SARS guns for KPMG over ‘rogue unit’ report – calls for blacklisting and seizure of work

SARS commissioner Tom Moyane has called auditing firm KPMG’s withdrawal of a controversial report into a so-called ‘rogue SARS unit’ an attempt to discredit the tax agency and paint it as corrupt.

On Friday (15 September), KPMG released a statement in the wake of the Gupta scandal, wherein eight senior executives of the South African branch, including CEO Trevor Hoole, resigned over poor business practices relating to Gupta-linked companies.

As part of the briefing, the auditing firm also announced that it was withdrawing a controversial report into the “rogue SARS unit”, which it said did not pass the company’s ‘quality standards’ and could not be relied upon.

The report fingered Gordhan and former officials at SARS for establishing an illegal surveillance unit at the revenue service, to spy on other officials. The Hawks used the report to hound Gordhan throughout 2016, though no formal charges ever came from it.

At a media briefing on Monday, Moyane said that KPMG let SARS know, through its lawyers, that it was going to make the public statement about withdrawing the report.

However, the commissioner said that this action was unethical and illegal, and was done specifically to make SARS and its leadership look bad.

A prime point of contention is that the report is not KPMG’s to withdraw, with Moyane saying that the contract it had with the firm confirmed that the report was the property of SARS, and that KPMG had surrendered all rights to SARS.

Further, Moyane denied that the KPMG report was used as a basis of disciplinary hearings against SARS officials, and claims that said officials had ‘confessed’ illicit activities to him directly.

The KPMG report was delivered in late 2015 and made final in 2016 – whereas the ‘confessions’ were made in mid 2015, he said.

“SARS sees KPMG’s conduct as nothing else but a dismal attempt to portray SARS, its leadership, and in particular (Moyane) as incompetent, corrupt, inefficient and involved in a witch-hunt. This is the same narrative that has been perpetuated for years by some treacherous elements within society and the media,” he said.

The commissioner said that SARS was told what was going to happen, with no regard, engagement or input from them – the clients in the matter.

Moyane said that the “abhorrent, unethical and unprofessional” conduct by KPMG has left SARS with no choice but to take legal action.

He said that SARS will take KMPG on for damaging its reputation, and will try get the auditing firm blacklisted by the minister of finance for its “immoral and illegal behaviour”.

Moyane wants all work between the South African government and KPMG to cease, and wants all current work to be seized.

This is the legal route SARS wants to take:

  • Institute legal proceedings against KPMG for reputational damage to SARS including but not limited to a civil claim;
  • Report KPMG to the relevant statutory audit bodies both locally and internationally;
  • Report KPMG to the minister of finance to consider stopping all work currently performed by KPMG in other departments as well as any work in the pipeline until all the work by KPMG conducted for the state have been investigated and reviewed for quality and proper auditing quality and expected standards;
  • Immediately seize any work which KPMG is currently performing for SARS and assess the work KPMG has performed in the last 10 years with the aim to determine whether there was value for money and whether SARS should demand its money back;
  • Report KPMG to Parliament through SCOPA and SCOF with the aim to investigate the immoral conduct of KPMG and determine the appropriate action.

Read: KPMG has not done enough: Gordhan

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SARS guns for KPMG over ‘rogue unit’ report – calls for blacklisting and seizure of work