All out wars as SARS blames KPMG for reputational damage

18 September 2017 - 15:33
By Graeme Hosken

Embattled South African Revenue Services commissioner Tom Moyane – humiliated by accounting and auditing firm KPMG's withdrawal of its report’s findings conclusions and recommendations on the controversial SARS “rogue unit” - has blamed the company for the PR disaster he faces.

It’s now all out war for Moyane‚ who has labelled KPMG's behaviour "unethical"‚ and has said that he will do everything in his power to ensure the firm is blacklisted in South Africa and held legally accountable for the fiasco.

On Friday‚ KPMG dropped a bombshell when it said its report's findings‚ conclusions and recommendations‚ which were used to fire senior SARS investigative executives who operated the alleged rogue unit‚ were legally flawed. The firm has however insisted that the body of its report is sound.

Moyane mandated KPMG to conduct the report following reports from the Sikhakhane and Kroon commission of inquiries into the so-called rogue unit‚ which found there to be‚ according to Moyane‚ “prima facie evidence of wrongdoing”.

He said the Kroon Advisory Board found that the establishment of the secret unit within SARS in 2007‚ which covertly gathered intelligence‚ was unlawful.

“The Board went further to instruct SARS to charge employees involved and open criminal charges against those implicated in this act of crime.”

None of those implicated in inquiries‚ including SARS senior executives Ivan Pillay‚ Johann van Loggrenberg and Pete Richer‚ were ever interviewed by the panels.

KPMG’s withdrawal has now seen Parliament's Standing Committee on Public Accounts saying it will summon KPMG to explain its withdrawal.

The withdrawal saw KPMG apologise to former finance minister Pravin Gordhan‚ who it said had had knowledge of the SARS high risk investigation unit. The report was used by Moyane to lay criminal charges against Gordhan.

Moyane on Monday insisted that the report‚ which he said was SARS confidential and “exclusive” property‚ was legally sound.

Moyane said SARS was taken aback by KPMG’s unethical conduct.

“KPMG unilaterally announced the purported withdrawal of its report despite the existence of a service level agreement governing the relationship between the parties.”

He said KPMG had come to him via email at the eleventh hour to inform him of what they were about to do.

“SARS sees KPMG’s conduct as nothing else but a dismal attempt to portray SARS‚ its leadership‚ and in particular SARS Commissioner as incompetent‚ corrupt‚ inefficient and involved in a witch-hunt.

“This is the same narrative that has been perpetuated for years by some treacherous elements within society and the media.”

Asked who would be conducting the witch-hunt and what their agenda would be‚ Moyane had no explanation.

“I do not know. There can be many explanations for the word agenda. I am loath to respond to the agenda. I do not know who these people are by particular name.

“One has to ask why KPMG is coming out of this slumber now when the final copy was given to us in January 2016 and they said nothing to us back then.”

Asked about the Sikhakhane and Kroon reports‚ Moyane said the Sikhakhane report had come about because of mumblings within the media on the rogue unit allegations.

“The Sikhakhane report was something I inherited from the previous administration. Judge Kroon satisfied him with the findings of the Sikhakhane report.

“What the Sikhakhane inquiry unearthed gives one goosebumps. It’s just the tip of the iceberg of something far bigger.”

Asked if he was concerned that none of those accused of operating the alleged rogue unit had been interviewed before the reports were compiled‚ Moyane‚ said no.

“They will have their day and time when they can come and explain their behaviour. They were doing things that they should not have been doing. They should have been involved in tax administrative work‚ but were not.”

Pointing to the fact that the legal findings of SARS own inquiry into the rogue unit were copied and pasted into KPMG’s legal findings‚ Moyane said he didn’t know how that had happened.

“If it is so‚ and you are telling me it is‚ then it is bad. It’s worrying. But I cannot explain it. It’s not for me to explain.

“We only went to KPMG to get a second legal opinion.”

Defending their report‚ Moyane said KPMG's final report came out after the disciplinary process had already happened. The disciplinary actions were based on the Sikhakhane report.

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“This therefore makes it sound. It [the Sikhakhane report] is not flawed it confirms conclusively evidence of wrongdoing.

“I acted to get the [rogue] unit disbanded. I got it to cease to exist so that those running this unit can do their correct work‚ tax administration work which they were employed to do.”

He warned that the withdrawal of KPMG’s report did not vindicate those implicated in it and that they should still be held to account.

During the media conference a smiling Moyane stopped the conference and had a message from KPMG's spokesman‚ Nqubeko Sibya‚ read out.

Sibya's SMS said that the only parts of the report which were being withdrawn were the findings‚ conclusions and recommendations‚ and that KPMG stood by everything else in its R23-million investigation.

The rogue unit was established to allegedly spy on the National Prosecuting Authority which at the time was contemplating the criminal charges against President Jacob Zuma.