Today, SARS confirmed to Parliament’s Standing Committee on Finance (SCOF) that Mr Jonas Makwakwa had his suspension lifted as from the 1st of November 2017. SARS also admitted that the suspension was lifted despite the fact that Makwakwa was, and still is, being investigated by SARS for possible tax evasion and/or violations of the Tax Administration Act (TAA).
This investigation follows the Financial Intelligence Centre (FIC) alerting SARS Commissioner, Tom Moyane, to suspicious amounts of money which ended up in Makwakwa and his girlfriend, Kelly-Ann Elskie’s bank accounts.
In light of SARS’s revelations today, the DA has written to Finance Minister, Malusi Gigaba, in order to apprise him of the concerns surrounding Makwakwa’s continued presence at SARS and to ask if he believes that Makwakwa should be suspended from his duties at the revenue service until the investigations into his tax affairs as well as into his possible involvement in money laundering have been finalised.
It is mind-boggling how Monyane thought it wise to lift Makwakwa’s suspension despite him being at the centre of serious corruption allegations against him.
Page 5 B (iv) of the SARS Standard Operating Procedure, HR-ER-02-S01, clearly states that suspension on full pay may be imposed under the following circumstances:
- If the employee is alleged to have committed an offence that is of a serious nature;
- To stabilise the work environment in order to conduct a proper investigation into the allegation/s levelled against the employee or employees, and to avoid the potential tampering with evidence and/or interference with the investigation;
- To minimise any risk and/or potential damage to SARS property and/or danger to the well-being of other SARS employees during an investigation; and
- To protect and secure witnesses and to avoid interference or intimidation of witnesses during the course of the investigation.
There can be no doubt that the report to SARS from the FIC indicates the possibility of tax evasion and/or of a violation of the TAA, which would constitute an offence of a serious nature. Meaning, Makwakwa has no business at SARS.
The fact that Makwakwa, a senior manager at SARS, is under investigation for tax evasion should be of grave concern to Moyane and Gigaba, yet they have remained silent on the matter.
The DA will however not allow for the silence to continue. Minister Gigaba must, in his response, come clean on his stance on Makwakwa’s return to SARS.
The DA has been reliably informed that Mr Jonas Makwakwa, who has been on special leave pending the outcome of an investigation into how large amounts of money ended up in his bank account, will return to work any day now.
The DA has therefore written to the Chairperson of the Standing Committee on Finance (SCOF) to request that SARS be required to report in detail on the Makwakwa matter.
This must include:
- A detailed explanation for the alleged return to SARS of Jonas Makwakwa;
- An unabridged copy of the Hogan Lovells investigation report;
- Whether the Financial Intelligence Centre has been informed of the outcome of the Hogan Lovells investigations; and
- What has been the outcome of the criminal investigation into the Makwakwa/Elskie matter by the Hawks?
On the 15th of September 2016, SARS commissioned Hogan Lovells to investigate FICA referrals that large amounts of cash deposited into Makwakwa’s as well as Kelly-Ann Elskie bank accounts.
Despite repeated requests by the DA for progress reports on the Hogan Lovells investigation SARS have steadfastly refused to give any reports.
It now appears that the Hogan Lovells investigation has been concluded and Makwakwa has returned to work.
Information received indicates that Makwakwa will be assigned to a new position at SARS and that all cell phones, including that of the SARS Commissioner, Tom Moyane, have been prohibited from being taken into Block A of the SARS Head Office in Pretoria that houses SARS senior management.
SARS must confirm Makwakwa’s return and fully account for it.
The Minister of Justice, Michael Masuta’s, call to reinstitute the counter money laundering advisory council is a blatant attempt to dilute National Treasury’s control over the Financial Intelligence Centre (FIC), which is one of the most important weapons in the fight against corruption in South Africa.
During his pre-budget press conference last week on 18 May 2017 the Minister stated that:
“The relationship between the JCPS Cluster and the Financial Cluster is critical in the combatting money laundering, illicit financial flows and terror financing. The Financial Intelligence Centre Act significantly made provision for a counter-money laundering advisory council to be constituted by the heads of entities and directors-general from both clusters. A concerning feature is that the FICA Amendment Act does away with this all important advisory council. It is crucial that any regulations accompanying the amendment act reinstitute provision of the Council. The Council would serve as an oversight accountability structure in relation to the functioning of the Financial Intelligence Centre and would advise government on its endeavours in the fight against money laundering, illicit financial flows and terror financing.”
If the counter money laundering advisory council was reinstituted it would: comprise of inter alia the Commissioner of the South African Police, the National Director of Public Prosecutions and the Director-General of the State Security Agency; require the Minister to consult the council before appointing a person, or reviewing the appointment of a person, as the Director of the FIC; and require the Minister to take advice from the council on the performance of the functions of the FIC.
What is particularly scary is that the minister envisages the counter money laundering advisory council, not as an advisory structure, as it was originally envisaged, but as an oversight and accountability structure, keeping an eye on the FIC, and believes that it can be reinstituted by regulation, rather than an amendment to the Financial Intelligence Centre Act (No. 38 of 2001).
The fact is that the call to reinstitute the counter money laundering advisory council is a blatant “power grab” aimed at removing, or diluting, National Treasury’s control over the the day-to-day operations of the FIC, which would be bad for the fight against corruption in South Africa.
The Minister of Finance, Malusi Gigaba, should use his budget vote speech tomorrow to reassure the public that he will stand up to his Cabinet colleges and reject any idea of reinstituting the counter money laundering advisory council and diluting National Treasury control over the FIC, which he knows is one of the most important weapons in the fights against corruption in South Africa.
There is now a risk that the Minister of Finance, Malusi Gigaba, may delay the implementation of the Financial Intelligence Centre Amendment Bill [B33D-2015], which is one of the most important legislative weapons in the fight against corruption in South Africa.
The Financial Intelligence Centre Amendment Bill provides for the ongoing monitoring of the business relationships, sources of wealth and sources of funds of “domestic prominent influential persons”, and family members and close associates of “domestic prominent influential persons”, in South Africa.
What this means is that President Jacob Zuma and his most important clients, the Guptas, are going to feel the heat as their business relationships, sources of wealth and sources of funds are subjected to ongoing monitoring by financial institutions in South Africa.
However, the battle is far from over and there could still be significant delays in implementing the legislation because, despite being signed into law by President Jacob Zuma, the legislation only actually commences on a date to be determined by the minister and published in the Government Gazette.
The Financial Intelligence Centre must, for example, still produce an official list of “domestic prominent influential persons” and of family members and known close associates of “domestic prominent influential persons”.
This will be a massive task because the list of “domestic prominent influential persons” includes, for example, senior executives, as well as family members and close associates of senior executives, of all companies supplying goods and services above a threshold amount, which must be determined by the minister and published in the Government Gazette.
There are also doubts about whether the Financial Intelligence Centre, which only has a budget of R289 million for 2017/18, will have the resources to effectively implement the Financial Intelligence Centre Amendment Bill.
The minister will no doubt be under political pressure to delay the implementation of the legislation to protect his political master’s most important clients, the Guptas.
The minister should, therefore, take decisive action and set out clear timeframes and budgets for the implementation of the Financial Intelligence Centre Amendment Bill.
Whatever the case, we will have to very carefully monitor the implementation of the Financial Intelligence Centre Amendment Bill.
And I will, therefore, be requesting the Chairperson of the Standing Committee on Finance, Yunus Carrim, to schedule a meeting to probe the readiness of the Financial Intelligence Centre to implement the Financial Intelligence Centre Amendment Bill in South Africa.