SARS was almost destroyed from the inside

During South Africa’s State Capture era, the South African Revenue Service (SARS) almost saw itself completely dismantled to serve the political agenda of certain high-ranking government officials.

Involved in this was former President Jacob Zuma, who was found to have played a significant role in this deliberate destruction of the revenue service.

This was explained by Zuma’s predecessor, Thabo Mbeki, in a presentation at the recent National Democratic Revolution seminar.

Mbeki’s assertion stemmed from the main findings of the Nugent Commission, appointed by President Cyril Ramaphosa in 2018 to investigate governance failures at SARS.

Concerns about these failures arose from a substantial performance decline at SARS in the years following Trevor Manuel’s tenure as Finance Minister.

“For many years, SARS was outperforming itself in terms of collection,” Mbeki said. “It would say ‘We’re going to collect a billion rand’, and at the end of the financial year they’d collected a billion and a quarter.”

“It went on like this, always outperforming, until around 2014 when SARS started underperforming. That’s why the commission of inquiry was appointed by President Ramaphosa.”

The Nugent Commission delivered its final report in 2018, concluding that there had been a deliberate attempt to dismantle SARS under then-Commissioner Tom Moyane.

This included the driving out of many senior managers, who were subsequently replaced with ones more compliant with Moyane’s demands and agenda.

Additionally, Moyane had hired the Boston-based consulting firm Bain & Co. to assist him in a complete restructuring of the revenue service’s operating model.

This move was seen by opposition parties and former SARS employees as a means to protect senior politicians who had failed to properly declare their income.

During Moyane’s tenure as commissioner, SARS frequently missed its tax revenue collection targets, raising significant concerns, which led to the Nugent Commission’s appointment.

Moyane’s appointment as SARS Commissioner was terminated by Ramaphosa in November 2018 on recommendation from the Nugent Commission, following his suspension that March.

His successor, Edward Kieswetter, held the position for seven consecutive years and is largely credited with restoring trust and credibility to the revenue service.

Zuma’s role in the destruction of SARS

The Nugent report had ultimately concluded that certain high-ranking government officials had, in fact, tried to deliberately destroy SARS from the inside.

“SARS is responsible for 95% of state revenues,” Mbeki said. “There are people who took a decision to destroy SARS, and to destroy SARS means to destroy the democratic revolution.”

“They spelt out the practical steps that were taken in order to achieve that destruction of SARS, and that is why you began to get this underperformance of SARS.”

Mbeki said this attempted dismantling raised alarm bells significant enough to trigger not just the Nugent Commission but also parts of the Zondo Commission’s investigation.

While the Zondo Commission had originally been appointed by Zuma to look into matters of State Capture, it did not hold its first hearing until after Zuma had resigned and Ramaphosa had taken over.

The Zondo report corroborated many of the Nugent report’s findings and found that Zuma himself had played an active role in the dismantling of SARS during his tenure as President.

This was not only due to his specific appointment of Tom Moyane as SARS Commissioner, but also his direct engagement in facilitating the relationship with Bain & Co.

The inquiry found that Zuma and Moyane had met with the company even before Moyane had been appointed commissioner to strategise this structural dismantling.

It also found that the revenue service had been specifically targeted due to its criminal investigation capabilities, which would have hindered the success of State Capture.

“The Zondo Commission also looked at SARS, agreed with what the Nugent Commission said, and then went further,” Mbeki said.

“One of the things that they found is that the then-President of South Africa was directly involved in the process to destroy SARS.”

Following the publishing of the Nugent Commission’s findings, Bain & Co. admitted it had committed serious lapses in governance through choosing to involve itself with Moyane and Zuma.

South Africa would later ban the firm from bidding for public-sector contracts in September 2022, the same year in which the first part of the Zondo Commission’s report was released.