means conclusive.”

Nugent added: “Advocate Brassey drew [up] the charge sheet – it wasn’t only the rogue unit, of course. I accept it, because Brassey is a reputable advocate and I practised with him.

I accept that he felt he had a basis for that. But the point is, when it came to preparation for the trial, for the disciplinary hearing, he then had second thoughts. He said this is not enough to prove the case. The witnesses are not co-operating and the documents are not satisfactory.”

Lebelo attempted to give testimony about Cyril Ramaphosa’s intervention, but Judge Nugent quickly knocked that one on the head. “Let’s get through that quickly,” said Nugent. “There were some discussions, even the current president…”

Lebelo: “Yes.”

Nugent: “…got involved in some of the discussions. He was the deputy president at the time. A resolution was being sought. I want to now go to the disciplinary proceedings.

“As I understand it there were discussions about (Pillay) resigning at quite an early stage?”

Lebelo: “Yes, when this discussion happened it stopped, because big people were getting involved in the discussion and the last one was when there was a meeting in Cape Town with the former deputy minister [Mcebisi Jonas] where the resignation [of Pillay] happened and I was asked to do the media thing and stuff like that.”

Nugent did not include Brassey’s opinion and his subsequent memo for public scrutiny on the commission’s website. When Noseweek asked Brassey for the documents he was unable to assist.

After Noseweek secured copies of both his opinion and the later memo, we asked Brassey – who was now retired to Plettenberg Bay – about Judge Nugent’s view that he had had second thoughts about the rogue unit charges. 

“No, there was no change of mind,” said Brassey. “The issue of the rogue unit was a live one. Our job was to marshal the evidence and we did what we could. In the light of what we received, we provided our opinion on whether the charge was actionable or not.

“Our job was not to decide whether the charges should be pressed or not. This is the enduring prerogative of the employer – in this case, SARS – as our client. That said, it would be inconsistent with our professional code of ethics to pursue a charge that we considered legally untenable, and we would not have done so.

“When the matter settled, or at least when settlement was mooted, I vaguely recall being surprised at the development. I had recently drafted a comprehensive set of charges and was preparing to prosecute them.”

- Other documents available to read, free, on Noseweek’s website are:
1. Advocate Martin Brassey SC’s Opinion of 11 November 2014 to SARS re Potential Misconduct within SARS.

2. Memorandum from Advocates Martin Brassey SC, Michael van As and Nadine Fourie, to SARS re Disciplinary Action against Deputy Commissioner Ivan Pillay, 29 April 2015.

3. Pillay's memo expressing his own doubts about SARS's authority to conduct intelligence work.

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