Judge Nugent briefed the Standing Committee on Finance on Wednesday, 13 February 2019, on the key findings and recommendations of Nugent Commission of Inquiry into the Tax Administration and Governance by the South African Revenue Services (SARS). The commission was constituted on 24 May 2018, by His Excellency, President Cyril Ramaphosa under Proclamation 17 of 2018.
The pertinent matter discussed in the meeting was how will state capture of this magnitude be prevented going forward? The role that Parliament played in conducting oversight over National Treasury and SARS was also discussed. In terms of the Constitution, Parliament must conduct oversight over, government departments and its entities. Departments and its entities must report to Parliament and NT and SARS report quarterly to the finance committee on the fiscal framework, its programmes and how monies allocated to it are spent. Also, throughout the cyclical budget process at Parliament, the public is invited to present to the finance committee on the fiscal framework and other matters.
The role of Parliament was particularly discussed in regard to the claims made by Adrian Lackay, that the committee and the Joint Committee on Intelligence, did very little to give Lackay and / or his colleagues at SARS, implicated in the “rogue unit” allegations, an opportunity to be heard.
The Chairperson to the finance committee, Honourable Yunus Carrim, explained to Judge Nugent that on receiving the memorandum from Lackay, he immediately responded to Lackay and spoke to the Chairperson of the intelligence committee. As the issues raised by Lackay, fell within the ambit of the intelligence committee, it was agreed that there would be a division of labour between the intelligence and the finance committees. The Chairperson emphasised that in discussing the division of labour between the two committees, legal issues were identified on which matters should be addressed at the Commission for Conciliation Mediation and Arbitration or the labour court; what was assigned to the committees in terms of the Public Finance and Management Act and intelligence matters that fell within the ambit of the General Intelligence Laws Amendment Act 11 of 2013. However, whilst finalising the parametres of the scope of work between the two committees, Lackay’s memorandum was leaked, causing huge tensions within the African National Congress and the finance committee.
A commission of inquiry is in my view, a more suitable vehicle to have investigated the allegations about the “rogue unit” and other matters and make findings and recommendations in this regard. In the first instance it was a lot speedier than a parliamentary process would have been. In the event that a parliamentary committee inquiry was being considered, then several discussions and actions needed to take place. These actions may have included various discussions in committees, caucus and study group meetings in order to establish whether there was prima facie evidence to hold such an inquiry. The commission was also not linked to any political constituency, which meant it did not have to wait on party political inputs and reaching a consensus. This further helped in speeding up its findings and recommendations. It is worthy to recall that the commission was constituted in May 2018 and it published an interim report in October 2018.
Judge Nugent noted that he did not find the committee guilty of any wrong-doing in the commission’s report. A concern raised by the committee was that many officials lie and mislead MPs and there is no mechanism for MPs to check whether responses to its questions are correct. An example used as illustration, was the quarterly meeting with NT in 2018. The finance committee interrogated the former SARS Commissioner Tom Moyane on his knowledge about Jonas Makwakwa’s failure to make declarations regarding refunds. The former Commissioner vehemently denied having such knowledge. In another instance, Moyane was questioned regarding the dismantling of SARS’ Large Business Centre. Moyane provided a response that at the time seemed very credible and did not give the committee any reason to doubt. Was there more that the finance committee could have done? It was noted that when the public approaches MPs, they should not only make accusations, however, also include evidence.
Judge Nugent suggested that the best way to prevent Parliament from being misled or state capture or corruption, is to appoint fit and proper persons with unblemished record that is not linked to any constituency. Ostensibly because SARS collects monies from all citizens and not a particular constituency. This could prevent much malfeasance. However, finding a person of that calibre without a constituency or political, business or other interest is very unlikely.
For this reason, the commission’s recommendation on the appointment of an Inspector General is of importance. This would be an outside body capable of inquiring into possible governance failure of SARS on an ongoing basis. The Inspector-General could either initiate inquiries itself or in response to concerns expressed from inside or outside of SARS. The Inspector-General should have investigative powers similar to that of a commission of inquiry, however, no authority to interfere directly in the operations of SARS. Given that government finds itself in austerity measures, the Inspector-General’s office should be a lean office, consisting of few staff.
Another recommendation to note was that the SARS Act be amended to provide for the appointment of the Commissioner of SARS by the President after consultation with the Minister of Finance. This means that the President will have to consider the views and deliberate on them, however, it is his or her prerogative to make the final decision on who to appoint as the Commissioner of SARS. Perhaps, the President should also consult with Parliament in making this decision, or should this remain solely an executive power and be kept separate from the legislature? Further meetings on the commission’s recommendations will have to include these questions.
As the Fifth Parliament comes to end on 31 March 2019, the committee agreed that this was only an initial meeting and that MPs and their political parties must still apply their minds to the commission’s findings and its recommendations. It was therefore agreed that a follow-up meeting be held before 31 March 2019.
The committee will include its views and recommendations on the Nugent’s commissions report in its legacy report to the Sixth Parliament. It would be interesting to see the recommendation on how Parliament should deal with officials lying to MPs. Section 17 of the Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act, 2004 makes it an offence for witnesses summoned to Parliament, to give false evidence. Will this section be extended to include Ministers and their officials? Clearly, the Sixth Parliament already has its work already cut out and should hit the ground running as soon as it is constituted.
Zelna Jansen is the Chief Executive of Zelna Jansen Consultancy.