Moyane ‘unlawfully’ paid Guptas’ VAT refund through third party – report

South African Revenue Service (Sars) commissioner Tom Moyane has been accused of illegally authorising the payment of a R70 million VAT refund to a Gupta-linked company, Daily Maverick’s investigative unit Scorpio reports.

According to the report, Oakbay Investments director Ronica Ragavan emailed Moyane on May 22 last year requesting him to pay the first of three VAT payments amounting to R70 million into Terbium Financial Services’ account for the benefit of Oakbay.

The Guptas appointed Terbium as a payment agent to manage the payment of staff salaries after the country’s four major banks in 2016 severed ties with the controversial family accused of state capture and corruption.

The payment of the VAT refunds was reportedly despite objection from several Sars officials who warned Moyane and its chief officer of legal counsel Refiloe Mokoena that the law doesn’t permit the payment of VAT refunds into third party accounts to prevent fraud and money laundering.

“To prevent money laundering and corruption, tax compliance must be monitored with international and domestic law in mind. SARS is therefore limited to paying VAT refunds into the bank account linked to the relevant VAT number. There is no legal basis for paying VAT refunds into the trust account of an attorney – such an act would be illegal.

“The relationship between an attorney and a client is strictly governed by the Attorneys Act. The trust account cannot be audited by SARS and such a payment would ‘expose SARS to risk’, SARS officials warned after a flurry of letters between SARS and Oakbay,” the report stated.

In response to the allegations, Moyane denied through his spokesperson Sandile Memela that the request from Oakbay was unlawful and Sars was forced to deviate from its general practice.

“As commissioner, I exercised my discretion in terms of section 72 of the VAT Act due to the anomalous situation created by the closure of the Oakbay bank accounts, particularly in view of the fact that the refunds were due and payable in law to Oakbay. The allegation of illegality therefore has no basis,” Moyane said.

Moyane’s future at Sars has recently become a topic of speculation after Business Day reported on Thursday that his days were numbered at the tax agency and that his removal was set to be put before Cabinet.

On Wednesday, Moyane announced the resignation of his number two, Jonas Makwakwa, saying he was doing so for personal reasons and would make all his personal tax statements available for scrutiny.

Makwakwa was suspended and investigated over suspicious payments into his bank account. The payments were red-flagged by the Financial Intelligence Centre in 2016, and Moyane was forced to suspend Makwakwa after this was reported in the media.

In November last year, he was cleared of all charges and given the go-ahead to return to work. Opposition parties objected strongly to his reinstatement.

Recently he faced fresh allegations of conflict of interest after NICS was appointed as debt collectors for the revenue service, and Moyane said it was when he put these to Makwakwa, with the intention of suspending him, that he announced that he had already decided to resign.

– Additional reporting African News Agency

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