Rédaction Africa Links 24 with Pauli van Wyk
Published on 2024-02-27 16:37:58
The South African Revenue Service (SARS) has taken the unprecedented step of filing a R4.8-billion damages claim against Sasfin Bank Limited, as of December 22, 2023. The claim alleges that Sasfin facilitated large-scale tax evasion between 2013 and 2023, causing damages to the revenue service.
The investigation into Sasfin was triggered by SARS’s findings in 2022 that at least five employees at the bank were involved in assisting a transnational network operated by Zimbabwean tobacco boss Simon Rudland in moving over R3 billion offshore without paying tax. Sasfin’s CEO Michael Sassoon initially denied the allegations, but later acknowledged that the bank’s risk and control measures were inadequate. Despite claiming to have implemented stringent processes to prevent such crimes from recurring, SARS documents filed in December 2023 suggest that even more money than initially thought had been unlawfully moved through Sasfin’s system.
According to SARS, investigators found that 19 companies linked to Rudland’s operations used Sasfin’s system to illegally move R8.2 billion offshore over a decade. The funds were transferred through fictitious invoices and incomplete documentation to destinations such as Dubai, Switzerland, and Mauritius. Sasfin employees allegedly conspired to conceal these transactions by deleting records and reports to the South African Reserve Bank.
In response to the claims, Sasfin stated that independent investigations found no evidence of involvement by senior management or directors. However, several employees were found to be complicit, and criminal cases were opened against them. SARS alleges that Sasfin’s negligence allowed for the abuse and loss of funds, breaching its legal duty in assisting taxpayers and Gold Leaf Tobacco Corporation (GLTC) in exporting funds unlawfully.
The damages claim consists of two main parts. The first claim involves 18 companies, clients of Sasfin’s foreign exchange division, that collectively transferred R5.33 billion offshore without declaring income taxes or VAT payments totaling R1.96 billion. SARS asserts that Sasfin’s negligence caused this economic loss. The companies involved are suspected of being part of a money laundering network related to Rudland’s GLTC.
The second claim focuses on GLTC, which received R2.9 billion in undeclared funds through its Sasfin account between June 2016 and May 2018. SARS claims that GLTC owes R4.46 billion in taxes, but lacks the assets to settle the debt. Therefore, SARS holds Sasfin liable for an additional R2.9 billion in damages.
Sasfin has vowed to vigorously challenge the claims, as the potential loss of R4.8 billion would severely impact the bank’s balance sheet. Legal experts consulted by the bank believe that the likelihood of SARS’s claim succeeding is remote, citing the difficulty of proving negligence and economic loss in such cases.
As of now, it is unclear whether criminal charges have been laid in the matter, as neither the SA Reserve Bank nor SARS have confirmed any such actions. The situation remains complex and will likely be battled out in court in the coming months.
Read the original article on Daily Maverick
