- Edward Kieswetter worked on the public holiday, his first day in his new role.
- He has a mammoth task.
- Kieswetter may want to take lessons from a groundbreaking 90-year old American case as he sets about restoring faith in SARS.
- For more stories, go to Business Insider South Africa.
The new SARS Commissioner Edward Kieswetter has wasted no time in getting to work on turning around the moribund tax collection agency.
Despite yesterday’s public holiday, the country’s new tax-collector-in-chief started work, taking an oath of secrecy, writing a letter to staff and getting a detailed brief from Mark Kingon, who has held the fort over the past year and will be a key lieutenant in the new administration.
Deflated by years of mismanagement and state capture, SARS has been gradually clawing back ground since the departure of former head Tom Moyane, who was sacked after being found wanting by the commission of inquiry into the tax service.
Kieswetter has his work cut out for him.
Not only does he need to ramp up collections for a cash-hungry State, but he also has to repair the once proud institution built under the current public enterprises minister Pravin Gordhan. During his tenure as commissioner in the Mbeki administration, Gordhan radically improved the efficacy of the agency.
When Gordhan was kicked upstairs to become finance minister, Kieswetter should have replaced him as commissioner. After all, he founded and lead the successful large business unit at SARS - which was dismantled under Moyane.
Instead, the last decade saw Kieswetter broaden his corporate experience working as CEO of Alexander Forbes, starting his own private education business, as well as serving on a range of private and public sector boards, where he has been instrumental in the early stages of the clean-up at Transnet. He also served as lead independent director at Shoprite.
After 8 May, one of the biggest tasks facing the new government - expected to be the ANC, led by Cyril Ramaphosa - will be to restore public and investor confidence in the criminal justice system.
SARS under Kieswetter, and with the appropriate cross-departmental support and high-level political cover, will be instrumental in this process.
It might well take a leaf out of the book of US law enforcement officials of the 1930s. When they were faced with the murderous reign of Al Capone, they nailed him on tax violations, rather than the more complex charges they might otherwise have pursued.
As we've learned from numerous headline-grabbing inquiries, there is a growing body of evidence that illicit cash is flowing through the economy.
Tax cases against SA’s criminal underworld may be the quickest and most effective means of getting bad guys behind bars - rather than waiting for the notoriously glacial criminal justice system to start moving.
Capone was a slippery character.
He got others to do his dirty work and kept no assets in his own name. He dealt only in relatively modest amounts of cash which he moved about using Western Union. While it was well known and accepted that he ran a criminal organisation, it was hard to prove his crimes in a court of law.
So rather than waste time and resources on nailing him on a wide range of criminal exploits, they simply honed in on his tax affairs.
His seven-year reign as a Chicago crime boss ended when he was 33, when he was sentenced to 11 years in Alcatraz
While he described himself as a businessman, there is no doubt that he was a fearsome mobster, who was treated by some as a Robin Hood character due to his extraordinary generosity courtesy of his ill-gotten gains.
Federal authorities didn’t much care on which charges Capone was convicted, as long as they could get him behind bars.
His highly publicized 1931 tax evasion trial eventually saw him spend eight years behind bars.
Kieswetter needs some old fashioned sleuthing.
Matching the VIN numbers with the IDs of owners of expensive cars, for example, is a useful place to start when assessing whether the individuals who own them fill in tax returns. In the case where assets are owned by companies, SARS needs to check whether its directors are tax compliant.
It was the US Assistant Attorney General Mabel Walker Willebrandt who recognized that mob figures publicly led lavish lifestyles yet never filed tax returns. They could be more easily convicted on tax charges than going through the long-winded process of evidence gathering to get testimony about their other crimes.
Even illegally earned income is subject to income tax.
Surely for a South Africa that is seeking a post-election anti-corruption catharsis, this is an avenue the state could use to clear out criminal elements deeply intertwined throughout government?
In South Africa, SARS has used these old fashioned methods to connect dots.
It was a little grey man called Mr Chips working at SARS in the early 2000s who noticed via media reports that the high-flying CEO of a company called Specialised Outsourcing, Dave King, was living a considerably more lavish lifestyle than his personal tax returns suggested.
It took nearly 15 years for SARS to finally reach a settlement with King who at the time faced a tax bill of some R1.4bn. SARS eventually agreed to accept about a third of that for King to get his affairs in order.
It could now, surely, use its extraordinary powers and with co-operation from the Hawks, also under new management, to quickly prosecute some of the easier cases it must have on its radar.
This may force criminal networks to turn on themselves and lead to real evidence that could break the underworld stranglehold on the economy.
Bruce Whitfield is a multi-platform award-winning financial journalist and broadcaster.
Receive a single WhatsApp every morning with all our latest news: click here.
Also from Bruce Whitfield:
- Butternomics, aka why milk-rich SA has a butter shortage
- Most airlines want your phone switched off during take-off and landing – except FlySafair
- Your pension plan may just have received its biggest boost in two decades
- SA bosses! Here’s a radical idea: be nice
- A direct flight between Cape Town and the US is a start – now let’s not kill Airbnb please