South African Revenue Service

Pretoria, South Africa

The Nugent Commission found that the restructuring of SARS that occurred after 2014, under the advice of Bain & Company, largely had the effect of undermining SARS's tax collection capacity and quality of governance. Most significantly, oversight of individual tax and corporate tax were amalgamated into a single unit, called Business and Individual Tax, which reported directly to the Commissioner. At the same time, other key business units were fragmented, especially the Large Business Centre – which had been responsible for 35% of SARS's revenue and which the Nugent Commission said was "eviscerated" – and also the Litigation Unit and Compliance Unit. The Anti-Corruption and Security Unit, which investigated internal corruption at SARS and which had consistently been rated as among the best such units in the South African government, was also restructured such that its independence was undermined. The Executive Committee of SARS had by the end of 2015 "been denuded of virtually all the management and skills that had existed when Mr Moyane arrived." An existing modernisation strategy was also suspended, pending a review which the commission found to have been valueless.

Gordhan, then Minister of Finance and reportedly clashing with Moyane on several fronts, attempted unsuccessfully to block the restructuring in 2016, raising concerns about its likely effects on the agency's capacity. He has said that, in the same year, he asked Zuma to fire Moyane, on the basis that his and Moyane's working relationship had broken down. Among the detrimental consequences of the restructuring later identified by the Nugent Commission were that non-compliance became easier; that some 200 managers were displaced from their former positions and often relegated to less meaningful roles; that SARS's relationship with other state institutions, and its international reputation, suffered; and that SARS's measures to counter criminality were "rendered ineffective," to the benefit of the illicit tobacco trade in particular. The Tobacco Institute of South Africa told Parliament that South Africa lost R27 billion in customs and excise revenue between 2014 and 2018, and total tax collections fell by about R90 billion between 2015 and 2018.

Rogue unit allegations

On 12 October 2014, shortly after Moyane's appointment, the Sunday Times reported that one of the SARS investigative units had gone "rogue," and had broken into Zuma's home to plant listening devices. In subsequent articles, it published various other allegations about nefarious activities of the so-called rogue unit. On the basis of the allegations, Moyane disbanded both the unit and the SARS Executive Committee. The unit was also investigated by an independent panel chaired by Muzi Sikhakhane, which found in November 2014 that the unit had been established unlawfully. Moyane appointed KPMG at a cost of R23 million to perform investigations "focused on the conduct of" four employees cited in the Sikhakhane report, one of whom was former acting Commissioner Pillay. A series of protracted labour disputes followed, in which Pillay and others were suspended and subject to disciplinary charges arising largely from the rogue unit allegations, and Pillay resigned in May 2015. Other senior managers and investigators also departed, under similar circumstances and amid public perception that they had been "driven out" of or "purged" from SARS. The Nugent Commission later said it was highly plausible that Moyane's response to the rogue unit allegations had been "the first step in ‘neutralising’ possible detractors" within SARS, and Nugent said that, regardless of the source of the original allegations, SARS had used them "opportunistically."

The report of the KPMG investigation was submitted to Moyane in December 2015, and recommended that Gordhan, then the Minister of Finance, should be investigated for his role in establishing the unit while SARS Commissioner. The Daily Maverick reported that part of the KPMG report was copied and pasted from recommendations made by SARS's own legal team, and accused SARS and KPMG of conspiring against the unit and its members. Almost two years later in September 2017, KPMG withdrew the 2015 report, despite Moyane's objections, and apologised to Gordhan. Retired judge Frank Kroon of the Kroon Committee, another inquiry into the allegations, also disowned and retracted his prejudicial findings on the rogue unit, and in 2020 SARS announced that it would not rely on or use the Sikhakhane report for any purpose.

The Sunday Times, which broke many of the rogue unit stories, has since faced criticism for having been "drawn into an elaborate cloak-and-dagger campaign to discredit SARS" and for exhibiting "poor journalistic standards" – or, in Jacques Pauw's words, for "arguably the worst journalism that has ever been perpetrated in this country." In December 2015, the Press Ombudsman found that its coverage of the rogue unit allegations had been "inaccurate, misleading and unfair," and the Times published an apology admitting to factual errors and other missteps. The Nugent Commission found that it had done "great damage to SARS and the people of South Africa."

Allegations against Pravin Gordhan

The Hawks investigated Gordhan in relation to the rogue unit allegations, and intensified their investigation shortly before the 2016 Budget Speech, timing which Gordhan suggested was calculated to "intimidate and distract" him and the National Treasury. In October 2016, fraud charges were brought against Gordhan, Pillay, and Magashula, in relation to early retirement benefits paid to Pillay with the authorisation of Gordhan and Magashula in 2010 (before Pillay left retirement to rejoin SARS). At the Zondo Commission, senior SARS official Vlok Symington testified that he had effectively been "held hostage" in the SARS offices by Moyane's bodyguard and Hawks officers, who wanted Symington to hand over a document which cast doubt on the legitimacy of the charges against Gordhan. The charges were withdrawn shortly afterwards. The Public Protector Busisiwe Mkhwebane also conducted several investigations into Gordhan's conduct at SARS and in 2019 recommended that he should be subject to disciplinary action in relation to Pillay's early retirement. The Pretoria High Court overturned the recommendation, finding that the relevant part of Mkhwebane's report was "vague, contradictory and/or nonsensical."

The attention of law enforcement to Gordhan is largely believed to have been politically motivated – Zuma fired Gordhan from the Finance Ministry in March 2017 – and Gordhan later told the Zondo Commission that he believed that Moyane had pursued the criminal charges against him as part of an effort to facilitate the capture of the Treasury.

Ramaphosa presidency

Nugent Commission

In his February 2018 State of the Nation address, newly elected President Cyril Ramaphosa committed to "stabilise and strengthen" SARS, and to restore its credibility. He said that, at the request of the Minister of Finance Malusi Gigaba, he would institute a commission of inquiry into the situation at SARS. A month later, on 19 March 2018, he suspended Moyane pending disciplinary proceedings, writing in a letter to Moyane thatDevelopments at the SARS under your leadership have resulted in a deterioration in public confidence in the institution and in public finances being compromised. For the sake of the country and the economy, this situation cannot be allowed to continue, or to worsen.Moyane's suspension followed a meeting during which Ramaphosa told Moyane that "he had lost confidence in his ability to lead SARS," and "offered him an opportunity to resign," which Moyane declined. The Commission of Inquiry Into Tax Administration and Governance by SARS, commonly known as the Nugent Commission, was formally appointed two months later, on 23 May, under the chairmanship of retired judge Robert Nugent. It had a mandate to investigate various operational, administrative, and governance matters at SARS, and focused primarily on the years after mid-2014, at which point Nugent said that SARS's previously good condition had begun to deteriorate.

The commission's interim report, released in October 2018, recommended that Moyane should immediately be fired, on the basis that there had been "at least reckless mismanagement" under his tenure which "ought not to be permitted to continue." In line with this recommendation, Ramaphosa fired Moyane on 1 November. Moyane later unsuccessfully challenged his dismissal and the commission's report in court. The final report was released in December and concluded that SARS had been subject to extreme mismanagement along the lines discussed above, amounting to what it called a "catastrophe." Among the commission's recommendations were that:

• The National Prosecuting Authority should consider criminal prosecution related to the awarding of the Bain & Company contract;
• SARS should re-establish its Large Business Centre, Compliance Unit, and Integrity Unit;
• SARS should re-establish its capacity to monitor and investigate illicit trades;
• SARS should pursue the recovery of state funds used by Moyane to pay for personal legal fees;
• All posts at SARS should be re-evaluated, and "reparations" should be made to mistreated employees;
• Legislation should be amended, including to amend the procedure for appointing the SARS Commissioner; and
• An Inspector-General should be appointed at SARS. On the involvement of Bain & Company, Nugent acknowledged that Bain had unconditionally paid back about R217 million to cover the value of the contract with interest, and that there was no evidence that Bain headquarters was complicit in the scheme. However, he also emphasised the parent corporation's responsibility for the activities of its local offices, and chastised Bain representatives – both from headquarters and from the South African office – for failing to cooperate adequately with the inquiry.

Moyane declined to appear before the Nugent Commission but responded to its report in May 2021 at the Zondo Commission. He called the findings "preposterous," though he said that he had never read the full report. He also maintained that he had "performed sterlingly" at SARS and that his removal had been "orchestrated" by Gordhan, with whom he had an acrimonious relationship and who he claimed was racist towards him. By contrast, another witness at the Zondo Commission – the former SARS group executive – suggested that Moyane had been appointed precisely in order to undermine SARS's efforts to counteract illicit trade, organised crime, and tax evasion. Others have implied the same.

Aftermath

The day after Moyane's suspension, long-time SARS employee Mark Kingon was appointed acting SARS Commissioner, and he continued to act in that role after Ramaphosa had dismissed Moyane permanently. On 1 May 2019, Edward Kieswetter was appointed SARS Commissioner for a term of five years. Kieswetter is the former SARS Deputy Commissioner and former chief executive officer of financial services provider Alexander Forbes, and his appointment was recommended by an independent selection panel chaired by former Finance Minister Trevor Manuel.

Since 2019, Kieswetter has spoken publicly about his efforts to rebuild the agency's capacity and reputation following the "massive failure in governance and integrity" within SARS between 2014 and 2018. He has cited as residual obstacles internal opposition to reform, low employee morale, and the high rate of turnover since 2014 – in April 2021, he told Parliament that more than 2,000 employees had left SARS since 2014. According to Kieswetter, state capture "traumatised" the organisation and its employees. However, SARS has re-established its Large Business Centre, Compliance Unit, and other key units; and taxpayer compliance improved by 26% in the 2020/21 financial year.

Tax Collection

Total	1265.5	1344.8	1422.3	1425.5	1365.1	1598.5

Commissioners

The chief executive officer and accounting authority at SARS is the Commissioner, who, under Section 6 of the SARS Act, is appointed by the President for a pre-determined (but renewable) term not exceeding five years. Prior to an amendment to the act in 2002, the Commissioner was appointed by the Minister of Finance in consultation with the cabinet and the SARS board.

Former Commissioners are:

Commissioner	Start of term	End of term	Appointed under
Edward Kieswetter	May 2019	May 2024 (unless renewed)	President Cyril Ramaphosa
Mark Kingon (acting)	March 2018	May 2019
Tom Moyane	September 2014	March 2018 (suspended)	President Jacob Zuma
Ivan Pillay (acting)	July 2013	September 2014
Oupa Magashula	May 2009 (acting)	July 2013
Pravin Gordhan	November 1999	May 2009	Minister Trevor Manuel
Trevor van Heerden	October 1997	September 1999