Taxman after Sasfin Bank for R4.9 billion due to money laundering syndicate

The taxman has served a civil summons on Sasfin Bank for a total amount of R4 872 327 649.27 plus interest and costs in the form of a damages claim on 9 January, which Safin says arises from Sars’ “purported inability to collect income tax, Value Added Tax and penalties allegedly owed by former foreign exchange clients of the bank.”

Sasfin says in a Sens announcement that some of its former foreign exchange clients operated as a syndicate that ran an unlawful scheme to facilitate the expatriation of money out of South Africa and colluded with its former employees who operated outside the scope of their employment.

Al Jazeera reported in its documentary, Gold Mafia, that Sasfin Bank staff employees of Absa and the Standard Bank Group were bribed to launder money from an international gold smuggling syndicate with strong ties to Zimbabwe.

According to the Sens announcement, Sasfin took decisive action when it became aware of this unlawful scheme, including instituting an expanded investigation led by an independent forensic consultancy.

“This resulted in the termination of relationships with the implicated clients and employees and the opening of criminal cases against them.”

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Legal opinion in Sasfin’s favour

After receiving the summons, Sasfin Bank says it engaged transparently with the relevant regulators on the matter and obtained a legal opinion from ENS, authored by professor Dale Hutchinson, professor Michael Katz and Aslam Moosajee and endorsed by Advocate Wim Trengove S.C.

The legal opinion is that the claim falls outside of the recognised parameters of applicable law and has a very remote likelihood of success, Sasfin says in the announcement.

“On the basis of this strong legal opinion, Sasfin Holdings concluded that the claim will not result in the recognition of any liability. Sasfin Holdings continues to engage with its regulators in this regard. The board of directors of Sasfin Holdings remains of the view that Sars’ claim has no merit and has little chance of success.”

Sasfin says it will defend the claim and, given that this involves a defended trial action, the matter is only likely to come to trial in several years’ time.

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Sars confirms claim

Sars commissioner, Edward Kieswetter, confirmed in a statement that Sars instituted legal proceedings against Sasfin Bank.

“Sars conducted a thorough investigation into various South African taxpayers who had not made true and accurate tax disclosures to Sars. The investigation revealed that the taxpayers had colluded to expatriate funds offshore in a manner that obscured tracing the expatriated payments and jeopardises the recovery of tax in South Africa.”

According to the statement, Kieswetter’s position is that it is inappropriate to comment on the question of liability and compensation for the fiscus’ loss, as these are legal issues that are now before the South African judicial system. Given this development, Sars will not comment further.

“The commissioner wishes to affirm his commitment to pursue the enforcement and recovery of taxes without fear, favour or prejudice in the interest of upholding the fiscal integrity of the South African tax system,” Kieswetter said in the statement.