SOEs should look to Sars’s playbook, says Ivan Pillay

Former deputy commissioner of the South African Revenue Service (Sars) Ivan Pillay says the corruption and governance crises engulfing many of the country’s crumbling state-owned enterprises (SOEs) need to be fixed, pointing to some of the successes at the tax collection agency for solutions.

Delivering the keynote address at the Helen Suzman Memorial Lecture at the Gordon Institute of Business Science on Tuesday evening, Pillay lamented the worsening state of state-owned institutions, which have for years have been plagued by corruption and a lack of service delivery.

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He said a mood of despondency hangs over South African citizens, adding that the country has become a “weak and retreating state” resulting from weakening regulatory oversight, corruption and broken systems.

“At this time, the South African state is largely dysfunctional, very weak in its general regulatory role, appears to be incapable of performing some of its functions, and is unable to adequately protect its citizens,” he added.

During his talk on Tuesday, Pillay pointed to some of the systems that were implemented at Sars that contributed to some of its success. Despite facing state capture during the Tom Moyane era, he said Sars today remains one of the highly efficient government entities in the country.

He said Sars was not solely focused on collecting revenue, but that it effectively and continually endeavoured to increase the levels of tax compliance and customs laws in the country, in addition to supporting other government institutions, such as the Department of Home Affairs.

Key to its efficacy was the implementation of its competency model and building a compliance culture that was enabled by research and analytics, unlike “magical thinking” in South Africa’s institutions that have led to their fragmentation.

“There was no magical thinking in Sars — there’s a lot of magical thinking in South Africa. Little data, little knowledge,” Pillay added.

He said management in many public institutions seem to have adopted a rear-view mirror approach to governing, instead of looking at existing data to effectively guide them.

“The health of underlying operations is neglected. Yet, operations data and information are the earliest indicators of whether institutions are performing well and are effectively governed,” Pillay said.

“At worst, it is a cynical pantomime of governance,” he said.

Pillay’s tenure at Sars came to an abrupt end in 2015 during Jacob Zuma’s presidency, when the tax authority became a target of state capture. Zuma-backer Tom Moyane was Sars commissioner at the time.

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The capture of the tax authority led to the livelihoods and reputations of Pillay and several of his colleagues being grossly affected and eventually led to his resignation in 2015, together with Peter Richer who had been Sars’s head of strategic planning and risk.

It followed news of a so-called “rogue unit” within Sars that was accused of illegally spying on Zuma, running a brothel, and entering into illegal tax settlements. These allegations were later proved to have been false.

More than seven years after Pillay’s departure, Sars last month publicly apologised for the harm its former senior employees suffered, compensating them for the infringement of their personal rights and loss of employment.