Give SARS a chance, says Nene, amid staff exodus

Finance Minister Nhlanhla Nene has set up an advisory panel to deal with the fallout of corruption claims and an exodus of top executives from the South African Revenue Service.

 Business leaders have warned that the implosion at the institution has undermined its credibility and could even begin to affect its ability to collect tax revenues.

The panel, headed by retired judge Frank Kroon, would review the institution's governance arrangements and work to bring "closure" to the episode, Nene said on Wednesday.

During an interview with Business Times, Nene said the panel would be well-placed to advise whether anything had to be done to address "negative perceptions" of the institution.

But Nene didn't agree that SARS had suffered from a haemorrhaging of top skills.

"The biggest test of an institution and the depth of its skills base is when people in higher positions move on. People should give SARS a chance to show that we haven't lost skills, we have lost individuals," he said.

But SARS's credibility has taken a knock since an independent panel, led by Muzi Sikhakhane, said it had found evidence that a "covert unit" had been illegally established at SARS, a finding that led to the suspension of deputy commissioner Ivan Pillay and the executive for planning and risk, Pete Richer.

Several high-profile officials have also resigned in the past few months, including chief operations officer Barry Hore and head of modernisation and strategy, Jerome Frey. SARS spokesman Adrian Lackay left last week after 11 years with the institution.

These events have led to speculation of a purge by SARS commissioner Tom Moyane, who dissolved his eight-member executive structure after starting his job in September.

More alarmingly, this fallout has prompted allegations that there is a campaign by politicians and corporations with criminal intent to seize control of SARS, which has established a culture of tax compliance in the country over the past two decades and helped to promote SA's standing in the eyes of global investors.

"A lot of damage has been done," said Iraj Abedian, CEO of Pan-African Holdings. "SARS is important not just from a revenue point of view but for the credibility of the country.

"The fact that there is an exodus at the top suggests that something has gone off the rails. Why and how is something the panel should shed some light on," he said.

Tax experts have also warned that if trust in the administration should fail, companies and individuals would be likely to become less compliant.

During a press briefing ahead of the budget, Nene acknowledged that what was happening at SARS could affect its performance.

"It has not impacted on revenue - but if there is continuous media coverage without dealing with the matters at hand, you are likely to get to that point," he said.