Sars to take legal action against KPMG for reputational damage

The South African Revenue Service (Sars) says it will be taking legal action against international auditing firm KPMG for reputational damage after it withdrew its report on the Sars “rogue unit”.

Addressing the media on Monday morning, Sars commissioner Tom Moyane said the tax collection agency was taken aback by the “aberrant and unethical conduct” of KPMG. He said the auditing firm unilaterally announced the purported withdrawal of its report on Friday despite the existence of a service-level agreement governing the relationship between the parties.

“Sars has observed with astonishment some former Sars employees and others who have been crisscrossing different media platforms while making unfounded and baseless conclusions as a result of KPMG’s media statement.

“Sars wishes to categorically state that the allegations that KPMG report was used as the basis for disciplinary actions as well as the institution of a criminal offence are, at best, false and, at worst, deceitful, and aimed at misleading the people of SA,” Moyane said, reading from a statement.

He announced a range of measures Sars would be taking against KPMG, which included reporting the company to the relevant local and international statutory bodies, as well as parliament, to determine the appropriate action to take.

KPMG will also be reported to Finance Minister Malusi Gigaba with the aim of blacklisting the company for its “unethical, immoral and unlawful behaviour”. The commissioner said Sars would immediately stop all work KPMG was doing for the tax authority.

Moyane also wants Gigaba to consider stopping all work currently performed by KPMG on other departments as well as any other work in the pipeline until the company’s work for government has been investigated and reviewed.

During the press briefing, KPMG messaged Sars to clarify that it did not retract the rogue unit report, but only its findings and recommendations.

Moyane said the report was “not flawed” and showed there was prima facie evidence of a rogue unit. He confirmed the report had been given the Hawks for further investigation.

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