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The day Pravin Gordhan took on big (illegal) tobacco

Gordhan and his colleagues’ investigations of the illicit tobacco trade – which appears to involve top politicians and businessmen – is possibly the reason they’re being targeted now.

Finance Minister Pravin Gordhan must be wondering whether one of his old plans while he was in charge of the SA Revenue Service (Sars) – combating the illegal tobacco trade in South Africa – was worth it.

Because that is apparently where the nightmare he finds himself in now began.

While Gordhan will not be reporting to the Hawks this afternoon, it appears as if former Sars deputy commissioner Ivan Pillay, together with former group executives Pete Richter and Johan van Loggerenberg, will be knocking on Brigadier Nyameka Xaba’s door, where they will be informed of their rights under the constitution and the charges against them.

Pillay, Richter and Van Loggerenberg will be kept in separate rooms as, one by one, they are informed of their rights under the constitution and the charges against them.
Van Loggerenberg has urged the public not to overreact to speculation.

“As early as 31 July 2014, Sars was on record that the initial attacks on Sars, me and investigative units that I managed, were driven by persons associated with the tobacco industry,” Van Loggerenberg told The Citizen.

“I have continuously offered my cooperation to the authorities since as early as 2014. I have nothing to hide and deny any wrongdoing. As stated before, I have no doubt that if the Hawks conduct their investigations without fear or favour, the truth shall ultimately triumph.”

Gordhan and the others have to decide if they are willing to answer questions or make a statement, or simply inform Xaba they wish to testify in court.

The “rogue unit” narrative at Sars has been well documented and discredited. However Van Loggerenberg’s claim the tobacco industry was behind the destabilisation of Sars is startling.

Sars wars: where there’s smoke

If the Hawks need more information, it needs to look at pending court action between independent cigarette manufacturer Carnilinx and British American Tobacco (BAT), Forensic Security Services (FSS) and eight other respondents.

Former police officer and FSS investigator Daniel van der Westhuizen states on behalf of Carnilinx in its founding affidavit he was the project manager of operation “Knysna”, which was dedicated to disrupting Carnilinx’s operations.

In the affidavit, he claims stakeholders in the project were the “South African Police, Department of Priority Crimes Investigation, Crime Intelligence Gathering, Asset Forfeiture Unit, Sars, Customs, and the Traffic Control Policing Unit.”

He further claims BAT agents were paid up to R5 000 for disturbing Carnilinx operations.

“BAT SA paid an amount in excess of R150 million to the spies, through FSS,” said Van der Westhuizen, referring to “spies” recruited by FSS.

Van der Westhuizen stated further that if BAT SA were investigated properly, authorities “may well recover tens of billions of rands which are due to the fiscus.”

Spy games

According to a letter from former Fair Trade Independent Tobacco Association (Fita) chairperson Belinda Walter’s attorney in May 2014, it was between December 2012 and January 2013 that Walter was introduced to BAT, and the Tobacco Institute of SA (Tisa) and their private security firm FSS, and then subsequently to BAT United Kingdom.

“As a direct result of Ms Walter’s relationship with representatives of the State Security Agency (SSA),” Walter then entered into an agreement with BAT.

“Walter would provide BAT with information of and concerning the business operations, illicit and/or criminal activity of independent cigarette manufacturers who were clients of Ms Walter and/or members of the Fita (of which Ms Walter was the chairperson from its formation until November 2013),” the letter to Ewan Duncan of BAT declares.

For her work, Walter was to be paid £3 000 per month by BAT “to provide and share such information” with BAT, which would “be used by BAT in conjunction with SSA and other South African law enforcement agencies in order to combat criminality in the tobacco and cigarette industries”.

In the subsequent letter to BAT, Walter threatens to sue BAT for nonpayment of £5 000, and was also going to sue the SSA for misrepresentation, “as BAT, SSA, and the other South African law enforcement agencies were not sharing the information for the purposes alleged …” and “BAT required the information for purposes of industrial espionage” the letter continued.

Shortly afterwards, Walter was allegedly approached by members of Sars’ Tobacco Task Team and offered immunity from prosecution in exchange for dropping the civil action against BAT and the SSA.

However, in June 2014, rumours of a “rogue unit” within Sars began hitting the media.

Walter, a lawyer by profession, was allegedly paid in “Travelex” cards, which meant no cash trail for Sars and therefore no tax.

Then in July 2014, Walter’s SSA alleged handler told Walter “he represented interests of people who sought to replace the leadership of Sars and minister of finance”. The claim was circulated to various people within Sars on email by Walter on July 20, 2014.

At the time, Nhlanhla Nene was finance minister and Ivan Pillay the acting Sars commissioner.

In September, Tom Moyane was parachuted in as Sars boss after the crescendo of “rogue unit” articles grew.

The denials

“The illicit tobacco trade in South Africa, which accounts for nearly a quarter of the overall market, is a growing problem for our consumers and our business. For several years, we have endeavoured to assist the law enforcement agencies in their efforts to combat this illicit trade,” BAT said in a statement to The Citizen.

“We are currently involved in litigation with certain manufacturers, who have made claims that some of our activities went beyond our legitimate interest in combating the illicit trade.

“We are conducting an investigation with the assistance of an external law firm and if we were to find that illegal activity had occurred, we would, of course, take appropriate action. However, given that our investigation is ongoing and that some of the allegations are the subject of legal proceedings, it would not be appropriate for us to comment any further on them,” BAT stated.

Numerous attempts to engage Walter on the allegations proved fruitless.

Rot starts at the top

In a report entitled “Project Broken Arrow”, by an unnamed SA Revenue Services (Sars) official, it is brought to the attention of its former group executive Johann van Loggerenberg (JVL) and former deputy commissioner Ivan Pillay (IP) that there were efforts by “certain individuals”, who wished to destabilise and disorganise the organisation.

These “individuals” wanted to damage the reputation and stability of the targeted functionaries and that of Sars as a state institution, according to the document as seen by The Citizen.

The official claims to have met on several occasions in 2009 with former Sars employee Mike Peega (MP).

“…He duly informed me of his intentions to merge with other individuals in order to ‘expose’ and possibly ‘take care’ of JVL and a host of other significant individuals in the NRG [National Research Group],” it states.

“This would ultimately include the then commissioner of Sars and now Finance Minister Pravin Gordhan.

“MP spoke of a number of interested individuals inside Sars who are more than willing to combine efforts to target IP and JVL.

“It must be borne in mind that, although the aforementioned names of people were identified, NO other way of corroboration was actually done.

“The aforementioned individuals have allegedly met on a number of times at different locations before I could be approached.”

President Jacob Zuma in the report is often referred to as ‘old man’.

In an alleged timeline of events it is states:
• August 2009, a call was received from MP to meet.
• “MP came to my house and he told me that there were highly influential people that would like to meet with me.”
• The official then alleges that MP was referring to the late Leonard Radebe (LR), Mabheleni Ntuli (MN) and Bizoski Manyike (BM).

He continues:
• The following day… he came back to my house… at around 8am and he was driving a greenish Volvo SUV.
• He told me we were to meet with LR and BM for a discussion.
• We met LR alone at the House of Coffees in Silver Lakes at exactly 10 in the morning…
• BM did not show up.

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