Lion and cheatin’
Should you shop SAB to the SA Revenue Service?
Go on: down the Lion; feel satisfied!
The letter from Shelley-Anne Carreira of the SA Revenue Service’s corporate division (nose52) asking for your documents relating to SA Breweries’ Black Label tax fraud makes interesting reading. Did you know she’s the wife of KPMG Johannesburg’s senior partner, Richard Carreira?
I know several people who would reckon it useful to have the wife of a senior partner of KPMG heading the corporate division of SARS. (And wouldn’t KPMG just love to be SAB’s auditors!)
Almost as we were speaking, Finance Week published the following little item:
The US Justice department claims that accounting firm KPMG had impeded an internal revenue service probe by concealing the full extent of its involvement in developing and promoting tax shelters. The department filed a lawsuit against KPMG in July to force it to divulge tax shelter information to the IRS.
So noseweek called KPMG and asked whether they have any relationship with SA Breweries. The switchboard put us through to the person at KPMG who deals with client lists. His reply to our question: “We are not SAB’s auditors, but we do do tax work for them, the occasional special internal investigation, and a bit of corporate finance consultancy.” – Ed.
Hand over the bundle
I refer to the “bundle of documents” which you state [in nose51] reveal “a massive fraud perpetrated by SAB against the South African Receiver of Revenue”.
While not pertinently mentioned in my previous letter [nose52], I am requesting the above documentation in terms of section 74A of the Income Tax Act. As a result of your article, I am requesting the “bundle of documents” to verify the correctness thereof and to investigate any potential tax evasion on the part of the SAB.
Furthermore, I wish to draw your attention to section 4(2A) of the Act, which provides that you may not advise the taxpayer who is the subject of this request that the SARS has requested this information from yourselves. Your attention is also drawn to the provisions of the Act that impose a criminal sanction in the event that you disclose any communication to the taxpayer.
Should the requested information not be provided within 14 days of the date of this request [2/12/2003], further legal recourse will be taken.
(for General Manager: Corporate Tax Centre)
To deal with the last paragraph of your letter first: I was not aware that publication of your initial letter (in nose52) might constitute a criminal offence. Your letter was not marked confidential, and there was, of course, no secret to the fact that we had the information concerning SAB and had made it available, by means of publication, to the general public – most specifically including yourselves.
I would think that all reasonable people, including SAB, would have expected the SARS to take an interest in the matter, so no real secret there, either.
On the question of providing you with the “bundle of documents”: I am surprised at the threatening, peremptory tone of your demand after I explained to you (by telephone) that we were happy to cooperate insofar as this might be reasonably required of us, but only to the extent that the anonymity of our source was in no way compromised.
For the record:
1. We don’t hold the original documents. They may more productively – and appropriately – be demanded of the directors of the taxpayer and its auditors and tax consultants. (I believe the documents have been adequately identified in our two stories for you to be able to do so.)
2. We are obviously not the author or the addressed recipient of the documents, so we cannot verify or elaborate on their content.
3. To enforce any claims which you might have against the taxpayer arising from the documents, you would have to produce them to the taxpayer should SAB dispute the claim. Were we to make our copies available to you, and you then produced them in this way, you would more than likely in the process assist them to identify our source. Under no circumstances would we expose ourselves, or our source, to that risk, as that would fatally prejudice our ability to perform our function, as is guaranteed by the Constitution. That function, I believe, certainly overrides your mere convenience.
Finally, I am puzzled why you, specifically, are demanding our cooperation in the matter. I understand you deal only with SAB’s current tax assessments. The investigation of historical tax frauds is the responsibility of other divisions of the Revenue Service. If this is correct, could you explain your interest? – Ed.
Your reports concerning Pick’nPay and SAB in nose52 got me thinking. I just returned from a holiday in the US. Having done some shopping there I was interested to find that the price of Miller Lite was about $9.50 for an 18-pack which works out at about R85 for a 24-can case. This means that the price in SA for a similar case of Castle compares favourably with the US price. But when it comes to canned soft drinks, South Africans get screwed! A 24-can case of Coke in the US is routinely sold for $2.88. (Nominally this is a “specials” price, but every supermarket I went into always seemed to have a special in progress.) That comes to about R20 per case, while at Pick’nPay we pay almost exactly that for a six-pack! Either Raymond (and all the other supermarket owners) are perpetrating a major rip-off ... or maybe it’s time to investigate ABI (SAB’s softdrink subsidiary) and their pricing/costing policies. It’s ridiculous that a case of Coke and a case of Castle cost almost exactly the same in SA. Thanks for your great mag.
Morgan-Price International (Africa Region)
River Club, Johannesburg
Could Coke just be doing the old imperialist thing: collecting a fat trademark royalty from its sucker clients in the colonies? – Ed.
‘Stupid’ Rian Malan
I sympathise with Rian Malan’s frustration regarding the so-called statistical evidence for Aids and the mass predisposition to believe it. I can only recommend that he disengages and quietly lets the parade of doom-driven, credulous flagellants pass by.
One cannot hope to prove a negative. In the Middle Ages everyone, including people of the highest intelligence, believed in witchcraft. Who could possibly have convinced them of the error of their belief? People believe in such things because they want to believe in them. The belief in Aids is founded on an uncritical acceptance of statistics; no more than that – just as the belief in witchcraft was founded on an uncritical acceptance of mediaeval theology.
This is the way of the world and, as Molière observed, it is folly to busy oneself with the correction of the world.
See ‘The TAC thinks Rian Malan is wrong’ in this issue.
That Venter memo
As one of the recipients of the original memo in which Bill Venter proposed that we re-use A4 envelopes, rubber bands, paper clips and so on, I can confirm from memory that the date on the memo is probably correct. I was an employee of Standard Telephones and Cables (STC) when, in 1977, Venter’s Altech bought the company from its American owners, International Telephones and Telegraph. (ITT got out of SA as a result of pressure from the World Council of Churches.) Bill immediately set about putting his cultural stamp on the company by, inter alia, sending out that memo.
Some time later, Dr Harold Serebro (MD) compiled a collection of Bill’s more outrageous memos – we thought he was brown-nosing Bill – and if I remember correctly, it was printed and published by Grant Rogerson, who handled that sort of thing in the company. I don’t know why they are now being so coy about the whole thing. [Greenberg has said categorically that he copied nobody. Dr Venter remains mum. – Ed.]
When it comes to explaining the remarkable similarities between the published memos of Bill Venter in Johannesburg and Alan Greenberg in New York, it is, of course, possible that one did not plagiarise the other – but that both plagiarised a third party.
Curiouser and curiouser … – Ed.
I stopped reading noseweek ages ago and only got to read issue 52 when a friend lent me his copy for the Landmark article. Jeez, that really is snuze nuze. That you had some clerk assemble it is one thing; the scary bit is that you signed it off for publication.
In the first five lines you confuse Life Training with Landmark [We don’t – Ed.] patently unaware that they are direct competitors so everyone realises you know zip about this sector. You waste six pages on a tiny Cape Town operation. Have you lost your marbles? Patently you didn’t even bother to do simple research, of which I have done plenty over 10 years.
The reporter says she was not given access to their financial statements. This is about the best (ragged) line you trot out. Are your financials available to the public? Do you have a Pty with auditors – or just a silly little cc? Is this a valid test for transparency? [Yes.] Is the real problem that all your staff are out checking wine labels?
In case you hadn’t noticed, there is so much real financial scandal here in Cape Town right now. Just take the oil industry – they all have their head offices here, so all the scandals are here. The numbers are mind-boggling and the SARS are screaming blue murder and BEE are screaming and … noseweek publishes six pages about Landmark. Thank God I didn’t buy a copy.
Maybe you can get the printers to mark and print the folding points for converting snuze nuze into useful office gliders.
Marina da Gama
Mr Hall, a less-well-known accountant, has apparently been doing Life Training and Landmark self-improvement courses for the past 10 years – Ed.
Whine from the West
The ad for Ken Forrester wines in nose52 raises a few questions:
What is “sauvignon” wine?
Who made the statement regarding “seriously good wine”? Would it be Ken Forrester?
Exactly which awards has this “award-winning wine” won?
Have you, too, been on a Landmark course? Or is it the weather? In the meantime: 1. (a) In theory it could be either sauvignon rouge, or noire or gris (maybe you produce one of those?), but out here in the real world we drink only a sauvignon that’s blanc; OR (b) it could be an editing error; 2. noseweek’s distinguished wine panel; 3. Forrester’s 2002 Chenin Blanc won the Challenge International du Vin 2003 silver award, got a gold medal at the Michelangelo International Wine awards and was selected as one of the leading proponents of Chenin Blanc in SA at the Rendezvous du Chenin held in the Loire Valley. The 2001 Forrester Family Reserve Shiraz got a silver Veritas award in 2003, and, surely as good as any award, the 2001 Noble Late Harvest gets a five-star rating in John Platter’s 2004 Guide. AND … tarrah! … Madiba chose Forrester wines for his 80th birthday bash.
Richard, just send us a case of your wine (two cases are better) and we’ll tell you how it rates. (Hope the weather changes soon.) – Ed.
Minister Manto Tshabalala-Msimang has a habit of popping in at a long-established restaurant, just up the road from parliament, for a glass of wine and something to eat.
Her bodyguards go to the bar (which is the smoking area) for a cigarette or two. One evening, in recent weeks, she was there again. When she had finished her meal and drinks she pointed out to the management on duty that she was offended by the smell of cigarettes permeating the area where she had eaten and, for that reason, was refusing to pay her bill of R310.
The restaurant is in an old building and while they have tried to demarcate the smoking and non-smoking areas of the establishment, they are not in full compliance of the law. (Major alterations would be required for that.)
Who’s in the wrong?
We asked the restaurant owner for his comment: “The minister had a point: that evening we unfortunately had a large crowd of smokers. We're not complaining. We're a small restaurant and definitely can’t afford to make any points.”
Maybe it’s time it became fashionable for addicts to wear nicotine patches when eating out – and to turn to their beloved’s earlobes when the urge to suck becomes too great. – Ed.
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