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    Sikhakhane Report

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    Sikhakhane Report

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    Sikhakhane Report into SARS

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    Sikhakhane Report into SARS

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    Sikhakhane Report

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    Amanda Watson
    Sikhakhane Report into SARS

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    commissioner cory INVESTIGATION REPORT CONDUCT OF MR JOHAN HENDRIKUS VAN LOGGERENBERG ‘SOUTH AFRICAN REVENUE SERVICE By ADV. MUZi SIKHAKHANE Assisted by EN RAJAB-BUDLENDER and ADV. PATRICK RAMANO Attorney for SARS: Mr. Imraan Mahomed: Hogan Lovells Attorneys (SA) ‘COMMISSIONER COPY TABLE OF CONTENTS INTRODUCTION... sont s 3 ‘SARS AND ITS STATUTORY MANDATE. cco caer THE COMPLAINT ernie seen ‘TERMS OF REFERENCE. anon 7 PROCEDURE AND METHODOLOGY soos ° ‘THE PANELS’ BROAD OBJECTIVES ss ee ‘THE PROTAGONISTS IN THIS INVESTIGATION... THE ROOT OF SARS’ CHALLENGES ae ‘THE PURPOSE BEHIND THE FORMATION OF THE NRG. oo THE NATIONAL STRATEGIC INTELLIGENCE ACT AND THE LIMITATIONS ON COVERT ACTIVITY cnn 47 FURTHER EVIDENCE CONSIDERED weve 47 Mr Van Loogerenbergs Evidence a Evidence by Other SARS’ Officials 0 The Relatonshia 55 The Demise ofthe Relationship 6 ‘Ms. Water's Tox Aut 69 INTERACTION BETWEEN MR VAN LOGGERENBERG AND MEMBERS OF THE MEDIA a coe: wacuizuncu. Set ™ [ROMANTIC RELATIONSHIP BETWEEN MR VAN LOGGERENBERG AND OTHER SARS EMPLOYEES és : 7% ules Pertaining to Relationships, 7% MR VAN LOGGERENBERG'S WHATSAPP MESSAGES conn nnnnnee 8 ‘CODE OF CONDUCT AND THE TAX ADMINISTRATION ACT enn 4 (Code of Conduct 8 The Tax Adminstration et a (CONFLICT OF INTEREST snnnnne 88 FINDINGS cn oe 3 RECOMMENDATIONS... so 9 CONCLUSION en = e soe 7 ‘commigsioncn cory INTRODUCTION 1. On8 September 204, by Notice and in ems of Seton 9 ofthe South Akan Revenue Sevice Act 34 of 1997 (the SARS Act) the then Acing ‘Commissions uf the South Alaa Revenue Service (SARS, Mr. van Play {Mt Play’) appointed us as an extemal panel to conduct en investigation nto egations of impropriety against Mr. Johan van Loggerenberg (Mr. Yan \Loggerenterg), SARS's Group Execute: Projects, Evidence Managerent _and Technica Support. A copy ofthe later of appointment including the tems ‘of reference ls annexed hereto as Annexure “SRA”. ‘SARS AND ITS STATUTORY MANDATE. 2 SARS 6 av mtogral par ot @ demociate South Africa and the heartbeat ofthe ‘country’ eeanamy, is haresworking and profesional taf mains the envy of ‘many developing and developed counties alike, ithas been and remains the eptome o administrative effelency. 1 i for this reason that any sign of| Inappropriate conduct within the ranks of SARS must be nipped in the bud before it ects the entre erganization and the reputation of South Afi as roern ard democratic state, 2 SARS is a creature of statute Its statulory mandate 6 governed by the: incples set out in Section 19541) and (2) of the Constiution end tows: primarily from the SARS Act. The Constivtion and these regulatory schemes ‘COMMISSIONER COPY Censhvine a unique and epecal kine of nos, guiding and directing human and ‘rganzatonal conduct. They eccupy the top positon of the normative pyramid and acct in judging conduct of tae entrusted with patcular obligations, The SARS Act paces particular obigations upon SARS and the Commission, lnctuing those oficials who act onhisherbehalt. 4 The objectives of SARS ar sed In section 3 of he SARS Act a fotows "SARS's objectives are the efficient and effective- (2) collection of venue; ane (©) control over the import, export, manufacture, ‘movement, storage or use of certain goods.” 5 The functions of SARS are proved forin section 4: “()Toachieve ts onjecuves SARS must- (2) secure the efficient and effective, and widest possible, enforcement of- (the national legislation sted in Schedule ; and (i) any othor legislation conceming the collection of revenue or the ‘control over the import, export, manufacture, movernent, storage or use of certain goods that may be assigned to SARS. Intorms of ether legislation or an ‘agreement between SARS and the forgan of state or institation concerned: (©) advise the Minister on- ()_allmatters concerning revenue; and (i) the exercise of any power of the performance of any funetion assigned to the Ministor or any other funetionary in the national ‘COMMISSICNER COPY executive in terms of legislation teferred to legislation referred tn paragraph (a) and (€)__advis the Ministor of Trade and Industry on matters concerning the control over ‘tho import export, manufacture, ‘movement, storage or use of certain goods. (2) SARS must perform its functions in the most cost- ficient and. effective manner and in ‘accordance with the values and principles mentioned in section 195 ofthe Constitution, ‘THE COMPLAINT 18 The invortigaton arcs fom a complaint made against Mr. Van Loggerenborg by Ms. Boinda Walter (Ms. Water), an attomey and director of Binds Walter Atomeys in Protea Following a rather acrimonious end to romantic relatonsnip Between Ms, Waller and Mr. Van Loggerenderg on 27 May 2014, Ms, Water fed formal complaint againt i. Van Loggerenterg. 7 The essence of Ms, Waters comploiat i that Mr. Van Loggerenberg ran a covert unit wihin SARS, unlawful revealed taxpayer information, was engaged in unlawful interception of conversations and inated ther romantic Felatonship wih the sole pupose of obtaining incriminating information bout her eens nth tobacco industry. This compliint has le to widespread recia ‘speculation about SARS and the alleged unlawful or unethical conduct 0M ‘Van Loggerenberg 8 The dota ofthe above alogations are contained in various communicaons to SARS andthe media, The media repots that flowed painted a picture that Me. Van Loggerenberg nd Ms, Walter were entangled in what was refered to COMMISSIONER COPY In catsin newspapers a3 “SARS LOVE AFFAIR” ‘SPY LOVE GETS UGLY “SPIES AND LIES: AS LOVE AFFAIR ENDS", and co an 8148 common cause that Mr. Van Loggerenberg and Ms. Weer engaged in a romantic relationship tom 25 October 2013 to 27 May 2014. i is equally ‘common cause that Mr. Van Loggerenberg has been romantica involved with no less than three female ew employees at SARS, the names of which wil be revealed later inthis ceport. While they didnt rept dreety to Mr. Van Loggerenberg at the time ofthe relationships, at leat wo of the parsons in ‘question, wee Mr. Van Loggerenber's subordinates, 40 Signifcaty, a the time the romantic relationship between Ms. Walter and Mi ‘Van Loggerenberg started Ms. Walter was the Chaicperson ofthe Fair Trade Independent Tobacco Associaton (‘ITA’), whose members were the subject of ponding investigations by SARS. Me. Van Loggetenterg had been directly Involved in these investigations. “14 ts aso common cause that Ms. Walter was a covert agent for the State Securiy Agency the 884), previously the Nationa neigence Agency (the TNA} sine approximately October 2010, She had aso acted na professional capacty 28 the atomey for several eens in he Tobacco Industyincuding ‘Cariinx Tobacco Company (Pty) Lid (Camiénx?) before and dung the ‘course of her eatonstip with Me. Van Leggerenbera 12 The complaints by Ms. Walter are also detailed inthe report of SARS'S internat investinaon, which was led by Mic Moet Kanyane CMe Kanyane’) of Gidentuys Malate Atorneys Incorporated. We were fui withthe report of this panel. However, we sought to conduct this particular investigation COMMISSIONER COPY without any regard to the fncings contained in that report. We considered altesh al the evidence that was placed before is report and fring, though related to our terms of reference, were not considered as part of our investigation. “TERMS OF REFERENCE 3 ‘The precise terms of reference (contained in Annexure *SR1") and the issues upon wich our recommendations are sought by SARS a the flowing: 13.41 Whether there was any breach of the corfidentalty provisions Contained in Chapter 6 of the Tax Adminstatien Act 28 of 2011, as amended (he TAR) relating to the breach af the SARS oath of secrecy, 132. Whether there was any breach of section 7(a) anor (b) of the TAR, 25 ‘amended, relating to confi of intrest: 133, Whether Mr. Van Loggerenberg detberatey set cut to establish relationship wih Mis, Walter fo the purposes of oblaining ineinating Information about her cients, many of whom ae suspected of being Involved in et tobacco trading 134. Any possible breach by Mr. Van Loggerenberg of any law arising om ‘he uniawl interception of information 135. Whether thore was any breach of any law er code of conduct by ‘engaging nan intimate relationship with a taxpayer ors representative who was under investigation; ‘COMMISSIONER CoPY 13. Wve thee was any breaen of any law or code of conauct By nevng intimate relationships with subordinate SARS employees who work within te same division as andor report to Me, Van Loggetenberg 137 Whether there wore conficis of Interests between Mi, Van Loggetenberg’s role inthe chatty organization known as Wachzungu” and hisrole as senor SARS official 438 Any engagement in comp actives, 189 Any possible breach of SARS poles, processes, cases or good ‘governance; 13:10 Any 2ct of impropriety in generator terms oF any law 35 well as any alegaton that may come to light nthe course of he invetigatio, ‘THE NEW COMMISSIONER "V4 While we waren the midst of our Investigation, the President of the Repub of ‘South Aca, Mr. JG Zuma, appointed as naw SARS Commissione, Me. Tom Moyane ("Commissioner Moyane"). The panel therfore was required 10 ‘repo to Commissioner Moyane. The pane met wth Commissioner Mayans in is Brookiyn office on 17 October 2014 and confirmed is tems of relerence ‘wih him. Commissioner Moyane expressed and offered his fal support fo the panel and its wrk. The panel also briefed him on its progress and undertok to ‘make avalable ths report on the 45 day (5 November 2014) since t commenced ts investigation, COMMISSIONER COPY PRCCEDURE AND METHODOLOGY 15 The panel was given the discretion to adopt rules and procedures designed to achieve a speedy but in-depth investigation ino the allegations contained ithe terms of reference. The pane tk a reasonable steps to ensure thal any persons appearing before i were protected from any undue influence, protsure, Intimidation or coercion, In thie epi, whore the pans raccivnd = request that would have exposed @ winess or undermined the terms of reference, such request was decined, 16 A panel of inquiry such as the present one has no powers of compulsion. Nor oes have the power to issue subpoenas. Accoringly,initations were Issued in advance to persons that the panel considered would asset ts Investigation. Wen submisions were leo accepted from various pesins, _and deperding on ther relevance to the terms of reference, such submissons wore taker into account. The panel also interviewed those whose names appeared in documents with which it had been fumished or arose Yom Interviews with oer partipans, and who appeared to have infrmetion relevant the investigaton 17 Unimatey, more than 25 persons were interviewed, Several of ther submissions were of such a nature thatthe persons who made them require protection of ther ienttes, IIs for this reason that many aspects of the evidence are no atbuted to specie’ peopl. hough several persons were invited to appear, others made the equest to appear before the panel AS 3 Commissioner COPY result of time consis, not everyone that made such requests was granted ‘he opportunity to make oxal submissions. 1B tis also important to state thatthe proceedings were nota Wal nora vehicle or ‘mechanism for enquiring ito Human Resource o labour clated complains within SARS. The tack was simply to investiga ‘igorusly and honesty the Issues raised i the terms of reference with a view fo uncover whether certain laws, policies and codes of conduct have been violated, However, n order to ‘92in greater insights into the challenges facing SARS, submissions were not limite or confined, The individual persons Kad some bert to make broad ora submissions as deemed necessary, 19 The process of conducting the interviews commenced wih a clear objective of achieving dooper insights into the challenges facing SARS In respect of Me Von Loggerenberg andthe so-called spy sues. Accordingly the process was ‘rigorous, and at times confrontational. This was so because atthe beginning, the panel adopled an approach which alowed those interviewed to “honesty tell thir story. However, SARS, 98 we later found out has, within te stat complement, @ curous presence of former spies andlor former intligence ofcers. This was compounded by the fact that both Me. Van Loggerenberg and Ms. Water are also pat of he Intligence community. Quicky, the pane hag to tearm to Separate fcton and fri imagination from the facts andloe facts certain partes elected to remember 20. The method of afording interviewees an environment in which they &e ot ery to “tl their story" was adopted in order to ascertain what they were prepared to volinleer. in some cates, when you compare what they were prepared to volunteer and the evidence that emerged later, one Is atle 10 0 ‘Commissioner coPY Celermine what as being withheld from the panel. As more information came to the fore through documents and ether witnesses, the motives of diferent persons became clearer, including those that voluntered to make representations. The pane caulously adopted a robust, but not host sve of questning 21 During the investigation the panel sought to confine set to the tems of ‘elerence. Having sent an invitation fo SARS staf to make submissions, the panel received several equests liom various staf members and members of ‘the public who sought > adéress it on every problem they had with SARS’ Investigations. Their issues ranged from complaints about preferential, lweatment of Mi: Van Loggerenberg, marginalization by SARSS senior ‘management and some discrepancies Inthe manner in which resources are located to projects 22 Unfotunately, ad ghen the time constraints, it was practical impossible to ‘meet each and every person that registered some grievance or some degree of iscontent. However, ne panel vas not unaympathtic to these lsu, but the some of them did nol relate to the questions for which the investigation was convened 23. Tho avdonce was in some instances intensely detaled and voluminous. We were presented with volumes of documents and conducted numerous Interviews, some of which were lengity. We have no doubt that such Information will Become sbsolutely ciel in a much more extensive iequiry hose time frames are nat as ited COMMISSIONER COPY 24 Wo also exporianced some degree of host and in some cates mere posturing fiom persons we interviewed, In ur view, this was understandable, ‘Te loves of suspiion and cynicism were very high within the orgensation| ‘doce SARS managment wan pusceved by wom as having been hypnotized by Me, Van Loggerenberg's perceived power and charm. While we make no comment about the veracty of these perceptions, the pane found that sch @ perception had compromised certsin parts of the organisation. For understandable reasons, certain individuals viewed even thi investigation wih suspicion, carefuty Nnng at ther eas about what they thought would find Some of these idviduals were leary prepared to protect Mr. Van Loggerenberg at al costs, while ethers seemed to have adopted a host stance towards him as resul of what we viewed as organizational dynam, “The panol was miniul ofthese dynamics and sought to determine by way of evidence the real eves that were hidden in these submissions, The panel noted this envionment a6 part of the challenges that resut frm certain ‘omissions ans commissions by SARS. 25 Some offils, one of whom had volunteered to be interviewed, simply made falso repesentations to the panel. Having been infmately involved ia the 12 NRG") and te prodocozzor, they eleced to omit such involvement, We withhold ther names in hi report ‘imply because we were notable focal them back to answer other conduc Fcst twas clear to the panel that they could not be tusted to assist the lnvestigaion. Second, ther falsehoods notwithstanding, the panel was able to jobiain irlormation ftom many ether more tutu offeals and sources, -Accorigly, we consisered most ofthe testimony as largely sl ervng, false and ielevant 2 ‘COMMISSIONER COPY 28 Wille he process of questioning was quite rigorous, the investigation dt not adopt the format of cross-examination of those ilerviewed. The object was to {eto the botbm ofthe real problem by means of igorous engagement with ‘hose who appeared to make orl submissions. 27 We also sought 1o ensure that the process, while investigating Mr. Van Loggorenbergs conduct, did notin any way violate his constitutional igh. is for this reason that we allowed Mr. Van Loggerenberg to appear with bat Ns ftomey and Senior Counsel. His Senior Counsel, Adv N' Martz SC was ‘towed to make comments on ives about which he fet his input was ‘elovant. The panel also gave Mr. Van Loggerenberg two opportunites to make submissions. The fst was to allow him the opportunity to provide the pane! with his version of events as they elated tothe terms of ference. Once the panel gathered sufciet information i forded Mr. Van Loggerenberg anater ‘pperuniy to respond to certain issues that had emerged from its Investigation. Through this process the panel afforded him the opportunity to respond, it alto gave the panel some sgh nto what Mr. Van Loggerenborg chose nolo tl the pane during his frst interview. 28 As we were to leaen much lle, we had to walk tight ope in placing ou trust in the trahuness of witnesses whose tade is largely ithe intligence cra ‘There no doubt that such offells are an essential component of any state However, some among them choose the faking of sincety, deception and Iniigue as their prefered tools of trade. Accorcingly, the panel had to be presented tot 8 ‘COMMISSIONER COPY 29 As sated above, we were furnished with he report ofthe internal paneled by Me Kanyane, but dd not ha regard tothe findings contained in that report Instead, we deemed i absolutely imperative that we consider the evidence ‘esh inorder to respect Mr. Van Loggerenbergs rights oa fi process. We considered equally crucial that he be afforded amp cpportunity fe respond {o all the allegations, including the ones that emerged 2s we interviewed various persons who appeared bette the panel, We were algo mindful that he ‘nus to prove the strength of he alegatiens against him did nt ie wath him as he remained the eubjoct of euch accusations, Accordingly, our methodology was designed to ensure that Mr. Van Loggerenberg is not unduly burdened with mere allogations whose evidence wat non-existent. ‘30 We must record that et our very fst meeting with Mr, Van Loggerenterp, he ‘requested thatthe pane! should not use the names of he fallow SARS ofa with whom he has had romantic relalonshipe, Ms Lana Pinkham and Ms, Siobhan Wison, He repeated this request wen he was interviewed for the second time, He also asked that we do name the charity which he founded calles Wachizungu inthis report to the Commissioner, Both these requests were dovined for various reasons inciuding that no request fr eondentalty had been made by the ladies themselves when they gave evidence to the panel Moreover, the panel was of the view that to accede to Mi. Van Loooerenberg's request would have the effect of improper influencing the work ofthe panel 31 Surprisingly. on 2 November 2014, Me Van Lnggerenherg dressed an emai to the panel and to SARS, repeating the request in respect of Wachizungu. A ‘copy ofthe emails tached hereto as Annexure “SR2". “ COMMISSIONER COPY 32 One of out terms of relerence relates specialy to Wachieungu and we consider improper and audacious his ater to tel te pane! nat mention te name ofan entity thatthe panels specially askecto consider. We ae of te view that Me, Van Loggerenberg fas in tis regard to appreciate the slgniicance ofthe inte af the process. 133 Anather incident occured which last caused concern fo the panel. We were told by Ms. Water whan she appeared before the panel that Wr. Van Loggerenberg's counsel hid advised her that he was confident thatthe panel would fin favour of Mr. Van Loggerenberg and aked Ms. Waller to stop her Ingation against Me, Van Loggerenberg. We vewes this allegation in the most serious ight. We aso corsdere it fait fo pu this alogation to Mr. Mart SC ‘9s our esteemed collapse. He assured the panel that there had been a misunderstanding in his communication with Ms. Walter during ther attempt 0 sete tneiribgation. 34 Mr Marte SC told the pane! thet he had simply indicated that he knew the members ofthe panel as advocates he respected and was connsent tna ney ‘would come tothe correct outcome. As ou colleague, we accpted his bona Fes in his cegard and put the matter to rest We have no reason rot to accept Mr Marte SC's explanation. 35 On 3 November 2014 Mr, Ven Loggerenborg’sallorney aressed a lair to Me. invaan Mahomed seeking to remind the panel of an undertaking # had ‘made fo Mr, Van Loggarenterg when he appeared before i fr the second line, Unfotunatey, the lelter mischoractrises tho undertaking ae an Undertaking not to make an adverse fring against Mr. Van Loggerenberg 1s ‘CONMISSIONER SOPY without fst giving him an opportunity to respond thereto. A copy ofthe eter is attached hereto as “LETTER 1" 38 The panel made not suc undertaking, To do so would have made @ mockery of he process. The undertaking that was infact made was that in the event that a new and adverse allegation was made against Mr, Van Loggerenteg, ‘ater he had made his last representations, the panel woul afford him the ‘pporunty to respond 0 such new allegation. On 4 Navember 2014 Mr Imraan Mahomed, on behalf of tho panel addiessed a later to Mr. Van Loggerenbers's attomeys clartying this point and reminding them what the recse undertaking was, A copy ofthe leer is attached hereto as “LETTER a ‘THE PANELS’ BROAD OBJECTIVES 37 The kame! ofthe problem facing SARS and perhaps other organs of slate is luhethec te governance structuras sot within the aw, in pursuance of the genera objectives ofthe stato the vsion and mandate of SARS and in he best Interest of revenue colecton and the country a8 a whole. The principle of legality is the foremost principle for how organs of sate should do their busines, 88 It was crucial thoretore to make a cateful assessment of what works within SARS, what I o be preserved and encouraged to row and develop, a we! hati to be ascarded. In that way, one could isolate the areas thet ace problematic snd dea! wih them without destoying the stable aepacts ofthis august and ea institution ofthe county, ‘COMIISSIONER COPY 29 Because SARS fe @ Sou Arica ineuton, tw nstrally reflect some of the usual tensions within society That sto be expected because al nstivions of 2 sven county wi elect most of secley's dynamics end conradictons. The panel was acutely mindful of these issues and sought to approach the Invostigaton os objectvaty 2 # could 40 The pane! was algo mindul that any solution to be adopted must seek to Improve rather than demorakze SARS. it must take & to higher level and 5st in stangihering ts governance structures. Depending onthe fats, we wore conscious that a sledge hammer approach may well solve one problem Land emate many more. Aesodsingly, we Sought to leoate very carefully the problen as ralsed in the tems of reference and to subjoct each piece of evidence tothe same sertiny. 41 This approach was also made possible by the approsch and attude of toth the Acting Commissioner, Mr. Play who appointed the panel, 2s well 2 the ‘new Commissioner, Mr. Tom Moyane who was appointed when we Tad ‘ready commenced wih the investigation. They both gave us the support we required in order to perform our marnmeth ask. [if PROTAGONISTS IN THIS INVESTIGATION 42 ALthe heat of this investigation i the romantic relationship belween Mr. Van Loggerenberg and Ms. Waltr. Ther respective backgrounds are relevant and pethaps insrucive in regard to the present matter. We descrbe them accorsinal: COMMISSIONER COPY 424 22 23 Ms, Walters an admitted storey ofthe High Cour of South Altea, a rector and practicing atlorey of Beinés Water Attorneys Incorportod. Athough there are repens thal Ms, Waller csmissed llegaons that sho was a spy 35 “outlandish, edleulous”, she

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