Sars takes action to end dubious tender
The SA Revenue Service (Sars) has instituted urgent legal proceedings to terminate a contract with Lekgotla Trifecta Consortium (LTC), in which Sars chief Tom Moyane''s nephew is a director.
“This is to properly comply with the obligation the law imposes on organs of state to proactively raise and resolve procurement irregularities,” it said in a statement on Thursday.
LTC failed to declare the potential conflict of interest between director Nhlamulo Ndlhela and Moyane in an open tender process to collect tax debt. Sars said this constitutes material irregularity and breach in the award of the tender.
“It is Sars'' position that TLC''s failure to disclose the familial relationship between its shareholder Mr Ndlhela and the Commissioner constitutes material breach and irregularity in the award of the tender.”
LTC was one of three service providers in a pilot project given R2.2 billion debt to collect with an agreed commission of a 3.88% plus VAT of actual debt collected by them.
Last week, Sars announced that it would approach the High Court with the aim to declare the contract with LTC invalid should the parties fail to do so amicably.
Sars said the urgent application is to interdict LTC from any further steps to implement the Master Service Agreement and any and all Service Request agreements concluded between the revenue authority and LTC.
“This action must be seen and understood from Sars'' uncompromising and beyond-reproach manner in keeping with its Constitutional and statutory duty to maintain a high standard of professional ethics, accountability and transparency in its administration as well as the prevention of possible irregular expenditure and prejudice to the financial interest of the State,” it added.
Following a media query in August, Sars stated that it instituted an investigation into the TLC tender award.
“Upon the matter being brought to the attention of the Commissioner, he immediately instructed to initiate the process to cancel the award to LTC with immediate effect,” it said last week.
Sars said it sent a letter to LTC on 22 August 2016, requested why they did not disclose the relationship between Ndhlela and the Commissioner. It received a response from LTC on 25 August 2016, in which they stated that, according to legal advice obtained by them, they were not required to disclose the relationship.
This was despite the mandatory requirement as contained in the form.
“This clearly demonstrates an indisputable fact that LTC knew of their legislative and procedural requirement to disclose this relationship,” said Sars.
Sars said it subsequently obtained a formal legal opinion on 12 September 2016 and a further letter was sent to LTC on 16 September 2016, in which they were requested to make formal representations.
Sars decided that it was not persuaded by LTC''s submissions and provided LTC an opportunity until Monday 17 October to terminate the contract.
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“This is to properly comply with the obligation the law imposes on organs of state to proactively raise and resolve procurement irregularities,” it said in a statement on Thursday.
LTC failed to declare the potential conflict of interest between director Nhlamulo Ndlhela and Moyane in an open tender process to collect tax debt. Sars said this constitutes material irregularity and breach in the award of the tender.
“It is Sars'' position that TLC''s failure to disclose the familial relationship between its shareholder Mr Ndlhela and the Commissioner constitutes material breach and irregularity in the award of the tender.”
LTC was one of three service providers in a pilot project given R2.2 billion debt to collect with an agreed commission of a 3.88% plus VAT of actual debt collected by them.
Last week, Sars announced that it would approach the High Court with the aim to declare the contract with LTC invalid should the parties fail to do so amicably.
Sars said the urgent application is to interdict LTC from any further steps to implement the Master Service Agreement and any and all Service Request agreements concluded between the revenue authority and LTC.
“This action must be seen and understood from Sars'' uncompromising and beyond-reproach manner in keeping with its Constitutional and statutory duty to maintain a high standard of professional ethics, accountability and transparency in its administration as well as the prevention of possible irregular expenditure and prejudice to the financial interest of the State,” it added.
Following a media query in August, Sars stated that it instituted an investigation into the TLC tender award.
“Upon the matter being brought to the attention of the Commissioner, he immediately instructed to initiate the process to cancel the award to LTC with immediate effect,” it said last week.
Sars said it sent a letter to LTC on 22 August 2016, requested why they did not disclose the relationship between Ndhlela and the Commissioner. It received a response from LTC on 25 August 2016, in which they stated that, according to legal advice obtained by them, they were not required to disclose the relationship.
This was despite the mandatory requirement as contained in the form.
“This clearly demonstrates an indisputable fact that LTC knew of their legislative and procedural requirement to disclose this relationship,” said Sars.
Sars said it subsequently obtained a formal legal opinion on 12 September 2016 and a further letter was sent to LTC on 16 September 2016, in which they were requested to make formal representations.
Sars decided that it was not persuaded by LTC''s submissions and provided LTC an opportunity until Monday 17 October to terminate the contract.
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