Gupta millions: Disciplinary hearing mooted for suspended SARS legal head over VAT refund - law firm

Suspended South African Revenue Service (SARS) head of legal, Refiloe Mokoena, should face disciplinary processes for her alleged involvement in the unlawful payment of VAT refunds claimed by the Guptas, a legal opinion has found.    

News24 has seen the legal opinion, from Fluxmans law firm, which investigated Mokoena's conduct.

The firm recommended that formal charges be laid against her.

In September last year, Mokoena was served with a notice of intention to suspend and given an opportunity to provide reasons to explain why she should not be axed.

Mokoena was later suspended.

The suspension is related to Mokoena's alleged involvement in the unlawful payment of R420m in VAT refunds claimed by Gupta companies that were paid to a series of third parties, including a pay agent and a shelf company.

An investigation by News24 and Daily Maverick established that Mokoena had provided the go ahead for the payments to be made despite legal advice to the contrary from other SARS executives.

READ: SARS moves to suspend head of legal Refiloe Mokoena

According to the legal opinion, Mokoena said she only became involved with the VAT refunds during the period of May 29 and 30, 2017.

She also expressed what she believed to be a proper and considered legal "opinion" and standpoint on the question of refunds of value added tax payments into third-party bank accounts, read the opinion.

Fluxmans said Mokoena denied that she provided any instruction at any stage and repeatedly "contends that she would never do as the issue of value added tax was not within her purview".

"She also stresses the point on more than one occasion that at SARS, the issue of VAT refunds into third-party bank accounts was uncertain or unclear." 

But the law firm stated: "It is in our view significant that Ms Mokoena, on numerous occasions contends that the issue of VAT refunds was not within her 'purview' or domain, yet for whatever reason… she only a few days after taking up her appointment at SARS assumed and maintained an active role in ensuring that the refund in question was effected."  

Moving to the disclosure of certain documents to Sunday newspaper City Press and her affidavit which she contended she was "forced to give", the law firm said Mokoena had "simply bypassed the issue". 

"Mokoena had distanced herself from 'any involvement in and association with the distribution of this letter to the City Press.' Her affidavit does not 'set the record straight'.

"The allegations against her, in essence, in this regard, is that she was not honest, forthright and candid in her affidavit, a matter which is not dealt with (either adequately or at all) in her response. 

"Once again, it would appear from her submissions that Ms Mokoena has essentially, disputed any form of involvement in and association with the ostensible expediting of the application of Oakbay - this particular allegation would need to be tested by the leading of evidence."  

Addressing the charge of non-disclosure of the termination of her directorship from Denel/Armscor and the Constitutional Court's findings and decisions against her, the opinion stated that Mokoena contended in her responses that there had, in fact, been disclosure on this issue - a fact which was denied by the recruitment agency.

"Certainly, from the evidence of the various individuals whom we had occasion to interview, Ms Mokoena allegedly acted in a manner which was improper, grossly negligent (at best for her) and ultimately, not in a manner befitting the high office which she occupies...."

ALSO READ: EXCLUSIVE: Drama at SARS over R70m Gupta refund

When approached for comment, SARS said: "SARS is not in a position to comment, divulge or discuss details of internal processes and employee information in the public domain as a result of employer-employee confidentiality."

Mokoena previously served on the board of state-owned arms manufacturer Denel while it was attempting to establish a joint venture with Gupta-owned VR Laser.

She was hired during former commissioner Tom Moyane's tenure. SARS admitted in July 2017 that the payment of the VAT refunds was illegal because the VAT Act did not allow payments to be made to third parties, specifically to curb fraud.

"VAT refund payments into an attorney's trust account would be a direct contravention of the provisions of section 44(3)(d) of the VAT Act," SARS previously told News24 and Daily Maverick.

The tax body continued, saying that "by all accounts, the SARS processes insofar refunds are concerned, have been followed; however, all these are being reviewed to ensure the robustness of the SARS systems and processes.

"The possibility that governance processes, which include standard operating procedures, have failed and the reasons for the failure, is part of our overall review referenced earlier."

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