By Pinky Khoabane
Johann Van Loggerenberg
IN a statement released by lawyers acting for Johann Van Loggerenberg yesterday, it emerged that auditing firm KPMG had invited the “Rogue Unit” members to meetings to discuss the damage stemming from its report, but had snubbed their client. Loggerenberg is the former South African Revenue Services (SARS) group executive for tax and customs enforcement investigations (TCEI). KPMG as it turns out, met van Loggerenberg’s former colleagues – Adrian Lackay, Yolisa Pikie, Peter Richer, and Alan Pillay on Tuesday.
That meeting was followed by an earlier one between the auditing firm and former Finance Minister Pravin Gordhan and his deputy, Mcebisi Jonas. But the man who headed the unit that investigated allegations of tax evasion by some of South Africa’s richest men, some of them notorious, and the tobacco industry – was not invited despite what the statement says has been a two-year attempt at meeting with the audit firm.
In the aftermath of the KPMG report, which has seen KPMG offering an apology, resignations of nine executives and promises to pay back the money for the “sub standard” work it produced for SARS and Oakbay, not to mention the substantial number of clients which cancelled their contracts – the audit firm said it would withdraw only parts and not the entire forensic report.
This is a point of much contention – well among those who feel there are aspects of the report which may have exposed the dirty world of big tobacco – specifically British American Tobacco (BAT) – which had become the focus of van Loggerenberg’s investigation into illicit cigarette smuggling, tax evasion and money laundering – and which the KPMG report may sweep under the carpet.
Under project Honey Badger, SARS amalgamated all investigations into South Africa’s R5bn-a-year illicit tobacco trade. Tobacco manufacturing companies, BAT, CarniLinx and other smaller players became the target but it wasn’t long into the investigations that it became apparent that the small players were just that, small fry, compared to the impact big tobacco had on the fiscus. And so, van Loggerenberg and colleagues concentrated on this group, BAT being among their primary focus.
As I’ve reported here in the past few days, some former SARS officials remain adamant that the “rogue unit” stories – carried by the Sunday Times for almost two years before it apologised for getting “some aspects wrong” – stem from a “fight-back” campaign by big tobacco which had come to realise that SARS was onto them.
The Riddle Between KPMG, SARS & Rogue Unit
KPMG, you see, acted for SARS and BAT at the same time. And so while it was investigating whether there was truth in whether SARS had established a unit that was illegally spying on individuals including President Jacob Zuma , it was also consulting for BAT which was being investigated by SARS for tax evasion, illicit cigarette smuggling and other shenanigans. In 2015, SARS was after BAT for a suspected R800m in unpaid and undeclared taxes.
If you’re wondering why we should be concerned about the partial retraction of the report, this is why!
KPMG has lied for BAT for many years, not just here but in Australia too, when that country introduced plain cigarette packaging. In a report which was found to be flawed, it said plain cigarette packaging increases illicit cigarette smuggling and has no effect on smoking patterns. We reported on it here http://uncensoredopinion.co.za/kpmg-lied-big-tobacco-australia-no-increase-smuggling-cigarette-package-removed/
Many Role Players, Many Agendas
Unlike the current narrative which seeks to project the KPMG/SARS saga purely as Gupta state capture there are several former SARS officials whose view is that the state capture of state security apparatus by big tobacco is being completely ignored by mainstream media. In an email to me last year, one of the officials declared:
“I have been following the discussions about so-called “state capture” and thought to share with you some thoughts.
I don’t have a view on the Gupta-family because I lack facts. I prefer not to form views on matters unless I know something for a fact. But it is of note in my view, that other instances of “state capture” seem to not feature in the social and mainstream media at all. I think its also easy to reflect on a single political party or family or politician, but alas, when other facts are available, it becomes convenient to say nothing.
“State capture” has happened since time immemorial. It is nothing new.
The most dangerous form is where commercial interests infiltrate state agencies at lower levels. This is so because it enables commercial interests to directly manipulate state actions and outcomes in their favour. There are many such examples, probably most obvious recently in the wake of what happened at SARS. And yet, people seem fixated on a single family and a single politician. Again, I state, I have no view on the family or politicians associated. I just think its a question of perspective. When evidence of state capture by others surfaced, everybody kept quiet…”
In response to an article I penned last week,“KPMG, Sars, Illicit Tobacco Trade and Politics” http://uncensoredopinion.co.za/kpmg-sars-illicit-tobacco-trade-politics/ , and then posted on Twitter, van Loggerenberg wrote:
“Keep digging. You’re onto something here. It’s the tip of an iceberg. Many role-players, many agendas”.
Why has KPMG isolated van Loggerenberg from the rest of his former colleagues?
While the relationship between KPMG and BAT is clearly defined, the big question for me is why KPMG has, among all these former SARS officials, met everyone and excluded van Loggerenberg. Could it be that the rest are also in cahoots with KPMG and protecting BAT?
As the man at the centre of the storm says: Keep digging…..
Here is the FULL Press Statement: Johann van Loggerenberg/KPMG/SARS report
We confirm that we act for Mr JH van Loggerenberg (“our client”).
Following several media enquiries, our client has instructed us to issue the following statement regarding KPMG South Africa and KPMG International:
“Our client has noted the meetings which took place between KPMG SA and KPMG International with Messrs Pravin Gordhan and Mcebisi Jonas last week (21 September 2017) and yesterday (26 September 2017) with Messrs Ivan Pillay, Peter Richer, Yolisa Pikie and Adrian Lackay. Our client completely supports the sentiments as publicly expressed in their respective media statements following these meetings.
Our client has not met with either KPMG SA and/or KPMG International.
Our client has been trying to meaningfully engage with KPMG SA and their attorneys, Norton Rose Fulbright SA, in writing, since 15 October 2015 to date, and KPMG International, since 14 August 2017 to date. Our client has found them to be unresponsive and their communiques (when they did bother to reply) to be dismissive, evasive, inadequate and displaying scant regard for the laws and rules of the audit profession and the basic human rights of individuals.
Our client believes that the retraction by KPMG SA of the “summary, conclusions, findings and recommendations” of their so-called “SARS report” falls way short of the legal, moral and ethical obligations that rest on KPMG SA to correct the wrongs caused by the report and the process leading up to its publication. It is noteworthy that this retraction came only after significant public outcry and questions being posed by some of their clients, leading to KPMG International conducting an “internal review”, and finding the report wanting within a matter of days.
Whilst KPMG SA has always emphatically denied any flaw in their report, our client considers this retraction as an unequivocal public admission of his longstanding assertions to KPMG which include, but are not limited to:
The report demonstrably omits multiple material facts, including evidence of a very serious nature, resulting in the suppression of evidence of criminal offences, significant losses to the taxpayer, the manipulation of state officials and agencies and the orchestrated disruption of and interfering in the statutory mandates of state agencies;
The report is tardy, nonsensical and replete with errors, falsities, obfuscations and material misrepresentations;
The report is incredibly selective in what it seeks to rely on and what it ignores, shoehorning these to fit into a particular false narrative of a supposed “rogue unit”;
The report is riddled with multiple comments presented as if fact, when they are not;
The report reflects statements that are contradictory and misleading, and completely ignores exculpatory evidence;
The report contains many allegations that are illogical, unattributed, unsubstantiated and unsupported by facts;
The report uncritically gives audience to and accepted unsubstantiated allegations made by third parties, in some cases by external persons who approached KPMG SA, whilst failing to reflect on any reply or fair hearing of those pronounced upon;
The report demonstrates that KPMG SA did not uphold the fundamental obligatory principles of fairness and integrity during the entire process that led to its compilation and publication;
The process followed and the report itself are both materially questionable in law; and
The report’s authods failed to act fairly and with integrity as is required by both IRBA and SAICA.
Our client has always maintained that, in light of the above, and what our client has put to them (with due regard to various applicable provisions of the Auditing Profession Act 26 of 2005, and specifically Section 42 thereof read with Section 110 of the Rules Regarding Improper Conduct and Code of Professional Conduct for Registered Auditors of IRBA, as well as Section 110 of the Code of Ethics of SAICA), KPMG SA was obliged to disassociate itself from the report in its totality when they were made aware of these issues. Our client calls on KPMG to stop delaying this process and do so immediately.
Our client is further of the view that KPMG SA should immediately comply with their statutory reporting requirements as required by audit-related and anti-money laundering laws, suspicious financial transactions and anti-corruption legislation in all relevant jurisdictions — evidence of which they became privy to as a result of their “documentary review” and which, notably so, are not reflected in their report. In this same vein, and in the event that it is found that registered auditors and chartered accountants acted contra the Rules Regarding Improper Conduct and Code of Professional Conduct for Registered Auditors of IRBA, as well as the Code of Ethics of SAICA, such individuals should be reported to these bodies immediately.
Our client further believes that the statements issued by KPMG SA and KPMG International recently, and the public apology by KPMG SA on a Radio 702 interview on 20 and 21 September 2017, stating “…mistakes have been made…” and “…sorry will never be good enough…” and “…we sincerely apologise for the pain caused to individuals…”, are totally inadequate when measured against the immense harm caused to the economy, the country, a key state institution and many innocent individuals, their families and friends – most of whom have had no voice to defend themselves throughout the ordeal. This is compounded by the fact that our client has been demonstrating to KPMG SA for almost two years that their report was profoundly flawed and has caused harm to many people. At no stage throughout the engagements by our client during the period 15 October 2015 until recently, did KPMG SA acknowledge this to our client or take steps to remedy this.
Our client wishes to sincerely thank those civil society bodies, business people and all other persons who have been supporting and sending him (and others) messages of support and comfort in this regard.
Our client is still in the process of taking legal advice and is still considering the most appropriate action to take going forward.
Brett Murison Boqwana Burns Inc.
Gareth van Zyl