Tom Moyane. Picture: TREVOR SAMSON

Tom Moyane. Picture: TREVOR SAMSON

WHAT IT MEANS: Moyane acted with alacrity against Gordhan order but not on Makwakwa. Link between revenue and expenditure being severed; taxman now reports to Zuma.

Follow the money — that’s the mantra of tax authorities everywhere. This week the SA Revenue Service (Sars) announced it would be doing just that in a matter involving unexplained cash transfers made by none other than its second-in-command, Jonas Makwakwa.

This latest scandal at the revenue service has once again highlighted the stand-off between Sars commissioner Tom Moyane and finance minister Pravin Gordhan.

Trevor Manuel, asked about the relationship between Gordhan and Moyane, retorted: "Is there a relationship?"

Manuel was finance minister for 13 years, with Gordhan as tax commissioner for a decade of that time. Their relationship, Manuel says, was "structured but very comradely" and based on deep trust.

At the time, minister Manuel would meet commissioner Gordhan and his top officials at least once every two weeks, while the commissioner would meet the president — then Thabo Mbeki — twice a year to brief him, in the interests of transparency, on the tax affairs of all the cabinet ministers.

During that period Sars was also being transformed into a tax authority with a "higher purpose" — to deepen the democratic project and build a relationship of trust with citizens.

But such ideals seem to have crumbled under Jacob Zuma’s presidency. Instead Sars, which once represented the shining light of excellence in the state, appears to have slipped badly in recent months.

Staff who have been hounded out by Moyane in light of the "rogue unit" claims in the last two years talk widely of a "purge" of experienced Gordhan-era personnel, which now threatens the tax authority’s independence and its ability to do its job of collecting taxes. This is particularly poor timing, coming at a time of poor growth in the country when Sars is already likely to battle to hit its target of collecting R1.17trillion in taxes from the country's citizens.

The bitterness between Gordhan and Moyane reflects the deep antipathy between the pro- and anti-Zuma factions in the ANC. Early last year, Gordhan and Moyane clashed over leaks around the alleged "rogue" intelligence unit at Sars; in an unprecedented move, the commissioner did not attend the minister’s pre-budget media briefing; on Friday, Moyane blamed Gordhan for his own months-long delay in acting with regard to Makwakwa’s allegedly suspicious financial affairs.

Last Friday Sars announced the suspension of Makwakwa, pending an investigation by international law firm Hogan Lovells.

Yet Makwakwa’s suspension only took place thanks to public pressure. The fact is, the Financial Intelligence Centre (FIC) handed Moyane a report as long ago as May, indicating that Makwakwa should be investigated because it had identified "suspicious and unusual" transactions amounting to R1.2m deposited since 2010 into his bank account and that of his girlfriend, Kelly-Ann Elskie, who also works for Sars.

The burning question, which emerged after the revelations in the Sunday Times, was why Moyane had sat on the report for so long. Such allegations against a senior official, whose career at Sars began in 1997, were damaging to an institution which prides itself on integrity and transparency.

It also contrasts sharply with Moyane’s swift action over the "rogue unit" where he suspended Sars officials Ivan Pillay and Peter Richer within days of receiving a report on it — and Pillay was not even mentioned in the report by advocate Muzi Sikhakhane.

Clearly Moyane acts fast when it suits him: just five months after taking up the post, he appointed consultants for a far-reaching review of the Sars operating model.

According to sources who spoke on condition of anonymity, Moyane showed the FIC report to Makwakwa, who gave it to his attorneys. They wrote to the FIC, asking a string of questions — including wanting to know the identity of the analysts who compiled the report, whether they could provide clearance certificates from state security, which laws the FIC had used to subpoena video footage from the ATMs and inside the banks where the Makwakwa deposits were allegedly made. (The report contained images of Makwakwa making the deposits.)

In a statement on Friday Sars confirmed that since receiving the report, Moyane had been "engaging the director of the FIC" about its "legislative mandate to assist, advise and guide Sars" in the allegations against Makwakwa.

Moyane accused the FIC of a "lack of co-operation", saying he had raised this with Gordhan, and that the FIC reported to the minister. Gordhan confirmed to Business Day last week that he had met Moyane on Monday but was not aware of the issue ahead of the revelations in the Sunday Times that weekend.

The FIC, in response to questions this week, said statutory confidentiality requirements prevented it from confirming or denying that it had referred the report to Sars for investigation.

In its report, the FIC indicates that Makwakwa, as the Sars chief officer for business and individual taxes, had received "unexplained" cash deposits and bank transfers amounting to R1.2m between 2010 and 2016. Deposits of R450,200 had also been made into his girlfriend’s bank account in December 2015, the report says.

The suspicious deposits, according to a section of the report from the banking regulator, require investigation to determine whether they were the proceeds of corruption, crime or money-laundering, in which case appropriate criminal action could be taken. A total of 75 cash deposits amounting to R785,130 were made into Makwakwa’s personal account between March 1 2010 and January 31 2016, it says.

A total of 48 of these payments amounting to R726,400 were deposited between 2014 and 2015. The report says the volume and the amounts of the deposits are "highly unusual" because Makwakwa was permanently employed. It says the payments should be probed to ascertain whether they constitute payments from the proceeds of corrupt activities or other forms of crime as defined in the Prevention & Combating of Corrupt Activities Act of 2004.

The report details unusual deposits into Elskie’s account. Between December 22 and December 24 2015, three payments amounting to R450,200 were made into her personal bank account in two lots of R160,000 and one of R130,200. These were made over a period of three days into three branches of the same bank within 10km of each other.

It is understood that Makwakwa had four properties in his name and two vehicles. He also, according to sources, did not have any directorships in companies but was a trustee on two trusts. Makwakwa could not be reached for comment.

Though some Sars insiders believe that some of the payments are linked to contracts linked to the review of Sars’ operating model, this could not be confirmed.

The restructuring and review of Sars has triggered an explosive clash between Gordhan and Moyane in recent months. Gordhan asked Moyane to halt the process pending an examination by the minister. Moyane refused and pushed ahead, announcing that Gordhan’s predecessor, Nhlanhla Nene, had approved the overhaul.

Years ago, Manuel too presided over a major modernisation process at Sars, and says that in an undertaking so full of uncertainties, a political relationship and a political presence are required. "It’s not just a technical exercise driven by a few smart accountants."

Among the consultants used in the restructuring at the time was Bain & Company — a company well-known to Gordhan. Bain was involved in a similar revamp in 2001 during a project called Siyakha. Back then, questions were raised about the tender process. However, Sars dismissed them.

It is understood that at the time, Gordhan was unhappy with the fall-out between Bain and its BEE partner, in which Sars became embroiled. This is seen as a likely explanation for Gordhan’s request that Sars halt the current process until he had familiarised himself with all the intricacies.

According to Sars insiders who asked not to be named, questions were again raised about the procurement process in the 2015 review, but these were quickly quashed. A Sars employee who raised concerns was suspended and later resigned and is currently employed at the State Information Technology Agency.

Sars did not respond to questions from the Financial Mail on the restructuring, but in a statement in January said it was "important to note that Sars engaged in a legitimate process of procurement" ahead of the review, which was finally approved by Nene.

It also rejected reports that its large business centre (catering for top JSE-listed companies) had been neutered. At the time, Sars said the capacity of the large business centre had in fact been expanded. It was "decentralised". Instead of four exclusive Sars centres dealing with these companies, they are now part of certain Sars branches across SA.

Makwakwa was, until last week, the head of this division. He has been replaced by two officials in an acting capacity after his suspension. After a big purge and a slew of resignations, Makwakwa was among the most senior and most experienced Sars officials still standing. He also led the review and restructuring process, making new appointments and hiring and firing staff.

The impact of the restructuring remains unclear, but insiders say it was simply an overhaul of the institution’s organogram, with new faces at the top, but with the same systems and processes.

Sources who have left Sars say those seen as loyal to Gordhan and former deputy commissioner Ivan Pillay either resigned, got shifted sideways or, in some cases, "have no work to do".

A number were executives or managers, but after the review process were moved and are now called "domain specialists", with no real job description. "Some come in at nine and leave at two, they don’t know what they are supposed to do."

The power afforded to Makwakwa during this period even unsettled some of Moyane’s other allies. Makwakwa was thought to be stepping on the terrain of group executive for strategy & communications Hlengani Mathebula and the group executive for human resources, Teboho Mokoena.

Moyane did not have many allies when he arrived at Sars and it was clear the organisation was riddled with factions. Sources in senior posts back then say he was "obsessed" with allegations around the "rogue unit", and asked officials to write reports implicating Gordhan and Pillay.

Moyane was Zuma’s preferred replacement for Gordhan when he became finance minister in 2009. But insiders claim that Gordhan managed, while Zuma was out of the country, to get Oupa Magashula to succeed him instead. This angered Zuma, particularly as it is the president’s right to appoint the Sars commissioner.

Moyane and Sars did not respond to requests for interviews, but he said on PowerFM earlier this year that he had a relationship with the president which was "natural", political and professional.

"I do have a relationship with the president, a relationship that is natural of all cadres of the ANC. He was the first to receive me [in exile] in the People’s Republic of Mozambique ... and I worked under his leadership as he was the deputy chief representative of the ANC. The relationship was of a political nature and at the same time he got married to my long-time old-family sister, the late Kate," he said.

Moyane was a friend of Zuma’s wife Kate, who died in 2000. He has remained close to the family, particularly Zuma’s businessman son, Duduzane.

Manuel says the president "must have had a reason for appointing Moyane", who was "retired" prematurely from his post as correctional services commissioner.

At the time opposition parties, including the DA, questioning why he was being moved given his good performance at correctional services. However, Moyane was later criticised for doing nothing about a scathing Special Investigating Unit (SIU) report into dodgy tenders between a catering company, Bosasa, and the correctional services department. Bosasa’s contract was renewed despite the SIU report, which also criticised Moyane’s predecessor, Linda Mti, for supposedly having a corrupt relationship with the company.

Manuel notes that Moyane was "untested in that space" (Sars). But he likened it to a number of other odd appointments made under the Zuma administration.

While it might seem intuitive that the Sars chief should report to the finance minister, Moyane has instead insisted that he reports directly to the president.

The relationship between Gordhan and Moyane is so sour that in March, the minister threatened to resign unless the commissioner was removed. This did not happen. Instead, Zuma vowed to broker an accord between the two. According to a number of sources, this did not happen.

Instead the relationship has been left to bubble over into the public domain.

In the end, it was Moyane who laid a complaint with the Hawks over the so-called rogue unit set up during Gordhan’s time. The Hawks have questioned many officials who worked with Gordhan, including Magashula and former head of customs Gene Ravele.

Today, there remains a cloud over Gordhan’s head but little indication of whether he will be charged. Perhaps that is just the way the president wants it.

Moyane is now going further. Shortly after receiving the report into Makwakwa, he ordered an investigation, by Grant Thornton, into information technology contracts awarded while Gordhan headed Sars.

Still, Moyane dismisses allegations that his pursuit of the "rogue unit" — and Gordhan — is politically motivated. Instead, he has said that his reputation has suffered as a result of his clashes with the minister.

During the announcement of Sars meeting its trillion-rand target in the past tax season, he said: "Aspersion was cast on my person as an incompetent, incapable, inept leader of this important institution, my personal integrity questioned, in this hallowed and sacred environment where we dare to tread; how sacrilegious is it that a team ably led by an African cannot only overcome socio-historical prejudice but set the bar so high for its entire employees, that it beggars belief."

ANC head of economic transformation, Enoch Godongwana, last week highlighted the danger of the political shield Moyane enjoyed, way above the head of his supposed boss, Gordhan.

"You have got a situation which is unprecedented: a minister of finance who has no control over his revenue service, Sars. It is unprecedented because your finance minister must have control of both the revenue and expenditure sides," he said.

"That in itself has been a problem, and the fact of the matter is that the initiation of this criminal complaint [against Gordhan] is by that same revenue service," he said in an interview with eNCA. His comments were among the first by an ANC heavyweight to acknowledge the danger of the rift between Moyane and Gordhan.

This rift has its genesis in the complicated structure put in place in 1994, in the wake of the recommendations of the Katz Commission, which was set up by Nelson Mandela.

Back then there were two departments under the finance ministry: one responsible for the macroeconomic framework and taxation, with tax collection done by the inland revenue and excise as different units; and the other was the department of state expenditure. National treasury, as a constitutional body, was formed a few years after 1994 and merged the two departments.

Inland revenue and customs & excise were then taken out of the department to form Sars. Katz’s finding also made the point that tax administration, by Sars, and tax policy, by treasury, are linked.

Fast forward to 2016 and SA is in a situation where the link between the expenditure side of the budget and tax collection is increasingly severed.

The Sars commissioner now reports to the president and meetings with the minister have been tense.

Council for the Advancement of the SA Constitution executive director Lawson Naidoo has described the ideal relationship as similar to that between the national director of public prosecutions and the minister of justice. But as it stands, the relationship between Moyane and Gordhan is unhealthy and leaves the minister in a difficult position in terms of fiscal projections. The minister should have input into how revenue is generated. "It is dangerous for the economy," he says.

Political economy analyst Daniel Silke says it is a sign of the general breakdown of transparency and trust within and between government departments and institutions — or as deputy president Cyril Ramaphosa put it: "a government at war with itself".

Insiders in the ANC and government say that Sars’ attack on the FIC over the Makwakwa matter is "absurd". After all, the FIC’s job is to report suspicious movement of money to the relevant authority.

DA finance spokesman David Maynier has raised the issue with parliament’s chair of the finance portfolio committee, Yunus Carrim, and called for a full inquiry into the matter. Meanwhile, yet another private team of lawyers will probe the allegations against Makwakwa.

And should Gordhan be charged over the rogue unit, Moyane will have accomplished what appears to be one of Zuma’s most critical goals: bending a crucial arm of the state apparatus to his will.