Bain must answer to its role at SARS, Nugent Inquiry hears

The Nugent Commission of Inquiry wants Bain & Company to answer for its role in formulating SARS's controversial operating model.

The model, implemented in 2015 under now suspended commissioner Tom Moyane, has been described by several SARS executives in their testimony as hampering revenue collection.

Judge Robert Nugent, who is heading the probe, has raised concerns about what exactly the model was meant to achieve, saying the consulting firm would have to answer to that when they give evidence next week.

Nugent said it was important that Bain give its version of events and instructed evidence leader Carol Steinberg to supply the company with the transcripts of evidence implicating the firm.

“Our aim is not to ambush anybody here, but to give them a sense of what we are trying to achieve,” said Nugent.

Bain must answer

Steinberg said Bain had already been supplied with 20 questions to prepare for their presentation, and that additional questions would be handed to them.

The inquiry, which resumed on Tuesday in Pretoria, has heard that Bain presented SARS with four models, however, the final model implemented by SARS diverted from any of the four documents.  

The model is said not to be aligned with SARS philosophy and strategy.

“What was introduced was a fifth model which was different from other documents, so Bain needs to answer how much did it differ from the other models,” said Michael Katz, who is part of the panel.

Heading for disaster

The questionable role of the consulting firm came under further scrutiny during evidence by Fareed Khan, a SARS executive responsible for compliance.

In his evidence, Khan outlined the operational difficulties presented by the model, saying the new model had rendered the key tax enforcement division almost inefficient, slashed capacity and introduced unworkable structures.

“Since 2015, there hasn’t been a single system that supports compliance,” said Khan.

“Compliance is the engine room of SARS. If we don’t capacitate this division, we are going to slip and slip very fast.”

Khan told the panel that the challenges caused by the model were raised with Bain and Jonas Makwakwa, the then-head of Business and Individual Taxes (BAIT) who resigned from the agency in March.

Khan warned that his unit was heading for disaster if nothing is done to improve the cumbersome working environment.

“The tyres are wearing off, and we are going to be on the rim very soon.”

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