Revenue service’s No 2 probed for R1.2m in ‘suspicious’ cash deposits
The second-in-command at the South African Revenue Service has been flagged for "suspicious and unusual" cash payments into his bank account, with a report recommending an investigation to determine if the payments are "proceeds of crime arising from corrupt activities" or "acts of money laundering".
The report, compiled by a banking regulator, has been handed over to SARS commissioner Tom Moyane.
It alleges that Jonas Makwakwa, the chief officer: business and individual taxes, received unexplained cash deposits and bank transfers into his FNB account totalling R1.2-million between 2010 and January this year.
Investigators also pointed to three cash deposits, totalling R450,200,to Makwakwa's girlfriend's Absa account just before Christmas 2015.
The report, which is only preliminary, relies on bank records for 11 different bank accounts as well as camera footage from banks where the cash deposits were made.
SARS spokesman Sandile Memela declined to comment , but sources said that although the report had been given to Moyane in May, Makwakwa and his girlfriend, Kelly-Ann Elskie, who is also a SARS employee, had remained in their positions.
When contacted on Friday, Makwakwa and Elskie both said the matter was "sub judice" and declined to comment.
Makwakwa has become a powerful figure at SARS. A taxman for 20 years, he shot to prominence after Moyane became a commissioner in late 2014.
Since then, Makwakwa has acted as commissioner when Moyane was away, and has been put in charge of SARS's key revenue-generating unit, the Large Business Centre, which has oversight of large corporations and wealthy individuals.
It is not clear what triggered the investigation into Makwakwa and Elskie, but it is understood that banking regulators became suspicious because of the frequent deposits of large amounts of cash.
When investigators delved into Makwakwa's FNB bank account they identified cash deposits of R785,130 made between 2010 and 2016, most of these - 48 deposits totalling R726,400 - made between 2014 and 2015.
On one occasion Makwakwa was allegedly filmed depositing R68,000 in cash into his own account: in another 34 instances (totalling R606,200) investigators said: "information suggests that [Makwakwa] conducted these cash deposits in person".
There is also a question mark about a September 2014 credit of R147,850.65 on Makwakwa's account after he exchanged $13,500 .
The report concludes that the "volume and value of cash deposits are highly unusual" for a permanent employee, and should be investigated "in light of the position of authority held by [Makwakwa]".
Although the investigation is still at an early stage, the trail of payments appears to have also led investigators to an Absa account, a car and a property in Elskie's name.
She is believed to be Makwakwa's common-law wife and the mother of two of his children.
In particular, investigators raised questions about three large cash deposits - two of R160,000 each and one of R130,200 - that appeared to be inconsistent with Elskie's profile as a mid-level employee in SARS's legal department.
The deposits were made on December 22, 23 and 24 last year at different banks in a 10km radius. Cameras are said to have filmed Elskie making two of the deposits.
Neither Makwakwa nor Elskie has given an explanation for these payments - the report merely records them as "suspicious and unusual" and recommends that further investigation be done.
Investigators also raised concerns about R480,000 that was transferred via EFT into Makwakwa's bank account in three tranches in April and May last year - almost half of which appears to have been used to buy a Mercedes for Elskie.
Through a complex network of bank accounts and companies, investigators traced these payments back to a February 2015 payment of R17.87-million by the Department of Water and Sanitation in favour of a debt-collection company called New Integrated Credit Solutions.
It is not clear what the connection is between a chain of six different companies that have been identified in the report, which include several debt-collection companies and a company called Biz Fire Worx, where Makwakwa was once a director. It sells fire safety equipment.
In most instances, as soon as payments arrived in one bank account, the money was immediately transferred to the next, with a slice being deducted by each company in the chain. On the day after New Integrated Credit Solutions received its payment from the d epartment, it transferred precisely 25% - R4,468,239.28 - to a company called Mahube Payment Solutions.
Asked about this, New Integrated Credit Solutions chairman Baker Maseko said the payment would most likely have been as part of its subcontracting arrangement with Mahube to do data analysis on debt data. He said although SARS was a former client, it had not done business with the tax entity for four or five years.
Mahube has an indirect link with SARS through the company's sole director, Patrick Monyeki, who is said to be a close friend of Moyane.
Monyeki, an information technology veteran, has garnered controversy in relation to two major government IT contracts.
In 2013, it was reported that Monyeki, as a technical adviser, had allegedly played a crucial role in the decision to award a lucrative contract for the distribution of South African Social Security Agency grants to a company called Cash Paymaster Services. At the time, the bid committee was chaired by Moyane. Monyeki did not respond to the claims when they were reported. The decision to award the social grant payment contract to Cash Paymaster Services was later overturned by the Constitutional Court.
More recently it emerged that Monyeki has an interest in the company that was awarded a controversial R378-million contract to supply an "inmate management system" to the Department of Correctional Services.
The contract, with Integritron Integrated Solutions, is the subject of litigation and wrangling with the National Treasury, which wants it cancelled.
Monyeki's attorney, Donovan Reddy of BBM Law, responded to questions: "Your enquiries relate to transactions that occurred almost 18 months ago. Our client does not readily have this information to hand. The timeframe imposed on our client to reply is wholly insufficient ... Furthermore, our client is also not able to respond fully and fruitfully until a proper disclosure of the documents you mention and rely on, has been made."
Several other companies were involved in the chain of payments. The final payment in the chain, of R600,000, appears to have been made to Biz Fire Worx . In the two months after Biz Fire Worx received this payment, the company made three large payments into Makwakwa's FNB account, totalling R480,000. One of the company's directors, Lokisane Molea, confirmed receiving a R600,000 payment, but said this was a loan.
Asked about the R480,000 on-payment to Makwakwa, Molea claimed he had used this new loan to repay a series of old loans he had taken from Makwakwa, starting in 2009.
Less than a week after receiving this payment, in May 2015, Makwakwa appears to have used R200,000 to buy a Mercedes-Benz C220 for Elskie.
In February, amaBhungane reported that SARS insiders were concerned that Moyane and Makwakwa had overly-centralised influence over tax settlement negotiations worth billions of rands. Moyane, Makwakwa and SARS denied this and launched a R4-million defamation suit which amaBhungane is defending.
The amaBhungane Centre for Investigative Journalism, an independent non-profit, produced this story.
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