Tax chief 'sat for over a year' on Treasury tax claim

Suspended South African Revenue Service second-in-command Jonas Makwakwa appears to have sat for more than a year on a tax complaint against a Durban businessman with close links to President Jacob Zuma.

The Sunday Times understands that in April 2014 the National Treasury sent a communiqué to SARS about its suspicions that Mabheleni Ntuli paid no tax on R18-million he was paid for memorial services for Nelson Mandela in Mpumalanga in 2013.

An events management company owned by businesswoman Carol Bouwer paid the politically connected businessman R18-million through his company Dartingo Trading 20.

She hired him as a subcontractor to supply infrastructure for services.

The Mpumalanga government paid Bouwer's firm, Carol Bouwer Productions, R39-million as the main contractor organising the services.

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This week, Makwakwa denied impropriety. He said he had no recollection of any matter involving Carol Bouwer Productions or Dartingo Trading coming to him.

Bouwer said: "CBP is a compliant taxpayer. If that were not the case the company would not still be trading. Our suppliers are paid on the basis of a valid tax invoice. No, CBP has not had dealings with any executives at SARS regarding this matter."

It has emerged that the Treasury, which lodged a complaint with the Hawks on this tender, alerted then SARS acting commissioner Ivan Pillay to suspected nonpayment of tax by Ntuli and Bouwer on money earned for the events.

A former official in Pillay's office said that there was such a communiqué, and it would have been handled by Makwakwa's office after Pillay's departure. "Correspondence like that would have generally entered into our routine risk and case management system," he said. "It was not part of significant cases that required special governance to be put into place. It would have been in his office." Pillay declined to comment.

Two senior government officials said that Makwakwa, as the chief officer for business and individual taxes at SARS, handled the alert.

But since 2014 there has been no action against the companies. "It was suspected that since the entities did not have any VAT numbers they may not have made the necessary arrangements with SARS to meet their tax obligations," said an official.

The other official said that because of the restructuring at SARS, which resulted in the technical dissolution of its Large Business Centre, all the corporate clients were centralised under Makwakwa. "That was how the file was moved to him," he said.

The policy is very clear that for large corporates you can't go [alone] and negotiate with somebody who is owing

"What we got in this case is they were only limiting the investigators to Carol Bouwer. If Carol Bouwer transfers money to Ntuli, then obviously Ntuli must also pay tax ... But in this case, they were limited to her and not the other one.

"The problem with the way SARS is organised right now is that if there are reports from investigations against defaulters it will only be one person, Makwakwa, who will go and negotiate with them.

"The policy is very clear that for large corporates you can't go [alone] and negotiate with somebody who is owing," the source said.

"The suspicion was that the company [Dartingo Trading 20] was not tax compliant and should be investigated. There seems to have been no investigation by Makwakwa," said one government source.

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Ntuli had not responded to queries by the time of going to print.

But Makwakwa said yesterday that his office did not negotiate with clients. His office only dealt with case selection, meaning they decided which cases were selected for audit. "Whoever has got information will go to somebody within my unit and they will look at the matter to see if there is merit. We would do evaluation to see if there is need for an audit. If there is a need, we would forward it to enforcement."

Makwakwa was suspended on Thursday after allegations of misconduct over R1.2-million in "suspicious and unusual" transactions. It was said Makwakwa received "unexplained" cash deposits and bank transfers amounting to R1.2-million from 2010 to 2016.

SARS commissioner Tom Moyane announced yesterday he had appointed independent international law firm Hogan Lovells to investigate.

The Sunday Times reported last month that Ntuli splurged most of the R18-million on luxury cars, jewellery and high-end clothing and paid R55,000 into the bank account of one of Zuma's wives, Nompumelelo "MaNtuli" Ntuli-Zuma.

The Hawks are still investigating a case of fraud and corruption related to Mpumalanga tenders for Mandela memorial services. This followed a Treasury complaint after Bouwer's firm was appointed without any tender process being followed.

The speed with which payments were made to her in December 2013 also raised questions.

jikat@sundaytimes.co.za, skitis@sundaytimes.co.za