Sasfin rejects R4.87 billion SARS claim

Sasfin rejected a R4.87 billion damages claim brought by the South African tax agency related to allegations of money laundering and bribery by former employees and clients of its banking business. 

“The claim, which we emphatically reject, will involve a protracted trial action, and the matter is only likely to conclude in several years’ time,” Sasfin CEO Michael Sassoon said in an e-mailed statement. 

SARS’ civil claim comes after the news organization Al Jazeera reported last year that Sasfin Bank staff, as well as others from South Africa’s Standard Bank and Absa, were involved in laundering money in exchange for bribes from an international gold smuggling syndicate with strong ties to Zimbabwe. 

The case goes back to 2014 when a criminal syndicate colluded with former employees of Sasfin Bank who were operating outside of their scope and authority of employment, according to Sassoon.

SARS has subsequently been unable to collect income tax, value-added tax, and penalties allegedly owed by former foreign-exchange bank clients, he said.

“As soon as Sasfin became aware of the collusion, it took decisive action and instituted an independent investigation, which resulted in the termination of relationships with implicated clients and employees and the opening of criminal cases against them,” he said.

“It is unjust for banks to be held liable to SARS for taxes that their clients have failed to pay.” 

Following the claim, Sasfin has obtained legal opinion on the case. SARS declined to comment on the matter when asked by Bloomberg News.

“Of importance is that this is not a tax claim but a claim for damages and has nothing to do with Sasfin’s own tax affairs,” Sassoon said.

“Sasfin has concluded that the claim will not result in the recognition of any liability and that it has no effect on its capital position.”