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My findings on Pravin Gordhan & other matters - Busisiwe Mkhwebane

PP says President must disciplinary action against minister

Address by the Public Protector, Adv. Busisiwe Mkhwebane, during the media briefing in Pretoria on Friday, July 5, 2019

Programme Director;
Deputy Public Protector 
The Chief Operations Officer
Chief of Staff
Members of the media;
Ladies and gentleman;

Good afternoon!

Thank you for availing yourself despite the short notice.

I am making public my findings in respect of about six investigations that my office has been conducting. The investigations are as follows:

1. Allegations of undue delay by the City of Tshwane Metropolitan Municipality to resolve a complaint of illegal occupation of the RDP House;

2. Allegations of improper eviction by the City of Tshwane Metropolitan Municipality, resulting in the unlawful demolition of a building structure, erf 2810, Extension 4, Refiloe Township in Cullinan;

3. Allegations of failure by the City of Cape Town to properly regulate the operation of Uber metered taxi services in the Western Cape and to enforce the conditions of an agreement between the City and Uber Western Cape;

4. Allegations that the erstwhile Department of Rural Development and Land Reform, currently the Department of Agriculture, Land Reform and Rural Development allocated a farm but failed to accelerate the development of her business plan to enable her to receive funds for recapitalisation and development;

5. Allegations of maladministration, corruption and render irregularities in connection with the procurement and awarding of a contract amounting to R631 million to a company called Siyenza by the Amathole District Municipality without following due process; and

6. Allegations of violation of the Executive Ethics Code by Mr Pravin Gordhan, MP (Mr Gordhan) as well as allegations of maladministration, corruption and improper conduct by the South African Revenue Services (SARS). Full Report here

Let us start with the matter of Lehobye v City of Tshwane. I investigated allegations of undue delay by the City of Tshwane Metropolitan Municipality to resolve a complaint of illegal occupation of the RDP House which has been approved for one Ms. Gloria Lehobye.

The complainant alleged that she applied for the house in Erf 3476 Block U, Mabopane. The house had been approved by the Gauteng Department of Humans Settlements in 2001. However, when she wanted to occupy the house, which was to be handed over by the City, someone by the name of Esther Ndlovu had already moved into the property.

The complainant is unemployed, renting a room and when she reported the matter to City officials, she was allegedly told that they did not know what to do and to date the City has allegedly failed to resolve the matter.

I found that the allegations are substantiated and that the complainant was improperly prejudiced. To remedy this maladministration and improper conduct, the City Manager must take steps to ensure that the complainant is placed in her allocated RDP house or to provide her with alternative permanent accommodation within three months from the date of the report.

He must also apologise to the complainant in writing for the improper prejudice caused to her over the years. This must be done within 14 working days.

The City Manager must further ensure that conduct an investigation to establish the cause of the illegal occupation of RDP houses and take appropriate action against officials responsible for the undue delays and maladministration in the allocation of houses.

He must also ensure that an action plan indicating how the remedial action will be implemented is provided to the Public Protector within thirty working days of the date of this report.

Babedi v City of Tshwane

I investigated allegations of improper eviction by the City of Tshwane Metropolitan Municipality, resulting in the unlawful demolition of a building structure, erf 2810, Extension 4, Refiloe Township in Cullinan, which was allocated to him by the erstwhile Nokeng tsa Taemane Local Municipality (NTLM) on 13 April 2011.

The complainant alleged further that he had constructed an informal structure on his property, which he later demolished when he started to build a house. On 18 November 2013, a company called EL Shaddai Security Services (EL Shaddai), acting on instructions from the City, demolished the building structure that was built on his property on the basis that he illegally occupied the property. He alleged that he never received a notice of eviction from the City.

The complainant allegedly submitted that he lodged a complaint with the City on 2 February 2015 for a claim relating to damages incurred as a result of the demolition of his building structure. The City allegedly investigated the complaint and issued a report dated 22 July 2015. In terms of the aforesaid report, the complainant was allegedly confirmed to be the lawful owner of the property.

The complainant allegedly submitted further that the City failed to pay him damages incurred as a result of the demolition of his building structure by EL Shaddai. He then approached me to intervene and resolve his complaint.

I found the allegation that the City improperly evicted occupiers from the City’s land which resulted in the unlawful demolition of the Complainant’s building structure to be substantiated.

The allegation that the City improperly failed to deal with the complainant’s complaint regarding the unlawful demolition of his building structure in a fair and accountable manner in line with the democratic values and principles enshrined in the Constitution is also substantiated. Further, the allegation that the complainant was improperly prejudiced by the conduct of the City is substantiated.

As a remedy, I direct the City Manager to, within seven working days from the date of the report, issue a written apology to the complainant for the City’s irregular eviction to obtain a court order against him prior to his eviction, which resulted in the demolition of his building structure.

The City Manager must also within thirty working days from the date of the report, establish the amount of damages the complainant suffered because of the loss of his building structure and also request the Complainant to submit three quotations relating to such damages.

He must further, within thirty (30) days from the date of confirmation of the loss suffered by the complainant, approve and effect payment relating to the damages incurred by the Complainant as a result of the demolition of his property by EL Shaddai to him.

Munzvenga v City of Cape Town

I also investigated allegations of failure by the City of Cape Town to properly regulate the operation of Uber metered taxi services in the Western Cape and to enforce the conditions of an agreement between the City and Uber Western Cape.

The complainant alleged that Uber was allowed to operate in the City with approximately 3000 vehicles even though the City agreed to accommodate only 1035. He also alleged that City officials resorted to impounding Uber vehicles instead of properly regulating the service, thereby making about R10 000 profit for themselves per impound.

The complainant further alleged that Uber violated the regulations of the Provincial Regulating Entity by operating with a large contingent of Uber vehicles and that the City was reluctant to properly regulate the industry because of the revenue collected on impounds.

According to the complainant, Mr. Lee van der berg, Transport Regulator at the Municipal Regulating Entity, showed no interest when the complainant approached him about the matter. In addition, Mr. Brett Herrom, a City Councilor, was allegedly seen officially launching Uber green, which was, according to the complainant, an “illegally operating entity” as the vehicles had no permits.

The complainant provided a video clip of what appears to be an advertisement depicting the former Minister of Tourism, Mr. Derek Hanekom, making travel arrangements using the Uber mobile application and organizing an allegedly illegal operating taxi service.

Based on the information and evidence obtained during the investigation, I could not make a finding on the allegation that the City failed to properly regulate the operation of Uber metered taxi services in the Western Cape, resulting in Uber operators functioning illegally nor could I make findings on the allegation that former Minister Hanekom endorsed illegal Uber operators, in a n advertisement that was meant to showcase digital technology and innovation in the tourism sector.

I decided to close this investigation on these grounds. Any information contradicting the contents of my closing report in this regard may be submitted to my office on or before Wednesday, July 10, 2019. Should we not receive any such information by the return date, the matter will be considered as finalized.

Mahlangu v Department of Agriculture, Land Reform and Rural Development

I investigated allegations by one Ms. BC Mahlangu that the erstwhile Department of Rural Development and Land Reform, currently the Department of Agriculture, Land Reform and Rural Development allocated a farm, Krokodilspruit 290 JR, to her on 04 November 2013, but failed to accelerate the development of her business plan to enable her to receive funds for recapitalisation and development.

According to the complainant, the farm does not have water and electricity and she has not been able to utilise the property for the purpose for which it was allocated. Effectively, the complainant alleged that the Department unduly delayed to allocate approved funds for recapitalisation and development for portion 1 of the farm.

I found that the complaint was substantiated and that the complainant was improperly prejudiced as a result of the improper conduct and maladministration.

As a remedy, I direct the Acting Director-General (DG) of the Department to ensure that the farm allocated to the complainant is farmable and can be utilised for the purpose for which it was allocated by taking steps to reconnect water and electricity within thirty (30) working days from the date of this report.

The Acting DG must also ensure that the department’s Policy on Recapitalisation and Development Programme relating to paragraph D, sub-paragraph A and paragraph E is adhered to, and is in compliance with the Provision of Land and Assistance Act, 126 of 1993.

In addition, the Acting DG must ensure that the Department develops and implements a risk management plan which should identify and mitigate the risk/s associated with non-adherence to the Department’s Policy on Recapitalisation and Development Programme within ninety (90) working days from the date of this report.

The Acting DG must lastly ensure that all employees of the Department dealing with the Policy on Recapitalisation and Development Programme are to be properly trained to effectively and efficiently perform their functions and issue a written apology to the complainant for the Department’s delay to allocate the approved funds for recapitalisation and development of the farm within fourteen (14) working days from date of this report.

Rubela and Maimane v Amathole District Municipality

I investigated allegations of maladministration, corruption and render irregularities in connection with the procurement and awarding of a contract amounting to R631 million to a company called Siyenza by the Amathole District Municipality without following due process.

Three complaints were received relating to claims stemming from media reports early in 2015 in connection with the alleged irregular award of a tender by the Municipality to Siyenza.

In essence, the reports suggested that during or about October 2014, the Municipality awarded a contract to Siyenza, a company owned by a certain Mr. Bongani Mpeluza, who was alleged to have strong links with a group of politically connected individuals, to build sixty-six thousand toilets at a cost to the Municipality of R631million.

The contract was further alleged to have been awarded to Siyenza without following the Municipality’s supply chain management processes and procedures and despite same having been awarded to four other entities in August 2014.

I decided to investigate the following three issues:

1. Whether there were irregularities in the awarding of the tender for the supply, delivery and installation of VIP toilet top structures by the Municipality and if so, whether that constitutes improper conduct and maladministration;
2. Whether political influence played a role in the award of the contract and if so, whether that constitutes improper conduct and maladministration; and 
3. Whether the Municipality incurred any irregular, fruitless and wasteful expenditure as a result of the awarding of the contract.

I found that the allegation that there were irregularities in the awarding of the tender for the supply, delivery and installation of VIP toilet top structures by the Municipality was substantiated.

The allegation that political influence played a role in the award of the contract was unsubstantiated. No evidence could be found to suggest that he tender was awarded to Siyenza because of political influence from those close to Ms. Mantashe; Mr. Itholeng and Mr. Sambudla.

However, I cannot ignore that this was one of the biggest infrastructure tenders where utmost care and diligence should have been exercised to fully comply with section 217 of the Constitution and Municipal Supply Chain Regulations.

A question can be raised whether the there were irregularities in the awarding of the tender for the supply, delivery and installation of VIP toilet top structures by the Municipality would have acted in the same way had beneficiaries been ordinary citizen with the same credentials but without political links.

The allegation that the there were irregularities in the awarding of the tender for the supply, delivery and installation of VIP toilet top structures by the Municipality incurred irregular, fruitless and wasteful expenditure as a result of the awarding of the contract is substantiated.

As appropriate remedial action, I direct the Municipal Manager to ensure that within 15 working days of the date of the report, an action plan outlining how the remedial action will be implemented.

Among other things, the Municipal Manager must ensure that the Municipality’s Supply Chain Management policy is revised to include a framework outlining how further procurement in term of regulation 32 of Municipal Supply Chain Regulations must be done.

The Municipal Manager must ensure that appropriate disciplinary action is taken against all members of the Bid Adjudication Committee who were involved in the award of the tender. This must happen within 90 days of the date of this report.

This matter has also been referred to the Hawks and the Asset Forfeiture Unit in terms of the Public Protector Act to investigate any commission of an offense by all the implicated parties including those who are politically connected.

Anonymous and EFF v Minister Pravin Gordhan and SARS

Before I deal with this matter, I wish to record that I conducted this investigation under extremely difficult conditions. It has indeed been a long, winding and rocky road to get to this point.

I am extremely concerned that the matter in which I have been treated by some of the respondents in this matter during the performance of my duties as provided to me in terms of section 182 and 181 of the Constitution, read with section 6 and 7 of the Public Protector Act is tantamount to contempt.

There has been a continued tone of resistance and undermining of the functions and integrity of the Public Protector as a person and as an institution. It is for the above-mentioned concern that I wish to indicate that the office of the Public Protector is declared by the Constitution to be on that independent and impartial, and the Constitution demands that its powers be exercised ‘without fear, favour or prejudice’.

Those words are not mere material for rhetoric, as words of that kind are often used. The words mean what they say. Fulfilling their demands will call for courage at times but will always call for vigilance and conviction of purpose.

Executive Summary

(i) This report communicates my findings and appropriate remedial action taken in terms of section 182(1)(c) of the Constitution following an investigation into allegations of violation of the Executive Ethics Code by Mr Pravin Gordhan, MP (Mr Gordhan) as well as allegations of maladministration, corruption and improper conduct by the South African Revenue Services (SARS).

(ii) The first complaint was lodged with my office on 12 October 2018, by an anonymous whistle-blower. The second complaint was lodged on 09 November 2018 with my office by Mr Floyd Shivambu, the Economic Freedom Fighter (EFF) Deputy President and Chief Whip (the Complainants).

(iii) The Complainants alleged, inter alia, that:

(aa) The former Commissioner of SARS, Mr Ivan Pillay (Mr Pillay), failed to follow proper recruitment procedures in the appointment of Mr Yolise Pikie (Mr Pikie) and Mr Johan van Loggerenberg (Mr van Loggerenberg);

(bb) Mr van Loggerenberg unlawfully received cash deposits, paid directly into his personal First National Bank (FNB) bank account, from taxpayers and/or representatives, under investigation by SARS, during 19 November 2012 and 28 May 2014;

(cc) Mr Jonas Makwakwa (Mr Makwakwa) unlawfully received cash deposits into his personal bank account, from taxpayers and/or representatives, under investigation by SARS;

(dd) During the tenure of the former Commissioner of SARS, Mr Pravin Gordhan, MP (Mr Gordhan), SARS established an intelligence unit in violation of South African Intelligence prescripts. The intelligence unit was confirmed by a SARS investigation report compiled by Advocate Sikhakhane;

(ee) SARS violated section 41 (1)(e) of the Constitution by not respecting the constitutional status, power and functions of the National Intelligence Agency;

(ff) SARS irregularly procured intelligence equipment, which the intelligence unit utilised for gathering intelligence;

(gg) SARS failed to follow proper recruitment processes in appointing employees who worked for the intelligence unit;

(hh) The SARS intelligence unit irregularly bugged the offices of the National Prosecuting Authority (NPA) and the Directorate of Special Operations (DSO);

(ii) SARS, based on an instruction from Mr Gordhan, as the former Minister of Finance, in 2012, pursued the tax affairs of the current Economic Freedom Fighters (EFF) President, Mr Julius Malema, MP, without a legal basis;

(jj) Mr Pillay was appointed to the position of Deputy SARS Commissioner and subsequently as SARS Commissioner whilst he did not possess the necessary qualifications for the positions;

(kk) SARS failed to follow correct procurement processes in the appointment of Accenture;

(ll) SARS irregularly extended the SARS IT tender for 12 years resulting in fruitless and wasteful expenditure that has escalated to R8 billion to date;

(mm) SARS purchased an IT company by the name of INTERFRONT at an amount of R72 million whilst the company was worth R2 million at the time of purchase; and

(nn) Mr Gordhan violated the Executive Ethics Code by deliberately misleading the National Assembly in failing to disclose that he had met with a member of the Gupta family since taking office.

(iv) I have decided to focus the first part of my investigation into the following issues:

a. The allegation that Mr Gordhan violated the Executive Ethics Code by deliberately misleading the National Assembly in failing to disclose that he had met with a member of the Gupta family since taking office;

b. The allegation that, during his tenure as SARS Commissioner, Mr Pravin Gordhan, MP (Mr Gordhan), established an intelligence unit in violation of South African Intelligence Prescripts;

c. The allegation that, SARS failed to follow correct procurement procedures when procuring intelligence equipment which the intelligence unit utilised for gathering intelligence;

d. The allegation that, SARS failed to follow proper recruitment processes in appointing employees who worked for the intelligence unit;

e. The allegation that the intelligence unit carried out irregularly and unlawfully operations; and

f. The allegation that Mr Pillay was appointed to the position of Deputy SARS Commissioner and subsequently as SARS Commissioner whilst he did not possess the necessary qualifications for the position.

(v) The following issues will be deferred for the second volume of the investigation. These include:

a. The allegation that issues relating to the former Commissioner of SARS, Mr Ivan Pillay (Mr Pillay), failing to follow proper recruitment procedures in the appointment of Mr Yolise Pikie (Mr Pikie) and Mr Johan van Loggerenberg (Mr van Loggerenberg);

b. The allegation that Mr van Loggerenberg unlawfully received cash deposits, paid directly into his personal First National Bank (FNB) bank account, from taxpayers and/or representatives, under investigation by SARS, during 19 November 2012 and 28 May 2014;

c. The allegation that Mr Jonas Makwakwa (Mr Makwakwa) unlawfully received cash deposits into his personal bank account, from taxpayers and/or representatives, under investigation by SARS;

d. The allegation that SARS failed to follow correct procurement processes in the appointment of Accenture;

e. The allegation that SARS irregularly extended the SARS IT tender for 12 years resulting in fruitless and wasteful expenditure that has escalated to R8 billion to date;

f. The allegation that SARS purchased an IT company by the name of INTERFRONT at an amount of R72 million whilst the company was worth R2 million at the time of purchase; and

g. The allegation that SARS, based on an instruction from Mr Gordhan, as the former Minister of Finance, in 2012, pursued the tax affairs of the current Economic Freedom Fighters (EFF) President, Mr Julius Malema, MP, without a legal basis.

(vi) On analysis of the complaints, I considered and investigated the following issues or conducts:

(a) Whether Mr Gordhan violated the Executive Ethics Code by deliberately misleading the National Assembly in failing to disclose that he had met with a member of the Gupta family since taking office?

(b) Whether, during his tenure as SARS Commissioner, Mr Pravin Gordhan, MP (Mr Gordhan), established an intelligence unit in violation of South African Intelligence Prescripts, and if so, whether such conduct constitutes maladministration?

(c) Whether SARS failed to follow correct procurement procedures when procuring intelligence equipment which the intelligence unit utilised for gathering intelligence, and if so, whether such conduct amounts to maladministration?

(d) Whether SARS failed to follow proper recruitment processes in appointing employees who worked for the intelligence unit, and if so, whether such conduct constitutes maladministration?

(e) Whether the intelligence unit carried out irregular and unlawful operations, and if so, whether such conduct constitutes maladministration?

(f) Whether Mr Pillay was appointed to the position of Deputy SARS Commissioner and subsequently as SARS Commissioner whilst he did not possess the necessary qualifications for the position?

(vii) The reason for my issuing of the report in separate volumes is based on, firstly, the requirements of the Executive Members Ethics Act which has strict turnaround times of 30 days. Secondly, the issues relating to the SARS intelligence unit is of public interest and scrutiny and needs to be dealt with conclusively.

(viii) The investigation was conducted by way of correspondence and analysis of relevant documentation as well as the consideration and application of relevant laws, related prescripts and case law.

(ix) Key laws and policies taken into account to determine if Mr Gordhan violated the Executive Ethics Code as well as if there was any maladministration, corruption and improper conduct by SARS, were the following:

a) The relevant provisions of the Constitution of the Republic of South Africa and the Executive Ethics Code which regulates the conduct of Members of Cabinet.

b) The relevant provision of the Constitution and the National Strategic Intelligence Act 39 of 1994 that outlines, amongst others, issues relating to the Intelligence and Security Services in South Africa.

c) Provisions of the Tax Administration Act 28 of 2011, which regulates the investigative powers of SARS.

d) Provisions of Public Finance Management Act 01 of 1999 and the National Treasury Regulations, 2005 which regulates the responsibility of the Accounting Officer in the financial management of public funds. The National Treasury Regulations outline the rules that should be adhered in procuring goods using public funds.

e) Provisions of the South Revenue Services Act 26 of 2002 and the SARS Recruitment and Selection, 2007 which regulates the recruitment and selection processes to be followed in the appointment of SARS officials.

f) Provisions of the Interception of Communications and Provision of Communication Related Information Act 70 of 2002 which regulates the interception of certain communications.

g) The Public Protector may exercise a discretion in terms of section 6(9) of the Public Protector Act to entertain matters which arose more than two (02) years from the date of occurrence of the incident.

In deciding the “special circumstances” that may be taken into account in exercising such discretion favourably in accepting complaints, consideration is given to the nature of the complaint and the seriousness of the allegations; whether the outcome of the investigation into the complaint can rectify systemic problems in state administration;

whether the matter can be successfully investigated, with due consideration to the availability of evidence and / or records relating to the incident(s);

whether there are any competent alternative remedies available to the Complainant and the overall impact of the investigation;

whether the prejudice suffered by the Complainant persists; whether refusal to investigate the matter perpetuates the violation of section 195 of Constitution and whether the remedial action will redress the imbalances of the past. What constitute “special circumstances” will depend on the merits of each case.

(x) Observations

(a) My investigation of the establishment and activities of the intelligence unit by SARS should not be viewed as stifling the effectiveness and efficiency of SARS in their investigations into tax evasions and the curbing of illicit economy, but is to ensure that they do not encroach in the territory of the State Security Agency.

(b) Perhaps consideration should be made by the two institutions to conclude a Memorandum of Understanding (MOU) so as to have collaborations as and when the need arises.

(xi) Having considered the evidence uncovered during the investigation against the relevant regulatory framework, I now make the following findings:

a. Regarding whether Mr Gordhan violated the Executive Ethics Code by deliberately misleading the National Assembly in failing to disclose that he had met with a member of the Gupta family since taking office.

(aa) The allegation that Mr Gordhan violated the Executive Ethics Code by deliberately misleading the National Assembly in failing to disclose that he had met with a member of the Gupta family since taking office, is substantiated.

(bb) Mr Gordhan conceded to not having disclosed that he had actually met a member of the Gupta family and an associate of the family in 2010.

(cc) He contended that at the time of his response to the Parliamentary question he could not recall as he had forgotten about the meeting at which Mr Ajay Gupta was present.

(dd) According to his affidavit to the State Capture Commission Inquiry (the Zondo Commission), that it was only after being reminded by Mr Dondo Mogajane who at the time was his Chief of Staff. I find this rather implausible when one considers the prominence of the subject of state capture in South Africa.

(ee) I therefore find that his conduct in this regard is in violation of paragraph 2 of the Executive Ethics Code and accordingly amounts to conduct that is inconsistent with his office as a member of Cabinet as contemplated by section 96 of the Constitution.

b. Regarding whether, during his tenure as SARS Commissioner, Mr Pravin Gordhan, MP (Mr Gordhan), established an intelligence unit in violation of South African Intelligence Prescripts, and if so, whether such conduct constitutes maladministration.

(aa) The allegation that Mr Gordhan during his tenure as the Commissioner of SARS established an intelligence unit in violation of the South African Intelligence prescripts is substantiated.

(bb) In terms of the national legislation, SARS is not mentioned as one of the National Intelligence Structures established in terms of the National Strategic Intelligence Act (NSI Act) and can only work with other law enforcement agencies within the principles of co-operative government in achieving it objectives.

(cc) SARS under the guidance and management of Mr Ivan Pillay as General Manager: Enforcement and Risk Division established an intelligence unit without the involvement of National Intelligence Agency (NIA) now known as the State Security Agency (SSA).

The Commissioner of SARS is the Accounting Officer

(dd) Evidence indicates that even prior to Mr Gordhan’s memorandum to Mr Manuel, SARS had already began operating a unit that gathered information covertly. However, as the Accounting Officer, Mr Gordhan should have been aware, and I believe, was aware that the unit had already started operating. Mr Pillay reported directly to Mr Gordhan as Commissioner of SARS.

(ee) The establishment of the unit with the approval of Mr Gordhan as the erstwhile Accounting Officer was in breach of section 209 of the Constitution in terms of which only the President may establish such covert information gathering unit.

(ff) I further noted that Mr Magashula had misrepresented himself under oath by denying the existence of an intelligence unit. Even if the unit was never called the rogue unit at SARS, the operations and functions of the CBCU, a unit that existed, were similar.

(gg) The conduct of Mr Gordhan as referred to in the establishment of the intelligence unit at SARS is improper and in violation of section 209 of the Constitution and therefore amounts to maladministration as envisaged in section 182(1) of the Constitution and abuse of power as envisaged in section 6(4)(ii) of the Public Protector Act.

c. Regarding whether SARS failed to follow correct procurement processes in the procurement of intelligence equipment which the intelligence unit utilised for gathering intelligence, and if so, whether such conduct amounts to maladministration.

(aa) The allegation that SARS failed to follow proper procurement processes in the procurement of intelligence equipment which the intelligence unit utilised for gathering intelligence, is substantiated.

(bb) Although SARS failed to provide me with documents relating to the procurement of equipment for the CBCU, NRG and subsequently the SPU, evidence at my disposal confirm the existence of such equipment as well as the acquisition thereof.

(cc) It is extremely impossible that a unit carrying out investigations on behalf of SARS would not have procured equipment necessary for the fulfilment of its duties and functions, as admitted to in so many instances and at so many levels. The only contention by SARS being that it was not conducting illegal operations.

(dd) However, if its operations were lawful, it is unclear why SARS and/or its former employees would keep the procurement of equipment such a guarded secret. I can only come to the conclusion that proper procurement processes were not adhered to, and that such conduct amounted to the violation of the PFMA and thus constituted improper conduct as envisaged in section 182(1) of the Constitution and maladministration as envisaged in section 6(4)(i) of the Public Protector Act.

(ee) I am of the firm view that the failure and blatant refusal of SARS and its former employees to provide me with records of the procurement to confirm the purchasing of the said equipment and the whereabouts thereof is suspicious and unwarranted and is aimed at perpetuating the narrative that there was no such intelligence unit at SARS.

d. Regarding whether SARS failed to follow proper recruitment processes in appointing employees who worked for the intelligence unit, and if so, whether such conduct constitutes maladministration.

(aa) The allegation that SARS failed to follow proper recruitment processes in appointing employees who worked for the intelligence unit, is substantiated.

(bb) Although SARS failed to provide me with a Policy regulating the transfer of staff within SARS branches as well as Policy which regulates headhunting of for positions at SARS, evidence at my disposal point to some irregularity in the recruitment of personnel for the intelligence unit.

(cc) The foregoing is supported by sufficient information provided by SARS to an investigation conducted by my office into such staff complaints as was raised by certain employees within the intelligence unit in 2014.

(dd) The failure to advertise positions externally is a violation of Paragraph 8.7 of the SARS Recruitment and Selection Policy.

(ee) The apparent denial of Mr Gordhan of any involvement or participation in the recruitment process of one or more of the unit’s employees is improbable. The Sikhakhane report confirms that Mr Gordhan played a role in the recruitment of Mr van Loggerenberg.

(ff) I have also noted that Mr Magashula’s denial of the existence of the unit and recruitment of employees thereof is a foul misrepresentation. Mr Magashula, at the time the members of the unit were transferred within SARS to form the CBCU and the appointment of external staff members, he was the Chief Operations Officer: Corporate Services. He approved the memorandum submitted by Mr Pillay relating to employees of the newly formed unit.

(gg) I have further noted that, prior to Mr Gordhan’s submission of a memorandum to the then Minister of Finance, Mr Trevor Manuel, Mr Pillay had already began recruiting members to partake in operations of surveillance.

(hh) The conduct of Mr Gordhan in approving the memorandum for the establishment and invariably recruitment of staff for the intelligence unit in the manner described is improper and thus amounted to improper conduct as envisaged in section 182 (1) of the Constitution and maladministration as envisaged in section 6(4)(i) of the Public Protector Act.

e. Regarding whether the intelligence unit carried out irregular and unlawful intelligence operations, and if so, whether such conduct constitutes maladministration

(aa) The allegation that the intelligence unit carried out irregular and unlawful intelligence operations, is substantiated.

(bb) Despite denials by SARS, I have evidence before me which indicates that during June 2007 until November 2007 Mr Pillay and Mr Janse van Rensburg irregularly procured Mr Helgard Lombard and Mr De Waal and/or authorised Mr Lombard and Mr De Waal to intercept communication within the offices of the DSO and those of the NPA without an interception direction issued by a designated judge in terms of the Regulation of Interception of Communication and Provision of Communication.

(cc) There is further evidence at my disposal of the unauthorised interception of private communications of prominent members of society as well as surveillance by the intelligence unit of SARS for unknown reasons and/or purposes.

(dd) The conduct of SARS officials in such unauthorised interception and surveillance is in violation of the Regulation of Interception of Communication and Provision of Communication and amounts to abuse of power as envisaged in section 6(4)(ii) of the Public Protector Act.

f. Regarding whether Mr Pillay was appointed to the position of Deputy SARS Commissioner and subsequently as SARS Commissioner whilst he did not possess the necessary qualifications for the positions, and if so, whether such conduct amounts to maladministration

(aa) The allegation whether Mr Pillay was appointed to the position of Deputy SARS Commissioner and subsequently as SARS Commissioner, whilst he did not possess the necessary qualifications, is substantiated.

(bb) The position of Deputy SARS Commissioner was a new title and/or position in SARS formulated through a new business model.

(cc) The new business model identified persons holding executive positions through skills and expertise, aligned values and principles as well as behavioural competencies.

(dd) The sole use of the new business model as a blanket benchmark for the appointment of Mr Pillay, specifically, to the position of Deputy SARS Commissioner was irregular and in violation of section 195 of the Constitution.

(xii) The appropriate remedial action I am taking in pursuit of section 182(1) (c), with the view of placing the Complainant as close as possible to where she would have been had improper conduct or maladministration not occurred, is the following:

(a) The President of the Republic of South Africa:

(i) To take note of the findings in this report in so far as they related to the erstwhile Minister of Finance, Mr Gordhan and to take appropriate disciplinary action against him for his violation of the Constitution and the Executive Ethics Code within 30 days of issuing of this report.

(b) The Speaker of the National Assembly:

(i) Within 14 working days of receipt of this Report, refer Mr Gordhan’s violation of the Code of Ethical Conduct and Disclosure of Members’ Interests for Assembly and Permanent Council Members to the Joint Committee on Ethics and Members’ Interests for consideration in terms of the provisions of paragraph 10 of the Parliament Code of Ethics.

(c) The Minister of State Security to:

(i) Within 90 days of the issuing of this Report, acting in line with Intelligence Services Amendment Act, implement, in totality the OIGI report dated 31 October 2014.

(ii) Within 30 days ensure that all intelligence equipment utilised by the SARS intelligence unit is returned, audited and placed into the custodian of the State Security Agency.

(iii) Within 14 days of the issuing of this report avail a declassified copy of the OIGI report dated 31 October 2014.

(d) The National Director of Public Prosecutions to note:

(i) That I am aware that there are currently criminal proceedings currently underway against the implicated former SARS officials and that effective steps should be taken to finalise the court process as the matter has been remanded several times already.

(e) The Commissioner of the South African Police Service to:

(i) Within 60 days, investigate the criminal conduct of Messrs Gordhan, Pillay and officials involved in the SARS intelligence unit, for violation of section 209 of the Constitution and section 3 of the National Strategic Intelligence Act including Mr Magashula’s conduct of lying under oath.

I look forward to the full implementation of remedial action in all these reports. I reiterate that the mere action of instituting review proceedings does not suspend implementation. If anyone wish to both institute review proceedings and suspend the implementation, I advise them to obtain a court interdict staying implementation. It is important that we draw a distinction between an appeal and a review. Failure to do this might amount to acting in a manner that is inconsistent with the Constitution and the law.

I wish to close with the following quotes, one from the iconic late former President Nelson Mandela and another from the Bible. At height of the struggle against apartheid, President Mandela said:

“I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities. It is an ideal which I hope to live for and to achieve. But if needs be, it is an ideal for which I man prepared to die.”

The book of Esther, Chapter 4, reads thus: “And so I will go to the King, which is against the law; and if I perish, I perish!”

Thank you.

Issued by the Public Protector, 6 July 2019