South African Tax Agency Head Suspended, Will Face Hearing

JOHANNESBUGH (Capital Markets in Africa) – South African tax collection agency boss Tom Moyane was suspended and will face disciplinary proceedings as newly elected President Cyril Ramaphosa’s administration moved to restore trust in the institution.

The ouster was Ramaphosa’s latest step to replace Jacob Zuma appointees in the government since taking over the presidency last month after his predecessor was forced to step down by the ruling party. He’s also removed the board of the state power utility, which is laden with debt and has been implicated in a graft scandal.

Mcebisi Jonas, a former deputy finance minister, is being considered for the post, but it’s unclear whether he would accept it, according to two people familiar with the situation, who spoke on condition of anonymity. Jonas couldn’t immediately be reached for comment and the National Treasury, which oversees the tax agency, didn’t respond to an emailed request for comment.

The decision to suspend Moyane as commissioner of the South African Revenue Service came on Monday after he refused to resign during a meeting with Ramaphosa, the Presidency said in a statement. Ramaphosa said in a letter to Moyane that under his leadership there had been a deterioration in public confidence in the agency and that public finances had been “compromised.”

Court Action
“For the sake of the country and the economy, this situation cannot be allowed to continue, or to worsen,” the president said in the letter.

As the events of the past few days unfolded, Moyane threatened to seek a court interdict to stop plans to remove him from his position, according to two people familiar with the matter.

Mark Kingon has been appointed acting commissioner, the National Treasury said in an emailed statement on Tuesday. Kingon, who has been with SARS since its establishment, was the interim head of the revenue body’s business and individual taxes unit, it said.

Zuma appointed Moyane, who previously ran the nation’s prisons, as head of the tax agency in 2014. Moyane clashed with then Finance Minister Pravin Gordhan, who accused him in 2016 of “totally unacceptable” behavior by defying orders to halt a management and systems overhaul. Zuma sided with Moyane, who retained his post despite consistently missing his revenue-collection targets, while Gordhan was fired from the cabinet in March last year.

Losing Credibility
Gordhan, who Ramaphosa appointed public enterprises minister, said in a wide-ranging interview last week that the revenue service’s leadership had “lost all credibility.”

The government agreed to probe under-collection by the nation’s tax service in November after the Treasury forecast a revenue shortfall of about 50 billion rand ($4.2 billion) for this fiscal year.

Moyane has recently faced criticism from lawmakers for his handling of an investigation into accusations his former deputy Jonas Makwakwa and his partner received 1.2 million rand in suspicious payments, and allegations of mismanaging tax refunds. Makwakwa resigned from the agency on March 14. While Moyane has denied wrongdoing, Ramaphosa referred to the refunds and Makwakwa matter as part of the reasons for suspending him.

“President Ramaphosa indicated that as SARS Commissioner, Mr. Moyane holds a high position of trust in the management of the country’s public finances,” the Presidency said. “It was therefore necessary to act urgently and immediately to protect the institution and place it on a path to stability and recovery.”

Source: Bloomberg Business News