By 2011, the VIP Taxpayer Unit was again begging the president to get his tax affairs in order. At the time, this unit reported directly to Ivan Pillay, who was concerned that Zuma’s non-compliance would create political fallout and cause people to pitch the South African Revenue Service against the president.
He appointed Mark Kingon to handle this predicament. Kingon, Pillay and [Gene] Ravele had meetings with both [Zuma’s attorney Michael] Hulley and Zuma – one was held in Durban – where the president’s onus to submit his returns was (yet again) explained to him. The majority of subsequent meetings appear to have been between Kingon and Hulley.
Legally, Zuma owed millions of rands in tax on the fringe benefits that accrued to him because of these upgrades. He has always maintained that they were security-related and that he didn’t ask for them. He argued he was therefore not responsible for any taxes. As the extent of the upgrades became more apparent in 2012, the tax effects on Zuma became equally clear.
R63-Million Tax Bill
Fringe benefits must be declared by taxpayers, who are then taxed on these annually as a matter of course by SARS. According to the seventh schedule of the Income Tax Act, there is no doubt that Zuma owed SARS for the benefits he derived from the upgrades to Nkandla. Whether the upgrades were security-related or not is irrelevant. The fact remains that he received significant fringe benefits. Tax law determines that tax is owed whether such benefit is “voluntary or otherwise”.
It thus wouldn’t have helped Zuma to argue that he didn’t ask for the upgrades – this didn’t matter either. The public protector later found that not all the upgrades were security-related and that Zuma had to pay for those.
SARS determined that Zuma was probably liable for taxable fringe benefits of around R145,185,235 relating to the upgrades. Taxation of this amount at a rate of 40% is R58,074,094. Because Zuma hadn’t declared these fringe benefits, a penalty of 10% – amounting to R5,807,409 – would have to be added, plus additional interest. This alone would have brought his tax bill for Nkandla to R63,881,503.
By October 2013, SARS had completed its preliminary inquiries into the upgrades and other aspects of Zuma’s non-compliance with tax laws. The file was kept with the VIP Taxpayer Unit, which deals with the taxes of prominent politicians, cabinet ministers and top civil servants, and locked away while SARS waited for Zuma’s tax submissions. Although Michael Hulley had promised that Zuma would submit his returns, nothing was forthcoming. SARS, mainly through Kingon, kept on nagging Hulley to comply, but Hulley just kept on giving SARS the runaround.
My sources tell me that by May 2015 Zuma had still not submitted his returns. They also gave a fascinating account of an incident in early 2011 when a “donation for Nkandla” arrived on a private jet at King Shaka International Airport outside Durban. When customs inspected the cargo, they found, among other things, medical equipment on board. The shipment originated in Russia and the sender was a man by the name of Vladimir Strzhalkovsky.
An internet search revealed that Strzhalkovsky is a former KGB agent who joined the ranks of post-communist Russia’s oligarchs and became one of the biggest businessmen in that country. He is the former CEO of Norilsk Nickel, the world’s largest nickel and palladium producer. Strzhalkovsky received an R1.4-billion payout in 2012 to step down from Norilsk Nickel.
My sources told me that the medical equipment on board the aeroplane was a mobile clinic for Nkandla. SARS impounded the equipment because it didn’t have the required clearance certificates and documents. Vivian Reddy, Zuma benefactor and friend, contacted SARS commissioner Oupa Magashula, insisting they release the shipment without following due process. Strzhalkovsky was due to visit South Africa where he would present the clinic to Zuma at Nkandla. Magashula refused to budge.
Enter the minister of state security, Siyabonga Cwele. He informed Magashula that the cargo on board Strzhalkovsky’s plane concerned “state security” and that his agents were taking control of the shipment. Magashula relented because national security overrode the customs laws of SARS.
At the end of March 2011, the Russian multinational Norilsk Nickel said in a press statement that Vladimir Strzhalkovsky had visited Jacob Zuma and had handed the president a Russian mobile telemedicine laboratory at Nkandla. Siyabonga Cwele was present at the ceremony.
Norilsk said in its statement: “Jakob [sic] Zuma expressed a high opinion of the Company’s current projects in the country. He emphasized that South Africa is ready to proceed with supporting the participation of Norilsk Nickel in new ore extraction and processing projects in South Africa.”
“But that is not the end of it,” said my source. “The medical equipment wasn’t all that SARS detained on that day at the airport.”
“There was also a lot of cash on that plane. A lot.
“SARS detained the entire plane with everything on board. When Cwele moved in, he took over the whole shipment, including the money. The money was also not declared and therefore illegally imported. Its origin and destination were never determined. But I think it makes sense that the clinic and the money had the same end destination.”
On The Payroll For R1-Million A Month
What I discovered next was almost too fantastic, implausible and far-fetched. Have you ever heard of any head of state anywhere in the universe who was, while running the affairs of his country, also an employee of a private company?
In 2010, a SARS auditor in the Durban office of the revenue collector was doing a routine tax compliance check of a security company by the name of Royal Security. The company’s founding member and director is Roy Moodley, who is a public friend of Jacob Zuma and an ANC benefactor. The company has offices and security personnel in at least six provinces and says on its website it has three thousand clients and contracts with the police, First National Bank, Engen, Transnet, MTN and Telkom.
Employers are by law required to deduct tax from employees monthly and pay this over to SARS.
It was explained to me that SARS uses reconciliations to ensure that the tax that employers claim to have paid to SARS on behalf of their employees and the income declared by the same employees add up. It is a criminal offence for any employer to deduct tax from an employee and not pay this over to SARS.
The Royal Security payroll reconciliations that the SARS official scrutinised included the tax years 1 March 2009 to 28 February 2010. From what I could establish, Royal Security was not under SARS investigation and it seemed at face value to have been tax compliant.
However, one of the Royal Security employees on the reconciliation raised a red flag because the auditor was unable to determine whether tax had been deducted from his salary and paid to SARS. The employee was remunerated at an amount of R1-million per month. Income tax on that salary bracket would have been around R400,000 per month. The employee was JG Zuma, which didn’t raise any unusual suspicions from the official until he searched for the details of the taxpayer on the SARS mainframe. Access to the employee’s tax records and employment history was blocked.
It dawned on the official: JG Zuma, employed by Royal Security, was none other than Jacob Gedleyihlekisa Zuma, the fourth president of democratic South Africa.
Friendship He Won’t Discuss
At his 60th birthday bash at Durban’s International Convention Centre in February 2014, the son of the flamboyant security tycoon Chockalingam “Roy” Moodley told the attendees that his father was the most powerful man in the country. Nobody blinked, not even Jacob Zuma, who was the guest of honour and sat at Moodley’s table.
Zuma and Moodley come a long way. When the ANC leader was inaugurated as president in May 2009, Moodley was one of his VIP guests.
There have for years been rumours that he has been bankrolling both Zuma and his family.
He is also reportedly a generous contributor to the ANC and was previously ward chairperson of the organisation’s Umhlanga branch in KwaZulu-Natal.
When public protector Thuli Madonsela did her “State of Capture” report, she submitted a list of 42 questions to Zuma. One of the questions was about his relationship with Moodley. Zuma refused to answer her. Their friendship has nonetheless been public, warm and beneficial. Moodley is an avid racehorse owner (he had 51 winners in the 2014/15 season) and in 2010 Zuma famously won R15,000 at the Durban July and was pictured flaunting the cash alongside Moodley. The two were again pictured together at the 2016 Durban July.
News24 reported in 2016 that mystery surrounded payments of R550-million to Moodley by a tender-rich IT security company. Siyangena Technologies won disputed contracts from one of our many ailing and besieged parastatals, the Passenger Rail Agency of South Africa, worth R4-billion, and in turn paid large sums of money to companies directly linked to Moodley.
The news site said that Siyangena is co-owned by soccer boss Mario Ferreira, whose relationship with Moodley seems to involve more than just business; they are co-owners of local racehorses. The payments from Siyangena to Moodley were the third example of large, unexplained payments that Prasa contractors made to individuals closely linked to Zuma and his family.
The President’s Boss
The “JG Zuma” tax query from the Durban auditor at the regional office in Durban caused consternation at head office in Pretoria.
My sources said that Royal Security ultimately paid the taxes due to SARS on behalf of the “employee” (JG Zuma) and the matter, at least from the company’s perspective, was laid to rest. Moodley paid the tax via bank transfer.
They said – and this is the crux of the matter – that Zuma was employed at the security company for at least four months after becoming president. It means that for the first months of his presidency, Zuma’s boss was Roy Moodley. These payments to Zuma must give Moodley an iron hold over Zuma.
What Zuma allegedly did was dishonest, unlawful and unconstitutional. He came close to losing his presidency after the Constitutional Court ruled in 2016 that he had failed to uphold the constitution. But this is much worse.
Zuma was in deep trouble, beca e the officials that dealt with Zuma’s tax affairs – Oupa Magashula before he left SARS, Ivan Pillay, Mark Kingon, Gene Ravele and Johann van Loggerenberg – would have treated Zuma no differently from any other taxpayer.
During the meeting between Pillay and Zuma in February 2014, the SARS acting commissioner apparently stressed to the president that he could not continue to drag his feet on the Nkandla tax issue and that, unless he submitted his tax returns and declared the fringe benefit, SARS would have no choice but to advance the case to the next level.
According to internal SARS notes of the meeting, Pillay told him that whatever his answer was to be regarding Nkandla, he needed to do his tax planning on the effects of the Nkandla benefits and do so properly and soon. Otherwise, it would become a problem and SARS did not want to be drawn into political fights.
Zuma was once again noncommittal about his returns and undertook to give the matter his attention.
A full-scale probe of Zuma’s tax affairs posed a mortal danger to him because he couldn’t afford to pay the taxes, which could ultimately have resulted in his sequestration – which would have spelt the end of his presidential reign. A South African president cannot be a unrehabilitated insolvent.
Secondly, had it come out that he was also an “employee” of a private company in the first few months of being president, he could have been “impeached” and removed from office.
Even if a generous sponsor was prepared to settle Zuma’s massive tax bill, it would have unleashed donations tax. If Zuma got a loan to pay his tax bill, he would have had to show how he was repaying the loan. Through a mixture of ignorance and arrogance, the president had spun himself into a cocoon from where there was no escape.
When the Constitutional Court ruled in 2016 that Zuma must repay R7.81-million for the non-security upgrades at Nkandla, he had to scrounge South Africa’s northernmost outpost to find an institution that would lend him the money. VBS Mutual Bank was set up in the former “independent” Republic of Venda and specialised in home loans for residents in the area. Zuma has a woeful credit record. Any credible financial institution would red-flag and reject his application.
My SARS sources said: “We know that Zuma fears the corruption charges. That’s common knowledge. But that’s nothing in comparison with his potentially huge tax bill, the fact that his household may have received proceeds of smuggled tobacco, and those payments allegedly made by Roy Moodley. And there are others too, the Guptas and so on. He would never have survived it. He could even have been sequestrated ultimately. That was his biggest fear. And he knew these guys hardly lost cases in court.”
There was, of course, the last and final solution for Zuma; the ultimate way out of his tax problems. This is the one I am suggesting was the reason for the upheaval at SARS and the removal of the “Gordhan Four”.
The first step for Zuma was to appoint his pal Tom Moyane as SARS commissioner. He, in turn, purged the place of anybody who could cause trouble. That, of course, wouldn’t have been enough, because what if they talk, or what if they enter the system in another way? No, they had to be branded as dishonest, criminal even, crooks, untrustworthy – just in case any of them decided to say something nasty about Zuma.
Snitches, Pimps, Rats ….. And The President
Hold on to your seat for I’m going to take you on a short journey through gangsta land. And not just because it entails gaudy and lurid characters with high entertainment value, but because it relates directly to the events around tobacco manufacturer Yusuf Kajee, Nkandla and Jacob Zuma. It highlights Kajee’s relationship with the president.
Towards the end of 2013, four unsavoury characters met at the upmarket Serengeti golf estate near OR Tambo International Airport on Johannesburg’s East Rand. They were convicted drug dealer Glenn Agliotti, Kajee and a business associate, Paul de Robillard, as well as a fourth person by the name of Warren who never spoke. A magistrate once placed Agliotti among the “snitches, pimps and rats” who sold their soul to avoid spending time in the slammer. Called the “Landlord”, he has for years been known in the underworld as a “fixer”; the go-to guy who sets up “connections”, makes problems disappear and negotiates deals.
As Selebi commenced his 15-year prison sentence, Agliotti was charged with the 2005 assassination of mining tycoon and ANC benefactor Brett Kebble. He wriggled himself out of that predicament as well. The actual trigger-pullers had lined the witness box to tell the court that Agliotti had masterminded the killing. Agliotti admitted in court that he had perjured himself about a host of things – but so had his accusers. Everyone had lied, and therefore Agliotti got off.
Days after the refusal of his indemnity, SARS laid criminal charges against him and eventually took him down when they found that he owed more than R70-million in unpaid taxes and penalties. He pleaded poverty and was in 2013 sequestrated by one of Van Loggerenberg’s SARS units. The criminal charges have been languishing at the NPA ever since.
Two meetings between Agliotti, De Robillard, Kajee and “Warren” were digitally recorded by one of the men, who gave the recordings to Van Loggerenberg. He has stated publicly that he handed copies of the recordings to SARS, various investigative panels, the Hawks, the police, the NPA, the State Security Agency and the inspector-general of intelligence. I have dealt with both Agliotti and Kajee in my days as a journalist and the voices on the recordings are undoubtedly theirs.
Much of the conversation between the men is nothing but gangster-banter-shit-chit-chat. Agliotti did most of the talking and puff, swagger and rant about his magnificent feats in gangsta-land. Agliotti had arranged the meeting because he needed cronies to be part of his state-sponsored cigarette-smuggling operation.
It is easy to get overwhelmed by facts and names but I will attempt to keep it simple.
In August 2011, State Security Agency agents and a police crime intelligence informant embarked on Project Robin to set up their own tobacco-smuggling enterprise. Among them were SSA acting head of economic intelligence Ferdi Fryer; another SSA agent, Graham Minnaar; and SSA agent and Pretoria attorney Belinda Walter. Some of them would later greatly assist Tom Moyane – and, by implication, Jacob Zuma – by plotting to discredit SARS and specifically Van Loggerenberg.
The rationale behind the project was that they could eliminate tobacco smuggling by flooding the market with even cheaper cigarettes through smuggling their own while making a lot of money for themselves in the process. They needed a “sponsor”, someone who could set up the infrastructure and in return profit from the enterprise. They decided on Tribert Ayabatwa, who has an estimated personal fortune of about R2-billion. He is a Rwandan industrialist who owns a significant property portfolio in South Africa.
Ayabatwa was charged with R55-million tax fraud in 2009 and fled to the UK, where he was arrested and faced extradition. He entered into a plea agreement with the NPA and pleaded guilty to a range of crimes. He received a suspended sentence and had to pay a huge fine and settle his enormous tax bill.
Apparently, a clause in the plea bargain prohibited Ayabatwa from trading in cigarettes for several years. Project Robin flouted this condition, but Ayabatwa initially agreed to be the sponsor. Ayabatwa was going to invest R10-million and profits of R40-million were anticipated. Ayabatwa would receive back his initial investment of R10-million, leaving a halfway split of the remaining R30-million, which would’ve left the SSA agents with R15-million to share among themselves.
Whether Ayabatwa was aware of the fact that he was collaborating with SSA agents or whether he was being played by them is something that remains unanswered, because this matter has never been properly investigated.
A month after the launch of Project Robin, Graham Minnaar said in an e-mail addressed to the other agents that he was putting the project on ice for at least six months “to build a better relationship before implementing the commercial aspects of the story”. It appears that at some point the SSA agents had problems with Ayabatwa and that he withdrew as a “sponsor”. They had to find a new one – which might explain Agliotti’s insistence that the project was approved by what he called the “NIA” – the National Intelligence Agency – which was renamed the SSA.
The Gangster’s Promise
Agliotti: I have been smuggling cigarettes for thirty years. I am a fucking gangster. Cigarette game is bigger than drugs. We are all smugglers. We can make money together. The government has asked me to run a smuggling operation … From Zuma’s office, there is a team in place. I will appear nowhere because I know the game.
De Robillard: Why the fuck me?
Agliotti: Because you are successful. You are in the cigarette game. Indemnity to whoever I tell them. Three–year project. Smuggle as much as you want.
De Robillard: What do you need from us?
Agliotti: Get the product and we will run it. I will give you all the protection in writing. They know I am a gangster.
Kajee: Will it be with their blessings?
Agliotti: SAPS, Hawks, SARS all the way down. We already negotiated the whole thing. Three years. That is my retirement. I said, Zuma, you are going to pay. I helped you become president or you would have been arrested.
Kajee: But he is a genuine guy.
Agliotti: No, he is fine. He is a gangster like us.
De Robillard: How many do you have to shuffle a week?
Agliotti: As much as we want. It’s our call. But I have three years. The best advice I can give is sell your Ferraris. I have fuck–all in my name. Not even a bank account. I have three things in my name. My three kids.
Kajee: Why did you choose us, Glenn?
Agliotti: I’ll rather run with operators. You run it. I will give you the protection from the president’s office.
• How intelligence and law-enforcement agencies waged a dirty-tricks campaign to discredit top SARS officials;
• How millions of rands of taxpayers’ money flowed into the accounts of bogus spies; and
• How SARS stopped tax investigations into Zuma cronies
THE BOOK KEPT UNDER LOCK AND KEY
Book kept under lock and key Jacques Pauw was a founder member of the anti-apartheid Afrikaans newspaper Vrye Weekblad, where he exposed the apartheid death squads in the late 1980s. In The President’s Keepers, he takes aim at the current regime with revelations so shocking that copies of the book were kept under lock and key until its release today. He had given up his career in journalism but in 2016 received a tip-off about massive corruption in the State Security Agency. ‘This was the start of this book, and from there it snowballed . . .
By: Jacques Pauw/Times Live