Sars ‘rogue unit’ narrative consigned to trash heap

The full bench of the High Court, Gauteng Division, Pretoria, on December 7 declared unlawful and set aside the Public Protector’s report into the establishment of an investigative unit at the South African Revenue Service (Sars).

Former deputy Sars commissioner Ivan Pillay and former Sars commissioner George (Oupa) Magashula had also submitted review applications to set aside the Public Protector’s report, and the remedial action ordered by the Public Protector (PP). The applications were separately dealt with, but there was “significant overlap in the evidence pertaining to the Public Protector’s findings” against them.

Former Sars executive Johann van Loggerenberg deposed an affidavit to Pillay’s affidavit.

The court noted that “despite communication from Mr Van Loggerenberg’s attorneys, the Public Protector made no attempt to contact him or his attorneys”.

It said: “It is important to note that no other party in these proceedings, including the Public Protector and the EFF, has sought to respond at all to what Mr Van Loggerenberg testified to in the affidavit deposed to by him. What he says thus stands entirely uncontradicted and unchallenged.”

Costs

After considering all the arguments and coming to its conclusion, the court ordered the PP and Advocate Busisiwe Mkhwebane in her personal capacity, to jointly and severally pay the costs of Public Enterprises Minister (and former Sars commissioner) Pravin Gordhan, Pillay, and Magashula, on the scale between attorney and client, including the costs of two counsel where applicable. Mkhwebane is ordered to pay the costs personally limited to 15% of those costs.

Public Protector failed in exercising her duties

The court found that the Public Protector had failed in the exercise of her duties and had displayed bias towards Gordhan and Pillay, based on the following reasons:

• The events relating to the complaint that had been lodged with the PP dated back to 2009/2010. The PP did not present exceptional circumstances to justify the investigation, as was required where there was such a long time lag. Notwithstanding that the previous PP in 2014 had declined to investigate the alleged unlawful establishment of the unit, the current PP decided to proceed.
• The PP did not engage with Gordhan nor his attorneys and publicly posted the notice of the investigation on YouTube before giving any notice to him and his attorneys. The PP Report was presented to the media without any prior notice to Gordhan or his legal representatives.
• The PP relied on the discredited and disavowed KPMG report and the discredited Sikhakhane report, and ignored the findings made in the Nugent report.
• The PP was dishonest in regard to the Office of the Inspector General of Intelligence’s (OIGI) report and ordered the Minister of State Security to implement it, even though she had stated that she hadn’t seen it. The court noted that: “Van Loggerenberg has since the publication of the OIGI report successfully reviewed and set aside the OIGI report. Any reliance thereon (apart from the fact that the Public Protector’s reliance thereon has, in any event, been highly irregular) is now moot, as the IOGI report is incapable of being implemented.”
• The PP pandered to the rogue-unit narrative and displayed a profound bias towards Gordhan and Pillay. She “simply dismissed out of hand and completely ignored and irrationally discarded hard facts and clear evidence”. She determined to make adverse findings against Gordhan and Pillay, “thereby promoting the false rogue unit narrative”.
• The PP completely disregarded the Sunday Times apology and Judge Frank Kroon’s apology.
• The PP made scurrilous allegations that Gordhan deliberately misled parliament in 2016, in response to a parliamentary question that he did recall the presence of a member of the Gupta family in 2010. The court found that this was not contradicted by any other evidence. The court found that the PP’s conclusion “is not based on any rational assessment of the evidence presented and is irrational”.
• The PP made an unwarranted and slanderous attack on Judge Sulet Potterill. Her attack on Potterill was reprehensible, “shockingly inappropriate and unwarranted”, “unbecoming of an advocate and officer of this court, and wrong in law”.
• The PP relentlessly pandered the falsehood of Pillay’s qualification. She ignored the evidence presented to her. The court found that with “one single irrational sentence, the skills, equivalent experience and leadership experience that Mr Pillay has accumulated over a lifetime, including the leadership role he held during the armed struggle for the liberation of South Africa, have been dismissed and negated by the Public Protector.”
• The PP’s conclusion that the investigative unit was in violation of South African Intelligence prescripts was based on “discredited reports and unsubstantiated facts”. It was also wrong in law, as the National Strategic Intelligence Act does not apply to the unit established by Sars.

Read: Public Protector takes another costly punch (Jul 2019)

Conclusion

The court concluded that:

• The PP did not carry out a “fair and credible investigation and an open-minded consideration of the extensive body of evidence that was placed before her in order to confirm the truth”.
• “The report fails at every point … the report is the product of a wholly irrational process, bereft of any sound legal or factual basis. It cannot stand and must be set aside. Had the Public Protector undertaken a fair and credible investigation and considered the extensive body of evidence in an open-minded manner, the report may have been an opportunity to confirm the facts and the truth thereof. Instead, she allowed her important office to be used to try and resuscitate a long-dead fake news propaganda fiction.”

Industry comments

In a media statement issued on Monday in response to the ruling, Sars said: “It is a seminal judgment that brings necessary closure to the unfortunate distracting narrative surrounding the establishment and functioning of the Sars High Risk Investigation Unit. Moreover, it confirms Sars’s powers to gather intelligence relating to tax offences.”

Werksmans Attorneys stated: “The court has confirmed what our clients have always contended: the Sars investigative unit was established lawfully, successfully pursued the national interest and was never covert or ‘rogue’ …

“More than that, the court found that the Public Protector acted irrationally, unlawfully and incorrigibly,” it added.

“Her conduct, the court finds, has stained the institution that she heads – an institution of utmost constitutional importance and one that most South Africans looked up to lead the fight against corruption and protect the rights of ordinary citizens. The Public Protector’s conduct – which the judgment describes as ‘reprehensible’, ‘manifestly bias’ towards our clients and ‘irrational’ – is unfortunate and will lead to a further erosion of public trust in important institutions that must strengthen our democratic development.”

Read: The public protector is inept and has failed the people of SA (Aug 2019)