Van Loggerenberg sets record straight on ‘hocus pocus’ ‘crap’ about Sars ‘rogue unit’

In a long and detailed Facebook post, former SA Revenue Service (Sars) group executive Johann van Loggerenberg hits back at the alleged misinformation about what he and his investigative unit did at the revenue collector during his years at Sars.

He said it was “pure nonsense” that his investigative unit had been unlawfully established or done anything wrong whatsoever.

Below is his full, unedited, uncensored post in its entirety. Though long, it is well worth reading.

How rogue can you be?

It has been suggested that a particular investigative unit in our tax and Customs authority was “unlawfully and illegally established” and therefore “rogue”. This is pure nonsense and demonstrates a lack of consideration of basic legal precepts and some thinking. The lawful basis upon which our tax and Customs authority may go about to set up units, recruit and organise staff and conduct investigations is rooted in the South African Revenue Service Act. It’s there for all to see, if you care to read the law and think things through, and maybe ask a few questions from those who set up the unit in the first place. The SARS Act is pretty self-explanatory. It has been the prevailing guide to set up divisions and units since SARS came about in the late nineties. A plethora of units for various purposes had been set up over the years in this manner. Now some would have you believe that the institution’s mandate is as limited as “to collect revenue”. Again, this is pure nonsense and a nonsensical simplification of a modern tax and Customs authority’s purpose, functions and mandate.

First off, one must actually have a look at the statute that brought the institution into being back in 1997 – the SARS Act. Section 4 (1) sets out the list of functions of the institution. Now what you will notice is that here, the SARS Act imposes the statutory obligation on the institution to “…secure the efficient and effective, widest possible enforcement…” The law says SARS “must” do so. There is no discretion – it doesn’t say “may”, “could”, “can pontificate and theorise”, but “must”. “Must”, means, well, “must”.

“Widest possible enforcement” also means just that.

“Enforcement”, according to the dictionary refers to: the act of compelling observance of or compliance with a law, rule, or obligation. “May do all that is necessary and expedient to perform its functions properly…” also means what it says. “Perform legal acts…engage in any activity, whether alone or with other organisations in the Republic…(to perform its functions properly)” is also rather self-explanatory. I don’t know about you, but for me it’s pretty clear. It means SARS can create units of staff in order to do all that is necessary and expedient to secure the efficient and effective, widest possible enforcement and engage in any (lawful) activity, to perform its functions properly.

Various laws administered by SARS set out multiple powers to investigate and enforce such as:

o Power to compel to answer.
o Power to obtain evidence from third parties.
o Power to monitor, control, conduct surveillance on goods and persons associated with such goods.
o Power to conduct inquiries.
o Power to inspect records on demand, including entering premises for such purpose.
o Power to search, rummage, enter vessels, vehicles and premises.
o Power to detain, seize and forfeit records, goods and evidence.
o Power to obtain search and seizure warrants.

And a whole lot more…

This should settle the issue, one would imagine.

However, to amplify this somewhat, let’s look towards our courts. In S v Botha and Others (1) 1995 (2) SACR 598 (w) the defence attorney argued that, according to Section 215(b) of the South African Constitution, only police officials could investigate crime and that no other possesses this authority. In this case, I guess one could say that the accused basically argued that the investigators in their case were, well, unlawfully and illegally constituted and “rogue” since they weren’t police officials. The court disagreed in judgment. The judge ruled that it was not the purpose of Section 215(b) to prevent someone who is not a member of the SAPS to conduct an investigation, and admitted that there are many private and corporate sectors that conduct their own investigations before handing their results to the SAPS for the institution of a prosecution. Accordingly, said the judge, this development has created new opportunities for private and corporate investigators, and all indications are that the scope for private and forensic investigations will increase.

I guess this should settle things then, right? If not, let’s look towards what the academics have said of this.

There are two (2) notable citations which speak to this: According to Swanepoel (2001:4) it is foreseen that, at least in the next couple of years, the State will not have the capacity to investigate all crimes, and especially in cases of a commercial nature, the outsourcing of criminal investigation will continue to increase. But it is important to understand that private and corporate sectors are limited with regard to their jurisdiction of investigations. They have no powers to charge or subpoena suspects, but they are able to investigate any criminal activity that affects the company internally according to company policies (Joubert, 2003:49).

Now back in February 2007, the State of the Nation Address announced that SARS would “modernise its systems in respect of border control, improve the work of the inter-departmental coordination structures in this regard; intensify intelligence work with regard to organised crime, building on the successes that had been achieved in the last few months in dealing with cash-in-transit heists, drug trafficking and poaching of game and abalone”.

So the nation was told this. SARS went on to develop a strategy to confront the illicit economy, which was presented and approved by Parliament by 2007. This should clear things up then, I imagine.

Okay, now with effect from March 2009, SARS officials were given certain extended law enforcement powers in law. A new Section 4A was inserted into the Customs and Excise Act allowing for the commissioner to confer the power to carry out arrests for the purposes of enforcing the act.

This power is conferred on a certain category of officer. If chosen, such an officer will be presented with a certificate and identification card stating that he or she is authorised to carry out arrests in order to enforce the act.

In exercising the power of arrest the customs officer will be deemed to be a peace officer as defined in the Criminal Procedure Act. If a person is arrested by such a customs officer, he or she must be brought to a police station as soon as possible – or in the case of arrest by warrant to any other place expressly mentioned in the warrant – and will then be dealt with in the manner contemplated by the act.

In terms of Section 4B of the Customs and Excise Act, the commissioner may determine a category of officer that will be authorised to possess firearms for the purpose of enforcing the act. The possession and use of firearms will be subject to the provisions of the Firearms Control Act.

Any officer that is issued with a permit to possess a firearm must carry the permit on his or her person when in possession of the firearm. The permit will serve as proof that the officer is authorised to possess an official firearm.

The use of non-lethal weapons may also be authorised by the commissioner in such circumstances as are prescribed by rule.

The commissioner may also make rules to facilitate the administration of Section 4B, including rules concerning the acquisition, record keeping, issuing of permits, carrying, possession, use, safe-keeping, theft and loss of firearms and ammunition. These rules will also prescribe the training of officers and any other matter that the commissioner considers reasonably necessary and useful for the efficient and effective administration of Section 4B.

It’s not all. The Tax Administration Act took effect on 1 October 2012. It introduced statutory provisions for SARS to conduct “criminal investigations” and procedures for SARS that should follow where it believes that a serious tax offence might have been committed.

A ‘serious tax offence’ is defined as “a tax offence for which a person may be liable on conviction to imprisonment for a period exceeding two years without the option of a fine or to a fine exceeding the equivalent amount of a fine under the Adjustment of Fines Act. Should SARS, while conducting a tax audit, realise that a serious tax offence may have been committed, the starting point would be Section 43.

Once a senior SARS official has decided that a criminal investigation should be pursued:

• any post-referral audit information must be kept separate from the criminal investigation; and such post-referral audit information would not be admissible in criminal proceedings.
• Section 44 sets out the manner in which a criminal investigation into an alleged serious tax offence should be conducted.

In essence:

o The taxpayer’s constitutional rights as a suspect in a criminal investigation should be recognised (section 44(1)).
o Those rights include the right to remain silent, the right not to be compelled to make any confession/admission and so on.
o SARS may only make use of the relevant material obtained during the audit “… prior to the referral referred to in section 43” (section 44(2)).
o Information obtained during the criminal investigation may, however, be used in both civil and criminal proceedings (section 44(3)).

Section 235 deals with “Criminal offences relating to evasion of tax”.

Some of the most pertinent criminal offences relating to taxpayers in respect of administrative issues are where the taxpayer ‘wilfully and without just cause’ fails or neglects to:

• register in terms of a tax act, such as for income tax or Value-added Tax (VAT).
• notify SARS of a change in particulars.
• submit a return or another document.
• appoint a representative taxpayer and notify SARS of such appointment or change in appointment.
• retain records as required.
• issue a document to a person, as required under a tax act, such as a VAT invoice.

In respect of other administrative interactions with SARS, it is a criminal offence not to:

o supply SARS with information, documents or things, as required.
o answer fully or truly any questions posed by a SARS official.
o take an oath or make a solemn declaration, as required, such as at an official inquiry
o attend and give evidence.
o comply with a directive or instruction issued by SARS.
o give assistance to SARS to conduct an audit or criminal investigation at the taxpayer’s premises.

Under common law, fraud is defined as the intentional making of an unlawful misrepresentation that actually causes or potentially can cause another person to act to his or her detriment.

Most cases of tax fraud would probably fall within the scope of this definition. However, this law provides specifically for certain fraud-like acts to constitute statutory crimes. These include the wilful submission of a false certificate or statement in respect of returns or financial statements or accounts.

It also includes the wilful issue of an erroneous, incomplete or false document that is required to be issued under a tax act (such as a VAT invoice). The crimes mentioned thus far carry a penalty of a fine or maximum imprisonment of two years. Section 235 also provides that it is a criminal offence for a person, with the intent to evade tax or assist another person to evade tax or obtain an undue refund, to:

o make a false statement in a return or document, or sign a return or document containing such a false statement, without reasonable grounds for believing the statement to be true.
o give a false answer to a request for information from SARS.
o prepare, maintain or authorise the preparation or maintenance of false books of account or other records, or falsified or authorises the falsification of books of account or other records.
o make use of, or authorise the use of, fraud or contrivance.
o make any false statement for the purposes of obtaining any refund of or exemption from tax.

Section 235(3) provides: “A senior SARS official may lay a complaint with the South African Police Service (SAPS) or the National Prosecuting Authority (NPA) regarding an offence under this section.”

Okay, now over to constitutional law professor Pierre de Vos, whose view on the matter reads as follows:

“A perusal of the National Strategic Intelligence Act suggests that the Sikhakhane Report may have relied on section 3 of the Act to come to the conclusion that the establishment of the so-called ‘rogue spy unit’ by SARS was unlawful. This section allows any state department empowered to do so by legislation ‘to gather departmental intelligence, and to evaluate, correlate and interpret such intelligence for the purpose of discharging such function’ provided that the department ‘shall not gather departmental intelligence within the Republic in a covert manner’.

“”Departmental intelligence’ is defined by the Act as ‘intelligence about any threat or potential threat to the national security and stability of the Republic which falls within the functions of a department of State, and includes intelligence needed by such department in order to neutralise such a threat’.

“This means that the National Strategic Intelligence Act does not prohibit a government entity such as SARS from gathering intelligence. Nor does it prohibit SARS from gathering intelligence covertly. It does confirm that the covert gathering of ‘departmental intelligence’ (in other words, intelligence relating to a potential threat to the national security and stability of South Africa) by SARS would be in breach of the Act…Moreover, given that the Act does allow departments to gather certain types of intelligence, it is not clear how the establishment of the unit could have been unlawful – unless it was deliberately set up to investigate threats to national security…”

Now the logic of some people, is that it is necessary for a criminal trial or commission of inquiry to settle this question. I support a commission of inquiry wholeheartedly but for a different reason – I wish for those behind the “rogue” campaign to be exposed for what they are. Now that such a commission has been brought to life, it remains to be seen whether their terms of reference extend to considering this issue.

A criminal trial is limited in the sense that it won’t test the above. Simply put, this unit had stood accused of a very long list of allegations, all false, including but not limited to, that it had:

o Broken into the home of former president Zuma.
o Planted listening devices in former president Zuma’s home.
o Broke into taxpayers’ homes and conducted “house infiltrations”.
o Spied on former president Zuma and another at the Beverly Hills hotel in Durban.
o Conducted lifestyle audits on prominent politicians.
o Infiltrated politicians and the ANC as bodyguards.
o Bought new homes and cars.
o Spied on “top cops”.
o Spied on late former national police commissioner Jackie Selebi.
o Illegally intercepted telecommunications and emails of taxpayers.
o Unlawfully spied on taxpayers.
o Was an illegal and unlawful unit, denied, and so secret that nobody had ever heard of them before.
o Had secret funds of over R560 million.
o Operated front companies.
o Operated a brothel as a front company.
o Used CCTV to spy on a former and late SARS official at a restaurant in Muldersdrift.
o Purchased a list of very sophisticated spy equipment and used this to spy on taxpayers.
o Tasked an official to infiltrate a rhino-poaching syndicate and, when he was arrested by the police, “disavowed” him.
o Received training and bought equipment from a former apartheid agent’s company.
o Used fake names and IDs in their work.
o Entered into questionable settlements with taxpayers.
o Had a so-called “grabber” and sophisticated interception software called “FinFisher”.
o Wanted to “swing elections” in 2014.
o Used a crowdfunding charitable fundraiser as a front of some sorts and received questionable donations from suspect donors.
o Was a “rogue unit”.
o Plotted against former president Zuma.
o Was deployed to “destroy careers of SARS officials”.
o “Purchased” equipment revealed in the latest list by Noseweek.
o Was involved in the deaths of colleagues; and the list goes on…

All of the above is bogus. Hocus pocus. Fake news. Crap. Not true. False. Which explains why nobody has been charged for any of this between May 2014 to date (that’s four years). What some say is that we must “use the criminal case” to prove our innocence insofar the “rogueness” of the unit.

Easy to say, much more difficult to do. But ultimately what fascinates me is that these same proponents who argue this seem completely uninterested in who the people were behind the propaganda – and more importantly, to what end? Any thoughts?

If you haven’t been bored to death by now and are still reading this up to this point, you might still potentially be interested in the actual mandate of the unit. In other words, what precisely was the unit mandated to do? Allow me to further bore you.

Back in November 2009, a media briefing pack was compiled. It consisted of a lengthy document, with quite a number of annexures. Among these annexures were the formal mandates of the initially named Special Projects Unit (SPU), dated July 2007, and the later more refined mandate of the renamed National Research Group (NRG), dated May 2008. These were provided to a number of media houses back then.

So first off, the unit’s existence has never been denied. On the contrary, it was explained.

This happened again in February 2010, this time as attachments to an even more detailed lengthy document and throughout ensuing years.

Editors and jounalists were briefed, handed the pack and questions were answered. In addition, the same documents were formally provided to various Members of Parliament and they were briefed, to various law enforcement agencies and our intelligence services.

From February to April 2010 and the later High-Risk Investigations Unit (HRIU) from March 2010 onwards, maintained the very same mandate dated May 2008, until its closure in 2014.

Furthermore, these documents were once again provided to our law enforcement agencies and intelligence services in November 2010. Since then, for years 2011, 2012, 2013 and 2014, formal letters were addressed to our law enforcement agencies and intelligence services, constantly requesting them for assistance to protect our people, the unit and deal with its detractors.

Not a single one of these letters were ever replied to. Not once. So what you need to consider within this context is this:

• The unit was never denied. It was explained in detail. To anybody that asked.
• Had any law enforcement agency or intelligence service an issue with the unit, why not answer our letters, talk to us, say something at all? Not in 2010, 2011, 2012, 2013 or 2014? Why ignore our letters?
• Do note that the mandates specifically stated, in no uncertain terms, that it had to operate “within the legal and policy framework” of the institution, “focus on tax and customs offences”, the “illicit economy”, supporting other units and law enforcement agencies. Which is exactly what it did. To great success.
• Why has nobody ever asked what exactly the unit did? Why is nobody interested in that?

Consider this level of transparency, with what the public knows about other investigative units at other non-law enforcement agencies, say, Home Affairs, or Public Works, or Environmental Affairs, our SOEs, and so on.

The laws and regulations administered and enforced:

• Customs and Excise Amendment Act, 2014
• Customs Control Act, 2014
• Customs Duty Act, 2014
• Employment Tax Incentive Act, 2013
• Employment Tax Incentive Act, 2013 as published in GG 37185 on 18 December 2013
• Merchant Shipping (International Oil Pollution Compensation Fund) Administration Act, 2013
• Merchant Shipping (International Oil Pollution Compensation Fund) Contributions Act, 2013
• Tax Administration Act, 2011
• Mineral and Petroleum Resources Royalty Act, 2008
• Diamond Export Levy (Administration) Act, 2007
• Securities Transfer Tax Act, 2007
• Small Business Amnesty and Amendment of Taxation Laws Act, 2006
• Sections 4 and 28 of the Exchange Control Amnesty and Amendment of Taxation Laws Act, 2003
• Unemployment Insurance Contributions Act, 2002
• Skills Development Levies Act, 1999
• Uncertificated Securities Tax Act, 1998
• Tax on Retirement Funds Act, 1996
• Sections 56 and 57 of the Income Tax Act, 1995
• Section 39 of the Taxation Laws Amendment Act, 1994
• Value-Added Tax Act, 1991
• Customs and Excise Act, 1964
• Income Tax Act, 1962
• Estate Duty Act, 1955
• Transfer Duty Act, 1949
• Union and Southern Rhodesian Death Duties Act, 1933
• Any regulation, proclamation, government notice or rule issued in terms of the legislation or the Constitution.

Additional legislation imposing enforcement duties on SARS:

• South African Police Service Amendment Act, 2008
• Prevention of and Treatment for Substance Abuse Act, 2008
• National Environmental Management Biodiversity Act, 2004
• Prevention and Combating of Corrupt Activities Act, 2004
• Financial Intelligence Centre Act, 2001
• Drugs and Drug Trafficking Act, 1999
• Prevention of Organised Crime Act, 1998
• Criminal Procedure Act, 1977
• There are others too, but I guess you get the picture.

In subsequent correspondence, Van Loggerenberg added: And by the way: In May 2007, literally 2 months after it started, the 25th of May 2007 to be precise, SARS obtained a legal opinion to convert the unit into a fully fledged SARS unit when it became clear the NIA had pulled out and no longer were interested in assisting SARS. That legal opinion almost reads verbatim like Prof de Vos’ opinion. And that informed the mandate of the unit from that day on.

The unit was born out of an agreement between state departments. SARS in its usual old way got out of the starting blocks fast and efficiently. Approvals were obtained and an initial 21 people made up the unit by March 2007. More than half were existing SARS officials transferred from various other enforcement units into the unit, with the balance being recruited externally. They hit the ground running when most started on 15 March 2007.

By April 2007, together with the police and Scorpions, they made their first bust. It was the biggest illegal abalone seizure in the history of KZN. Media statements were issued by all agencies that same month. A month later, the other agency went cold. S

o SARS obtained a legal opinion to inform the functioning of the unit in May 2007. This dictated the mandate and operations of the unit from that day on.

International agreements and treaties: There’s a long list:

What I am stating here, is no secret. As I’ve said, these laws, judgments, facts and documents have been in the public domain since as far back as 2009 and even prior. South Africans owe the relevant handful of women and men that were branded as “rogues” a deep gratitude and appreciation. Trust me, they did much with little, and made our country a better place for it. To have branded them “rogue”, is an absolute disgrace and miscarriage of justice. They were anything but rogue.