SARS enforcement and customs operations for October 2013

The South African Revenue Service (SARS) is providing an update to the media and the public on its operations to combat crimes such as smuggling, fraud and abuse of the tax system for the month of October 2013.

The aim is to inform the public about the work SARS’ Customs and Enforcement teams do on a daily basis, to provide an indication of the prevalence of tax and customs-related offences in South Africa, and to illustrate the support SARS provides to other law enforcement agencies.

Interventions to combat Fraud and Corruption

SARS will combat any form of corruption, fraud and abuse of the tax system. The following cases can be reported for October 2013:

1. Mr Michael Scholtz was due to be sentenced on 2 October 2013 in the Cape Town Regional Court after pleading guilty to charges related to VAT and Income Tax fraud. Mr Scholtz was not registered as a vendor but he traded and charged VAT, with the total prejudice in respect to VAT and Income Tax amounting to over R1 million and almost R80 000 respectively. Sentencing has been postponed to 14 November 2013.
    
2. Mr Vincent Luvhimbi was due to stand trial on 8 October 2013 in the Wynberg Magistrates Court on charges of fraud. He had posed as a SARS official and “assisted” members of the public to submit fraudulent tax returns – which resulted in fraudulent refunds, of which Mr Luvhimbi took 30% as payment. The prejudice to SARS amounts to over R80 000. The trial has been postponed to 18 November 2013. 
    
3. Mr Sylvester Sithole appeared in the Johannesburg Commercial Crimes Court on 9 October 2013 facing 33 counts of fraud and theft resulting from alleged VAT fraud. The financial prejudice to SARS totalled R13 million. Mr Sithole’s bail was set at R100 000, and the case was postponed to 5 December 2013 for trial.
    
4. On 10 October 2013, in a long-standing case Ms Desire Jenkins was sentenced to 10 years direct imprisonment for racketeering, and another 10 years for fraud, forgery and money laundering (having been found guilty in May 2012 on 20 counts of racketeering, fraud, forgery and money laundering).

   The sentences will run concurrently. A second accused, Mr Amier Moosagie, had been found guilty on 42 counts of racketeering, fraud, forgery and money laundering, but absconded before sentencing. An arrest warrant has been issued.
    

5. On 15 October an individual was arrested in Johannesburg in an ongoing investigation into an income tax fraud syndicate. He is alleged to have been a “runner” for the syndicate and was the third arrest in the matter (another “runner” and the tax practitioner responsible for submitting fraudulent returns have already been arrested). An amount of R127 000, resulting from the fraudulent returns, has already been recovered from the tax practitioner’s bank account.
    
6. On 24 October 2013 7 individuals appeared in the East London Magistrate’s Court on charges of racketeering, and 143 counts of tax fraud, or benefitting from the proceeds of tax fraud and racketeering. They are traders who created trading entities with the sole purpose of using them to submit false VAT returns and thus claim the resulting fraudulent VAT refunds.The actual prejudice suffered by SARS amounted to at least R13 million. The matter was remanded to 10 March 2014 for the defence case to be presented. 
    
7. On 28 October 2013, Mr Bernardus Pieters (and his company Grayston Technology Investments) was sentenced in the Johannesburg Regional Court on charges of VAT and PAYE fraud (not paying VAT owed between 1999 and 2008; and not paying PAYE between 2001 and 2008), where the total prejudice to SARS amounted to over R1.6 million.

   He had been found guilty on all charges faced, and was sentenced to a total of 4 years imprisonment (suspended for between 3 and 5 years) and a fine of R40 000, also suspended. He has already paid R1.4 million in terms of his VAT debt (including penalties and interest) and R800 000 towards his outstanding PAYE debt. 
    

8. On 31 October 2013 Mr Mogamet Saban appeared in the Cape Town Regional Court for sentencing, having been found guilty (along with his company) of running a business and charging VAT without paying it over to SARS, 116 counts of fraud and 32 statutory offences in all. He was sentenced to periodic imprisonment of 1488 hours, where he will report to a corrections facility every Friday night for 31 consecutive weekends. The company was sentenced to a fine of R50 000 suspended wholly for 5 years.

Customs Interventions

In the period from 1 to 31 October 2013, SARS Customs teams have:

1. Prevented just over 11 kilos of cocaine (valued at over R3.2 million), and over 51 kg ephedrine / crystal methamphetamine (valued at just over R11 million), from entering the country. In all cases, the drugs seized and the individuals involved were handed over to the SAPS for further action. The drugs were seized in a number of different interventions, and included:

•  As previously reported, 36 kg ephedrine / crystal methamphetamine, valued at approximately R6.5 million, found in the possession of a couple landing at King Shaka International airport from India. The bust was carried out with the SAPS, and resulted in the arrest of a third person who had allegedly arranged for the drugs to be brought in.
•  8.5 kg ephedrine / crystal methamphetamine, valued at R2.5 million, in two courier parcels, originating in Mauritius.
•  5 kg ephedrine / crystal methamphetamine, valued at R1.5 million, concealed in the seat of a bus crossing into South Africa at the Beit Bridge border post. Customs officials were alerted when, having stopped the bus for a full search, the driver’s assistant refused to leave the bus or get up from his seat. 
•  Just over  2kg ephedrine / crystal methamphetamine, valued at just over R680 000, concealed in false compartments in a truck crossing into South Africa at the Lebombo border post with Mozambique.
•  2 kg cocaine, valued at over R570 000, concealed in handbag handles in the luggage of a female passenger arriving in Johannesburg from Addis Ababa.
• Just under 2 kg cocaine, valued at just over R570 000, carried as a bodywrap by a female passenger arriving from Sao Paulo
•  3.3 kg cocaine, worth almost R950 000, in three separate seizures on different days, where three male passengers arriving from Sao Paulo were found after x-rays to be carrying abdominal “bullets”.
• 1.7 kg cocaine, worth almost R490 000, hidden as a paste in the lining of a backpack belonging to a male passenger arriving from Addis Ababa.
• Just over 1.1 kg cocaine, worth over R320 000, hidden in a laptop case carried by a female passenger arriving from Sao Paulo. 

2. Detained 3 349 cartons of cigarettes, with a total value of over R600 000 which were being smuggled into the country.

3. Seized a number of other items coming into the country, including

•  A live pangolin (a protected species) which was found in a taxi crossing into South Africa from Mozambique at the Lebombo border post. The animal has been handed to the Mpumalanga Parks and Tourism Agency.
•  A parcel from Nigeria containing blank cheques and US dollar postal orders to the value of R3.8 million. They were handed to the US Consulate.
•  A parcel from Germany containing 100 cannabis seeds.
• 3 204 “muscle and testosterone boost” capsules, valued at almost R24 000, in parcels from Belgium.
• 250 “male sexual enhancement” tablets, valued at R25 000.

4.  Prevented the following from leaving the country:

• Over 155 kg of dagga, valued at over R220 000, in parcels destined for the United Kingdom
•  Nine plastic containers holding scorpions and spiders, found in a parcel without declaration, bound for Germany. They were detained for CITES procedures.
•  Three live snakes, found in a parcel to Greece, declared as “documents”. They were detained for CITES procedures.
• 970 g cocaine, valued at almost R280 000, when SARS detector dog “Boetie” reacted to a parcel destined for Australia. The drugs were concealed in 97 buttons attached to garments in the parcel.
• A package of drugs (known as a “party pack”), valued at R1 000, consisting of 10 g cocaine, 1 rock or crack cocaine and 5 ecstasy tablets in a parcel bound for the USA identified when SARS detector dog “Boetie” reacted to the parcel.
• 750 kg untreated animal hides, in a shipment from Johannesburg to Lagos. As it is thought they could be rhino, elephant or hippo hides, the consignment has been detained for further investigations.
• 2 kg dried abalone, worth R3 000, in a parcel bound for China.
• 500 bundles of khat, valued at R30 000, in three separate parcels destined for the USA.
• A total of 10 cellphones and two laptops, destined for a number of countries, all of which are thought to have been stolen and which have been handed over to the South African Police Service (SAPS).