The South African Revenue Service (SARS) is providing its second update to the media and the public on its operations to combat crimes such as smuggling, fraud and abuse of the tax system.
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
A total of 5.66 million tax returns were submitted for the 2012 Tax Season by the deadline on 23 November.
SARS will continue to work tirelessly against any form of corruption, fraud and abuse of the tax system, and wants to assure all taxpayers that SARS will not tolerate any such transgressions. In this light, the following cases can be reported for November 2012:
- As reported previously, on 29 October 2012 Mr AC Onyeka was found guilty on 9 counts of VAT fraud in the Johannesburg Regional Court. Mr Onyeka had claimed fictitious VAT refunds to a value of almost R1.5 million. On 6 November he was sentenced to 8 years direct imprisonment of which two years is suspended for a period of five years.
- Mr Sunday Oluwaseyi Bamigbade was arrested on Friday 2 November 2012 on charges of fraud related to the depositing of a fraudulent tax refund (to the value of R278 247.18) into the account of a third person (Mr Bamigbade’s girlfriend). He appeared in the Germiston Magistrate’s Court on 5 November 2012, where the case was postponed without bail. R272 284.90 was recovered from the bank account and paid back to SARS.
- Mr BE Gaba and Mr GJP Lukou appeared in the Johannesburg Magistrates Court on 14 November 2012 and were sentenced to 5 years direct imprisonment each, having pleaded guilty to 23 counts of fraud. They had submitted fraudulent VAT returns with the intention of collecting fraudulent refunds to the value of R198 749.
- A former SARS employee, Mr AF Snyman, appeared in the Pretoria Commercial Crimes Court on 13 November 2012 on fraud charges. SARS detected that Mr Snyman had been defrauding SARS by manipulating a number of systems and abusing taxpayer information to which he had access as a SARS employee. He made 149 successful payments to his personal account, from 54 taxpayers’ accounts to a total value of R227 380. The suspect was arrested, resigned from SARS and was charged criminally. The case was remanded and Mr Snyman remains in custody.
- A SARS employee, Ms Sindiswa Jama, and three others, Messrs Lungisa Nyaba, Nashua Thulani and Sohe Phakamile Hosea, were arrested on 7 November 2012 on charges of Fraud. The 3 were members of the public who submitted VAT returns on behalf of dormant companies, and the SARS employee facilitated payment of fraudulent VAT refunds, for which she was paid. SARS suffered losses totalling R339 405.32 as a result. The SARS employee had been suspended on 4 October 2012, as soon as concerns were raised. All four were released on bail by the Johannesburg Magistrate’s Court and the case was remanded to 5 December 2012.
- On 23 November 2012, Ms Lindelwa Malawu was sentenced to 5 years imprisonment in the Johannesburg Regional court for her role in a syndicate which was submitting fraudulent tax returns in order to secure fraudulent refunds. Ms Malawu had been arrested in July 2010.
- A suspect was arrested on 13 November 2012 on charges of fraud and theft regarding a SARS cheque. A (valid) VAT refund cheque had been issued by SARS to a business, but was intercepted and ended in the suspect’s possession. He deposited it into his personal bank account, which raised suspicions – the bank put a hold on the account and informed SARS. The suspect was arrested when he came to the bank thinking the funds were going to be released. He is yet to appear in court.
Two suspects were arrested on 15 November 2012 for running an apparent Income Tax return scam. They were completing tax returns for a wide range of people (including unemployed persons), with the general modus operandi of inflating the amount of PAYE deducted from the taxpayer – which would result in a (fraudulent) refund to that taxpayer. At the moment the quantified loss to SARS stands at around R50 000. They have yet to appear in court.
Mr Johannes Mthembu was arrested on 27 November in connection with an ongoing investigation into a tax fraud syndicate. Mr Mthembu appeared in the Johannesburg Magistrate’s Court on 28 November and was released on bail. He will appear again with three others from the syndicate (who were arrested on 21 September 2012) on 18 January 2013.
Customs Interventions
In the period from 1 to 30 November 2012, SARS Customs teams have:
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Prevented almost 53 kilos of cocaine valued at nearly R14 million, and 42 kilos of Crystal Methamphetamine valued at just over R13 million, from entering the country (a total of almost 95kg drugs, valued at just over R27 million). These drugs were being carried in a number of ways:
- Body wraps
- Concealed in luggage (in powder, pill and liquid form)
- Swallowed / other “internal concealments”
- Stopped 3 340 “Viagra” tablets, valued at over R300 000 coming through the ports of entry (mainly sent in parcels from overseas to South African addresses)
- Assisted SAPS with the arrest of 3 individuals for (unsuccessfully) offering a bribe to a Customs official. The individuals were attempting to have a fake South African passport, found in a parcel mailed from France and seized by Customs, released. They are yet to appear in court.
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Seized a number of other items coming into the country including:
- 122 bank cards which were seized on 25 November at the Ramatlabama border post with Botswana, during the random inspection of inbound vehicles. The two passengers were handed over to the commercial crime unit of SAPS for further questioning and the vehicle was detained by Customs.
- 257 cashiers cheques from the ORNL Federal Credit Union to the value of over R5 million (R5 624 000), in a parcel on route from the USA to South Africa. The cheques have been detained for South African Reserve Bank.
- 18kg ivory
Other interventions:
The SARS National Audit Operations team conducted an Illicit Traders compliance campaign in KwaZulu-Natal from 19 to 22 November. Working in cooperation with the SAPS and the Department of Home Affairs, the SARS team visited retail outlets and traders in Durban Central, Inanda / Verulam and Pietermaritzburg over the course of four days. In total, 152 businesses were visited, of which only 30% were found to be registered for VAT. The campaign saw the seizure of almost 85 000 items of textiles, clothes, shoes, toys and accessories – valued at almost R13 million. Also, the Department of Home Affairs and SAPS arrested 58 foreign nationals whose immigration documents were not in order.
