SA Revenue Service commissioner Dr. Johnstone Makhubu has been thrust into the Phala Phala saga spotlight barely three weeks into his five-year tenure following his appointment by the farm's owner, President Cyril Ramaphosa.
Image: IOL Graphics
Newly-appointed SA Revenue Service (Sars) commissioner Dr. Johnstone Makhubu will account for the taxman’s declaration of compliance with tax obligations of President Cyril Ramaphosa and his Phala Phala farm only in “duly constituted structures”.
Sars, Public Protector Kholeka Gcaleka and the SA Reserve Bank (SARB) have come under widespread criticism following the Constitutional Court judgment reopening Ramaphosa’s possible impeachment for violating the Constitution and the law for failing to report the February 2020 theft of undeclared foreign currency from his farm in Bela-Bela in Limpopo.
The apex court referred to an impeachment committee the section 89 Independent Panel report, which found that, prima facie, Ramaphosa may have committed serious violations of the Constitution and the law as well as serious misconduct.
Ramaphosa has indicated that he intends taking the report of the three-member panel chaired by former Chief Justice Sandile Ngcobo on review amid calls for him to resign or to be recalled by the ANC, which has stood firmly behind him.
Makhubu this week told the National Assembly’s Standing Committee on Finance that he preferred to reserve his opinion on Phala Phala in as far as taxpayer matters are concerned.
“I have taken time to review the documents that informed our decisions and our utterances and one of the things I’ve found is that the consent that was given by taxpayers was very specific to time periods and therefore I’m not at liberty at this point to discuss any taxpayer matter that goes beyond those periods because then I would be violating the confidentiality provisions that are put forward in defence of taxpayers,” he said.
Makhubu further promised: “If we need to come through and make representations, we will do so at duly constituted structures and that is not to say we’re running away from accounting as far as that is concerned.”
In March 2023, Makhubu’s predecessor Edward Kieswetter revealed that audits had been concluded without any adverse tax findings on Ramaphosa, Ntaba Nyoni Estate and Ntaba Nyoni Feedlot, where the Phala Phala farm is situated, and that they were compliant with their tax obligations to date.
During the presentation of Sars’ annual performance and strategic plans, Makhubu promised that the tax revenue collection agency will watch the space and when called upon to respond to formal structures it will do so.
“I am not deviating again from my submission on the record that I will, as long as I’m commissioner at Sars, drive the independence of Sars, the autonomy of Sars and ensure that Sars acts in a manner that is without fear, favour or prejudice,” he said.
Makhubu was responding to questions from uMkhonto weSizwe Party (MKP) MP and former cabinet minister Des van Rooyen, who said: “In our engagements with your predecessor, as MKP we made it very clear that we are not happy [about] how Sars, from an ethical point of view, but also from a compliance point of view, with the laws of the country, more especially on issues of declaration of revenues and compliance status of individual taxpayers”.
Van Rooyen also expressed MKP’s unhappiness with the manner Sars managed the Phala Phala matter.
“In his response, your predecessor said [that] according to their findings Ntaba Nyoni Estate and Ntaba Nyoni Feedlot, where Phala Phala farm entities are, were compliant with [their] tax obligations and didn’t establish any adverse findings.
“We disagreed because from a layman’s perspective it was very apparent to us that there were serious tax law provisions that were undermined in that transaction,” he said.
Van Rooyen asked Makhubu whether in subsequent tax filings by the entities there was any different evidence that emerged requiring Sars to revisit its response in 2023.
Makhubu responded: “Unfortunately, I cannot speak to the subsequent period that I’m not at liberty by virtue of the limited consent that was given at the time to deal with these matters”.
He said he could only speak of his tenure, which started this month.
“But I can also assure you that this posture is not a Johnstone Makhubu posture, it’s the posture that has been in this organisation under commissioner Kieswetter and I am taking that forward as an accelerated basic response to the tax system,” added Makhubu.
He assured MPs that he has looked at the documents because he wanted to appraise himself on whether Sars came to the right decisions and what has subsequently happened.
The SA Federation of Trade Unions (Saftu) was among the organisations and groups that expressed its grave concern about the role played by the SARB, Gcaleka and other institutions that ultimately found little or nothing fundamentally wrong in the Phala Phala saga.
Saftu said Gcaleka and SARB governor Lesetja Kganyago should resign as they cannot simply continue as though nothing has happened and that their handling of the profoundly damaged public trust in the impartiality, independence, and integrity of institutions that are supposed to defend constitutional governance without fear or favour.
Gcaleka’s office stated that it is neither a participant in the parliamentary process nor a party to the Constitutional Court case, whose judgment did not assess or overturn her report, made no findings on the issues she investigated and did not engage with her conclusions or remedial action.
The SARB did not respond to requests for comment but has previously stated that there was no violation of exchange control regulations and that mere possession of foreign currency was not what was regulated by the regulations.
loyiso.sidimba@inl.co.za