South Africa to Soon See New Leaders at Tax Agency, Gordhan Says

(Bloomberg) -- The South African Revenue Service’s leadership team has no credibility and will soon be changed, according to Public Enterprises Minister Pravin Gordhan.

Gordhan, a former finance minister and a previous head of the tax agency, joins business leaders in calling for an overhaul at SARS after it’s repeatedly missed collection targets and amid accusations of wrongdoing. Newly-appointed President Cyril Ramaphosa has pledged to clamp down on corruption and mismanagement at state institutions.

“It’s out there in the public domain that leadership team has lost all credibility and the time for change, it should be sooner rather than later,” said Gordhan, who clashed with Moyane over the management of the tax authority when he was finance minister. Getting the revenue service right, “is not too far away,” he said.

Gordhan returned to the cabinet to oversee struggling state companies last month after being fired by then-President Jacob Zuma in March last year. Ramaphosa, 65, took over the presidency after Zuma was forced by the African National Congress to step down on Feb. 14 and has since dismissed Zuma favorites from the administration.

State-owned companies have been at the center of claims of corruption and mismanagement, and for links to contracts and alleged kickbacks for the Gupta family, who are friends of Zuma’s and in business with one of his sons. The tax agency doesn’t fall within Gordhan’s portfolio.

The revenue service on Friday rejected a report by the Daily Maverick, an online investigative newspaper, that Moyane helped companies linked to the Guptas obtain tax rebates they didn’t qualify for. Zuma and the Guptas also deny wrongdoing.

Removal Imminent

Moyane has also 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 ($100,000) in suspicious payments. Makwakwa resigned from the agency this week.

South Africa’s revenue shortfall for the fiscal year ending March 31 is 48 billion rand and the government in November announced an inquiry to probe under-collection of taxes that increased under Moyane’s leadership.

Moyane’s removal from SARS is imminent and will be put to Cabinet, Johannesburg-based Business Day newspaper reported on March 14, without saying where it got the information.

Zuma appointed Moyane, who previously ran the nation’s prisons, as head of SARS in 2014. He clashed in 2016 with Gordhan, who accused the tax-agency head of “totally unacceptable” behavior by defying his order to halt a management and systems overhaul. Zuma sided with Moyane and dismissed Gordhan’s request for a change of leadership at SARS.

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