Address by the Public Protector, Adv.

Busisiwe Mkhwebane, during the media

briefing in Pretoria on Friday, July 5, 2019

Programme Director;
Deputy Public Protector
The Chief Operations Officer
Chief of Staff
Members of the media;
Ladies and gentleman;

Good afternoon!

Thank you for availing yourself despite the short notice.

I am making public my findings in respect of about six investigations that my office has
been conducting. The investigations are as follows:

1. Allegations of undue delay by the City of Tshwane Metropolitan Municipality to

resolve a complaint of illegal occupation of the RDP House;
2. Allegations of improper eviction by the City of Tshwane Metropolitan
Municipality, resulting in the unlawful demolition of a building structure, erf
2810, Extension 4, Refiloe Township in Cullinan;
3. Allegations of failure by the City of Cape Town to properly regulate the
operation of Uber metered taxi services in the Western Cape and to enforce the
conditions of an agreement between the City and Uber Western Cape;
4. Allegations that the erstwhile Department of Rural Development and Land
Reform, currently the Department of Agriculture, Land Reform and Rural
Development allocated a farm but failed to accelerate the development of her
business plan to enable her to receive funds for recapitalisation and
development;
5. Allegations of maladministration, corruption and render irregularities in
connection with the procurement and awarding of a contract amounting to R631
million to a company called Siyenza by the Amathole District Municipality
without following due process; and

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 6. Allegations of violation of the Executive Ethics Code by Mr Pravin Gordhan, MP
(Mr Gordhan) as well as allegations of maladministration, corruption and
improper conduct by the South African Revenue Services (SARS).

Let us start with the matter of Lehobye v City of Tshwane. I investigated allegations
of undue delay by the City of Tshwane Metropolitan Municipality to resolve a complaint
of illegal occupation of the RDP House which has been approved for one Ms. Gloria
Lehobye.

The complainant alleged that she applied for the house in Erf 3476 Block U,
Mabopane. The house had been approved by the Gauteng Department of Humans
Settlements in 2001. However, when she wanted to occupy the house, which was to
be handed over by the City, someone by the name of Esther Ndlovu had already
moved into the property.

The complainant is unemployed, renting a room and when she reported the matter to
City officials, she was allegedly told that they did not know what to do and to date the
City has allegedly failed to resolve the matter.

I found that the allegations are substantiated and that the complainant was improperly
prejudiced. To remedy this maladministration and improper conduct, the City Manager
must take steps to ensure that the complainant is placed in her allocated RDP house
or to provide her with alternative permanent accommodation within three months from
the date of the report.

He must also apologise to the complainant in writing for the improper prejudice caused
to her over the years. This must be done within 14 working days.

The City Manager must further ensure that conduct an investigation to establish the
cause of the illegal occupation of RDP houses and take appropriate action against
officials responsible for the undue delays and maladministration in the allocation of
houses.

He must also ensure that an action plan indicating how the remedial action will be
implemented is provided to the Public Protector within thirty working days of the date
of this report.

Babedi v City of Tshwane

I investigated allegations of improper eviction by the City of Tshwane Metropolitan

Municipality, resulting in the unlawful demolition of a building structure, erf 2810,
Extension 4, Refiloe Township in Cullinan, which was allocated to him by the erstwhile
Nokeng tsa Taemane Local Municipality (NTLM) on 13 April 2011.

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The complainant alleged further that he had constructed an informal structure on his
property, which he later demolished when he started to build a house. On 18
November 2013, a company called EL Shaddai Security Services (EL Shaddai), acting
on instructions from the City, demolished the building structure that was built on his
property on the basis that he illegally occupied the property. He alleged that he never
received a notice of eviction from the City.

The complainant allegedly submitted that he lodged a complaint with the City on 2
February 2015 for a claim relating to damages incurred as a result of the demolition of
his building structure. The City allegedly investigated the complaint and issued a report
dated 22 July 2015. In terms of the aforesaid report, the complainant was allegedly
confirmed to be the lawful owner of the property.

The complainant allegedly submitted further that the City failed to pay him damages
incurred as a result of the demolition of his building structure by EL Shaddai. He then
approached me to intervene and resolve his complaint.

I found the allegation that the City improperly evicted occupiers from the City’s land
which resulted in the unlawful demolition of the Complainant’s building structure to be
substantiated.

The allegation that the City improperly failed to deal with the complainant’s complaint
regarding the unlawful demolition of his building structure in a fair and accountable
manner in line with the democratic values and principles enshrined in the Constitution
is also substantiated. Further, the allegation that the complainant was improperly
prejudiced by the conduct of the City is substantiated.

As a remedy, I direct the City Manager to, within seven working days from the date of
the report, issue a written apology to the complainant for the City’s irregular eviction
to obtain a court order against him prior to his eviction, which resulted in the demolition
of his building structure.

The City Manager must also within thirty working days from the date of the report,
establish the amount of damages the complainant suffered because of the loss of his
building structure and also request the Complainant to submit three quotations relating
to such damages.

He must further, within thirty (30) days from the date of confirmation of the loss suffered
by the complainant, approve and effect payment relating to the damages incurred by
the Complainant as a result of the demolition of his property by EL Shaddai to him.

Munzvenga v City of Cape Town

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I also investigated allegations of failure by the City of Cape Town to properly regulate
the operation of Uber metered taxi services in the Western Cape and to enforce the
conditions of an agreement between the City and Uber Western Cape.

The complainant alleged that Uber was allowed to operate in the City with
approximately 3000 vehicles even though the City agreed to accommodate only 1035.
He also alleged that City officials resorted to impounding Uber vehicles instead of
properly regulating the service, thereby making about R10 000 profit for themselves
per impound.

The complainant further alleged that Uber violated the regulations of the Provincial
Regulating Entity by operating with a large contingent of Uber vehicles and that the
City was reluctant to properly regulate the industry because of the revenue collected
on impounds.

According to the complainant, Mr. Lee van der berg, Transport Regulator at the
Municipal Regulating Entity, showed no interest when the complainant approached
him about the matter. In addition, Mr. Brett Herrom, a City Councilor, was allegedly
seen officially launching Uber green, which was, according to the complainant, an
“illegally operating entity” as the vehicles had no permits.

The complainant provided a video clip of what appears to be an advertisement

depicting the former Minister of Tourism, Mr. Derek Hanekom, making travel
arrangements using the Uber mobile application and organizing an allegedly illegal
operating taxi service.

Based on the information and evidence obtained during the investigation, I could not
make a finding on the allegation that the City failed to properly regulate the operation
of Uber metered taxi services in the Western Cape, resulting in Uber operators
functioning illegally nor could I make findings on the allegation that former Minister
Hanekom endorsed illegal Uber operators, in a n advertisement that was meant to
showcase digital technology and innovation in the tourism sector.

I decided to close this investigation on these grounds. Any information contradicting

the contents of my closing report in this regard may be submitted to my office on or
before Wednesday, July 10, 2019. Should we not receive any such information by the
return date, the matter will be considered as finalized.

Mahlangu v Department of Agriculture, Land Reform and Rural Development

I investigated allegations by one Ms. BC Mahlangu that the erstwhile Department of

Rural Development and Land Reform, currently the Department of Agriculture, Land
Reform and Rural Development allocated a farm, Krokodilspruit 290 JR, to her on 04

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November 2013, but failed to accelerate the development of her business plan to
enable her to receive funds for recapitalisation and development.

According to the complainant, the farm does not have water and electricity and she
has not been able to utilise the property for the purpose for which it was allocated.
Effectively, the complainant alleged that the Department unduly delayed to allocate
approved funds for recapitalisation and development for portion 1 of the farm.

I found that the complaint was substantiated and that the complainant was improperly
prejudiced as a result of the improper conduct and maladministration.

As a remedy, I direct the Acting Director-General (DG) of the Department to ensure

that the farm allocated to the complainant is farmable and can be utilised for the
purpose for which it was allocated by taking steps to reconnect water and electricity
within thirty (30) working days from the date of this report.

The Acting DG must also ensure that the department’s Policy on Recapitalisation and
Development Programme relating to paragraph D, sub-paragraph A and paragraph E
is adhered to, and is in compliance with the Provision of Land and Assistance Act, 126
of 1993.

In addition, the Acting DG must ensure that the Department develops and implements
a risk management plan which should identify and mitigate the risk/s associated with
non-adherence to the Department’s Policy on Recapitalisation and Development
Programme within ninety (90) working days from the date of this report.

The Acting DG must lastly ensure that all employees of the Department dealing with
the Policy on Recapitalisation and Development Programme are to be properly trained
to effectively and efficiently perform their functions and issue a written apology to the
complainant for the Department’s delay to allocate the approved funds for
recapitalisation and development of the farm within fourteen (14) working days from
date of this report.

Rubela and Maimane v Amathole District Municipality

I investigated allegations of maladministration, corruption and render irregularities in

connection with the procurement and awarding of a contract amounting to R631 million
to a company called Siyenza by the Amathole District Municipality without following
due process.

Three complaints were received relating to claims stemming from media reports early
in 2015 in connection with the alleged irregular award of a tender by the Municipality
to Siyenza.

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In essence, the reports suggested that during or about October 2014, the Municipality
awarded a contract to Siyenza, a company owned by a certain Mr. Bongani Mpeluza,
who was alleged to have strong links with a group of politically connected individuals,
to build sixty-six thousand toilets at a cost to the Municipality of R631million.

The contract was further alleged to have been awarded to Siyenza without following
the Municipality’s supply chain management processes and procedures and despite
same having been awarded to four other entities in August 2014.

I decided to investigate the following three issues:

1. Whether there were irregularities in the awarding of the tender for the supply,
delivery and installation of VIP toilet top structures by the Municipality and if so,
whether that constitutes improper conduct and maladministration;
2. Whether political influence played a role in the award of the contract and if so,
whether that constitutes improper conduct and maladministration; and
3. Whether the Municipality incurred any irregular, fruitless and wasteful
expenditure as a result of the awarding of the contract.

I found that the allegation that there were irregularities in the awarding of the tender
for the supply, delivery and installation of VIP toilet top structures by the Municipality
was substantiated.

The allegation that political influence played a role in the award of the contract was
unsubstantiated. No evidence could be found to suggest that he tender was awarded
to Siyenza because of political influence from those close to Ms. Mantashe; Mr.
Itholeng and Mr. Sambudla.

However, I cannot ignore that this was one of the biggest infrastructure tenders where
utmost care and diligence should have been exercised to fully comply with section 217
of the Constitution and Municipal Supply Chain Regulations.

A question can be raised whether the there were irregularities in the awarding of the
tender for the supply, delivery and installation of VIP toilet top structures by the
Municipality would have acted in the same way had beneficiaries been ordinary citizen
with the same credentials but without political links.

The allegation that the there were irregularities in the awarding of the tender for the
supply, delivery and installation of VIP toilet top structures by the Municipality incurred
irregular, fruitless and wasteful expenditure as a result of the awarding of the contract
is substantiated.

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As appropriate remedial action, I direct the Municipal Manager to ensure that within
15 working days of the date of the report, an action plan outlining how the remedial
action will be implemented.

Among other things, the Municipal Manager must ensure that the Municipality’s Supply
Chain Management policy is revised to include a framework outlining how further
procurement in term of regulation 32 of Municipal Supply Chain Regulations must be
done.

The Municipal Manager must ensure that appropriate disciplinary action is taken
against all members of the Bid Adjudication Committee who were involved in the
award of the tender. This must happen within 90 days of the date of this report.

This matter has also been referred to the Hawks and the Asset Forfeiture Unit in terms
of the Public Protector Act to investigate any commission of an offense by all the
implicated parties including those who are politically connected.

Anonymous and EFF v Minister Pravin Gordhan and SARS

Before I deal with this matter, I wish to record that I conducted this investigation under
extremely difficult conditions. It has indeed been a long, winding and rocky road to get
to this point.

I am extremely concerned that the matter in which I have been treated by some of the
respondents in this matter during the performance of my duties as provided to me in
terms of section 182 and 181 of the Constitution, read with section 6 and 7 of the
Public Protector Act is tantamount to contempt.

There has been a continued tone of resistance and undermining of the functions and
integrity of the Public Protector as a person and as an institution. It is for the above-
mentioned concern that I wish to indicate that the office of the Public Protector is
declared by the Constitution to be on that independent and impartial, and the
Constitution demands that its powers be exercised ‘without fear, favour or prejudice’.

Those words are not mere material for rhetoric, as words of that kind are often used.
The words mean what they say. Fulfilling their demands will call for courage at times
but will always call for vigilance and conviction of purpose.

Executive Summary

(i) This report communicates my findings and appropriate remedial action taken
in terms of section 182(1)(c) of the Constitution following an investigation into
allegations of violation of the Executive Ethics Code by Mr Pravin Gordhan,

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 MP (Mr Gordhan) as well as allegations of maladministration, corruption and
improper conduct by the South African Revenue Services (SARS).

(ii) The first complaint was lodged with my office on 12 October 2018, by an
anonymous whistle-blower. The second complaint was lodged on 09
November 2018 with my office by Mr Floyd Shivambu, the Economic Freedom
Fighter (EFF) Deputy President and Chief Whip (the Complainants).

(iii) The Complainants alleged, inter alia, that:

(aa) The former Commissioner of SARS, Mr Ivan Pillay (Mr Pillay), failed to follow
proper recruitment procedures in the appointment of Mr Yolise Pikie (Mr Pikie)
and Mr Johan van Loggerenberg (Mr van Loggerenberg);

(bb) Mr van Loggerenberg unlawfully received cash deposits, paid directly into his
personal First National Bank (FNB) bank account, from taxpayers and/or
representatives, under investigation by SARS, during 19 November 2012 and
28 May 2014;

(cc) Mr Jonas Makwakwa (Mr Makwakwa) unlawfully received cash deposits into
his personal bank account, from taxpayers and/or representatives, under
investigation by SARS;

(dd) During the tenure of the former Commissioner of SARS, Mr Pravin Gordhan,
MP (Mr Gordhan), SARS established an intelligence unit in violation of South
African Intelligence prescripts. The intelligence unit was confirmed by a SARS
investigation report compiled by Advocate Sikhakhane;

(ee) SARS violated section 41 (1)(e) of the Constitution by not respecting the
constitutional status, power and functions of the National Intelligence Agency;

(ff) SARS irregularly procured intelligence equipment, which the intelligence unit
utilised for gathering intelligence;

(gg) SARS failed to follow proper recruitment processes in appointing employees

who worked for the intelligence unit;

(hh) The SARS intelligence unit irregularly bugged the offices of the National
Prosecuting Authority (NPA) and the Directorate of Special Operations (DSO);

(ii) SARS, based on an instruction from Mr Gordhan, as the former Minister of

Finance, in 2012, pursued the tax affairs of the current Economic Freedom
Fighters (EFF) President, Mr Julius Malema, MP, without a legal basis;

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(jj) Mr Pillay was appointed to the position of Deputy SARS Commissioner and
subsequently as SARS Commissioner whilst he did not possess the
necessary qualifications for the positions;

(kk) SARS failed to follow correct procurement processes in the appointment of

Accenture;

(ll) SARS irregularly extended the SARS IT tender for 12 years resulting in
fruitless and wasteful expenditure that has escalated to R8 billion to date;

(mm) SARS purchased an IT company by the name of INTERFRONT at an amount

of R72 million whilst the company was worth R2 million at the time of purchase;
and

(nn) Mr Gordhan violated the Executive Ethics Code by deliberately misleading the
National Assembly in failing to disclose that he had met with a member of the
Gupta family since taking office.

(iv) I have decided to focus the first part of my investigation into the following
issues:

a. The allegation that Mr Gordhan violated the Executive Ethics Code by

deliberately misleading the National Assembly in failing to disclose that he had
met with a member of the Gupta family since taking office;

b. The allegation that, during his tenure as SARS Commissioner, Mr Pravin

Gordhan, MP (Mr Gordhan), established an intelligence unit in violation of
South African Intelligence Prescripts;

c. The allegation that, SARS failed to follow correct procurement procedures

when procuring intelligence equipment which the intelligence unit utilised for
gathering intelligence;

d. The allegation that, SARS failed to follow proper recruitment processes in

appointing employees who worked for the intelligence unit;

e. The allegation that the intelligence unit carried out irregularly and unlawfully
operations; and

f. The allegation that Mr Pillay was appointed to the position of Deputy SARS
Commissioner and subsequently as SARS Commissioner whilst he did not
possess the necessary qualifications for the position.

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(v) The following issues will be deferred for the second volume of the
investigation. These include:

a. The allegation that issues relating to the former Commissioner of SARS, Mr

Ivan Pillay (Mr Pillay), failing to follow proper recruitment procedures in the
appointment of Mr Yolise Pikie (Mr Pikie) and Mr Johan van Loggerenberg (Mr
van Loggerenberg);

b. The allegation that Mr van Loggerenberg unlawfully received cash deposits,

paid directly into his personal First National Bank (FNB) bank account, from
taxpayers and/or representatives, under investigation by SARS, during 19
November 2012 and 28 May 2014;

c. The allegation that Mr Jonas Makwakwa (Mr Makwakwa) unlawfully received

cash deposits into his personal bank account, from taxpayers and/or
representatives, under investigation by SARS;

d. The allegation that SARS failed to follow correct procurement processes in the
appointment of Accenture;

e. The allegation that SARS irregularly extended the SARS IT tender for 12 years
resulting in fruitless and wasteful expenditure that has escalated to R8 billion
to date;

f. The allegation that SARS purchased an IT company by the name of

INTERFRONT at an amount of R72 million whilst the company was worth R2
million at the time of purchase; and

g. The allegation that SARS, based on an instruction from Mr Gordhan, as the

former Minister of Finance, in 2012, pursued the tax affairs of the current
Economic Freedom Fighters (EFF) President, Mr Julius Malema, MP, without
a legal basis.

(vi) On analysis of the complaints, I considered and investigated the following

issues or conducts:

(a) Whether Mr Gordhan violated the Executive Ethics Code by deliberately

misleading the National Assembly in failing to disclose that he had met with a
member of the Gupta family since taking office?

(b) Whether, during his tenure as SARS Commissioner, Mr Pravin Gordhan, MP

(Mr Gordhan), established an intelligence unit in violation of South African

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 Intelligence Prescripts, and if so, whether such conduct constitutes
maladministration?

(c) Whether SARS failed to follow correct procurement procedures when

procuring intelligence equipment which the intelligence unit utilised for
gathering intelligence, and if so, whether such conduct amounts to
maladministration?

(d) Whether SARS failed to follow proper recruitment processes in appointing

employees who worked for the intelligence unit, and if so, whether such
conduct constitutes maladministration?

(e) Whether the intelligence unit carried out irregular and unlawful operations, and
if so, whether such conduct constitutes maladministration?

(f) Whether Mr Pillay was appointed to the position of Deputy SARS

Commissioner and subsequently as SARS Commissioner whilst he did not
possess the necessary qualifications for the position?

(vii) The reason for my issuing of the report in separate volumes is based on, firstly,
the requirements of the Executive Members Ethics Act which has strict
turnaround times of 30 days. Secondly, the issues relating to the SARS
intelligence unit is of public interest and scrutiny and needs to be dealt with
conclusively.

(viii) The investigation was conducted by way of correspondence and analysis of

relevant documentation as well as the consideration and application of
relevant laws, related prescripts and case law.

(ix) Key laws and policies taken into account to determine if Mr Gordhan violated
the Executive Ethics Code as well as if there was any maladministration,
corruption and improper conduct by SARS, were the following:

a) The relevant provisions of the Constitution of the Republic of South Africa

and the Executive Ethics Code which regulates the conduct of Members
of Cabinet.

b) The relevant provision of the Constitution and the National Strategic

Intelligence Act 39 of 1994 that outlines, amongst others, issues relating
to the Intelligence and Security Services in South Africa.

c) Provisions of the Tax Administration Act 28 of 2011, which regulates the

investigative powers of SARS.

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 d) Provisions of Public Finance Management Act 01 of 1999 and the
National Treasury Regulations, 2005 which regulates the responsibility
of the Accounting Officer in the financial management of public funds.
The National Treasury Regulations outline the rules that should be
adhered in procuring goods using public funds.

e) Provisions of the South Revenue Services Act 26 of 2002 and the SARS
Recruitment and Selection, 2007 which regulates the recruitment and
selection processes to be followed in the appointment of SARS officials.

f) Provisions of the Interception of Communications and Provision of

Communication Related Information Act 70 of 2002 which regulates the
interception of certain communications.

g) The Public Protector may exercise a discretion in terms of section 6(9)

of the Public Protector Act to entertain matters which arose more than
two (02) years from the date of occurrence of the incident. In deciding
the “special circumstances” that may be taken into account in
exercising such discretion favourably in accepting complaints,
consideration is given to the nature of the complaint and the seriousness
of the allegations; whether the outcome of the investigation into the
complaint can rectify systemic problems in state administration; whether
the matter can be successfully investigated, with due consideration to
the availability of evidence and / or records relating to the incident(s);
whether there are any competent alternative remedies available to the
Complainant and the overall impact of the investigation; whether the
prejudice suffered by the Complainant persists; whether refusal to
investigate the matter perpetuates the violation of section 195 of
Constitution and whether the remedial action will redress the imbalances
of the past. What constitute “special circumstances” will depend on
the merits of each case.

(x) Observations

(a) My investigation of the establishment and activities of the intelligence unit

by SARS should not be viewed as stifling the effectiveness and efficiency
of SARS in their investigations into tax evasions and the curbing of illicit
economy, but is to ensure that they do not encroach in the territory of the
State Security Agency.

(b) Perhaps consideration should be made by the two institutions to conclude

a Memorandum of Understanding (MOU) so as to have collaborations as
and when the need arises.

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(xi) Having considered the evidence uncovered during the investigation against
the relevant regulatory framework, I now make the following findings:

a. Regarding whether Mr Gordhan violated the Executive Ethics Code by

deliberately misleading the National Assembly in failing to disclose that
he had met with a member of the Gupta family since taking office.

(aa) The allegation that Mr Gordhan violated the Executive Ethics Code by
deliberately misleading the National Assembly in failing to disclose that he had
met with a member of the Gupta family since taking office, is substantiated.

(bb) Mr Gordhan conceded to not having disclosed that he had actually met a
member of the Gupta family and an associate of the family in 2010.

(cc) He contended that at the time of his response to the Parliamentary question
he could not recall as he had forgotten about the meeting at which Mr Ajay
Gupta was present.

(dd) According to his affidavit to the State Capture Commission Inquiry (the Zondo
Commission), that it was only after being reminded by Mr Dondo Mogajane
who at the time was his Chief of Staff. I find this rather implausible when one
considers the prominence of the subject of state capture in South Africa.

(ee) I therefore find that his conduct in this regard is in violation of paragraph 2 of
the Executive Ethics Code and accordingly amounts to conduct that is
inconsistent with his office as a member of Cabinet as contemplated by
section 96 of the Constitution.

b. Regarding whether, during his tenure as SARS Commissioner, Mr Pravin

Gordhan, MP (Mr Gordhan), established an intelligence unit in violation
of South African Intelligence Prescripts, and if so, whether such conduct
constitutes maladministration.

(aa) The allegation that Mr Gordhan during his tenure as the Commissioner of
SARS established an intelligence unit in violation of the South African
Intelligence prescripts is substantiated.

(bb) In terms of the national legislation, SARS is not mentioned as one of the
National Intelligence Structures established in terms of the National Strategic
Intelligence Act (NSI Act) and can only work with other law enforcement
agencies within the principles of co-operative government in achieving it
objectives.

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(cc) SARS under the guidance and management of Mr Ivan Pillay as General
Manager: Enforcement and Risk Division established an intelligence unit
without the involvement of National Intelligence Agency (NIA) now known as
the State Security Agency (SSA).

The Commissioner of SARS is the Accounting Officer

(dd) Evidence indicates that even prior to Mr Gordhan’s memorandum to Mr

Manuel, SARS had already began operating a unit that gathered information
covertly. However, as the Accounting Officer, Mr Gordhan should have been
aware, and I believe, was aware that the unit had already started operating.
Mr Pillay reported directly to Mr Gordhan as Commissioner of SARS.

(ee) The establishment of the unit with the approval of Mr Gordhan as the erstwhile
Accounting Officer was in breach of section 209 of the Constitution in terms of
which only the President may establish such covert information gathering unit.

(ff) I further noted that Mr Magashula had misrepresented himself under oath by
denying the existence of an intelligence unit. Even if the unit was never called
the rogue unit at SARS, the operations and functions of the CBCU, a unit that
existed, were similar.

(gg) The conduct of Mr Gordhan as referred to in the establishment of the

intelligence unit at SARS is improper and in violation of section 209 of the
Constitution and therefore amounts to maladministration as envisaged in
section 182(1) of the Constitution and abuse of power as envisaged in section
6(4)(ii) of the Public Protector Act.

c. Regarding whether SARS failed to follow correct procurement

processes in the procurement of intelligence equipment which the
intelligence unit utilised for gathering intelligence, and if so, whether
such conduct amounts to maladministration.

(aa) The allegation that SARS failed to follow proper procurement processes in the
procurement of intelligence equipment which the intelligence unit utilised for
gathering intelligence, is substantiated.

(bb) Although SARS failed to provide me with documents relating to the

procurement of equipment for the CBCU, NRG and subsequently the SPU,
evidence at my disposal confirm the existence of such equipment as well as
the acquisition thereof.

(cc) It is extremely impossible that a unit carrying out investigations on behalf of

SARS would not have procured equipment necessary for the fulfilment of its

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 duties and functions, as admitted to in so many instances and at so many
levels. The only contention by SARS being that it was not conducting illegal
operations.

(dd) However, if its operations were lawful, it is unclear why SARS and/or its former
employees would keep the procurement of equipment such a guarded secret.
I can only come to the conclusion that proper procurement processes were
not adhered to, and that such conduct amounted to the violation of the PFMA
and thus constituted improper conduct as envisaged in section 182(1) of the
Constitution and maladministration as envisaged in section 6(4)(i) of the Public
Protector Act.

(ee) I am of the firm view that the failure and blatant refusal of SARS and its former
employees to provide me with records of the procurement to confirm the
purchasing of the said equipment and the whereabouts thereof is suspicious
and unwarranted and is aimed at perpetuating the narrative that there was no
such intelligence unit at SARS.

d. Regarding whether SARS failed to follow proper recruitment processes

in appointing employees who worked for the intelligence unit, and if so,
whether such conduct constitutes maladministration.

(aa) The allegation that SARS failed to follow proper recruitment processes in
appointing employees who worked for the intelligence unit, is substantiated.

(bb) Although SARS failed to provide me with a Policy regulating the transfer of
staff within SARS branches as well as Policy which regulates headhunting of
for positions at SARS, evidence at my disposal point to some irregularity in
the recruitment of personnel for the intelligence unit.

(cc) The foregoing is supported by sufficient information provided by SARS to an

investigation conducted by my office into such staff complaints as was raised
by certain employees within the intelligence unit in 2014.

(dd) The failure to advertise positions externally is a violation of Paragraph 8.7 of

the SARS Recruitment and Selection Policy.

(ee) The apparent denial of Mr Gordhan of any involvement or participation in the

recruitment process of one or more of the unit’s employees is improbable. The
Sikhakhane report confirms that Mr Gordhan played a role in the recruitment
of Mr van Loggerenberg.

(ff) I have also noted that Mr Magashula’s denial of the existence of the unit and
recruitment of employees thereof is a foul misrepresentation. Mr Magashula,

15
 at the time the members of the unit were transferred within SARS to form the
CBCU and the appointment of external staff members, he was the Chief
Operations Officer: Corporate Services. He approved the memorandum
submitted by Mr Pillay relating to employees of the newly formed unit.

(gg) I have further noted that, prior to Mr Gordhan’s submission of a memorandum

to the then Minister of Finance, Mr Trevor Manuel, Mr Pillay had already began
recruiting members to partake in operations of surveillance.

(hh) The conduct of Mr Gordhan in approving the memorandum for the

establishment and invariably recruitment of staff for the intelligence unit in the
manner described is improper and thus amounted to improper conduct as
envisaged in section 182 (1) of the Constitution and maladministration as
envisaged in section 6(4)(i) of the Public Protector Act.

e. Regarding whether the intelligence unit carried out irregular and

unlawful intelligence operations, and if so, whether such conduct
constitutes maladministration

(aa) The allegation that the intelligence unit carried out irregular and unlawful
intelligence operations, is substantiated.

(bb) Despite denials by SARS, I have evidence before me which indicates that
during June 2007 until November 2007 Mr Pillay and Mr Janse van Rensburg
irregularly procured Mr Helgard Lombard and Mr De Waal and/or authorised
Mr Lombard and Mr De Waal to intercept communication within the offices of
the DSO and those of the NPA without an interception direction issued by a
designated judge in terms of the Regulation of Interception of Communication
and Provision of Communication.

(cc) There is further evidence at my disposal of the unauthorised interception of

private communications of prominent members of society as well as
surveillance by the intelligence unit of SARS for unknown reasons and/or
purposes.

(dd) The conduct of SARS officials in such unauthorised interception and

surveillance is in violation of the Regulation of Interception of Communication
and Provision of Communication and amounts to abuse of power as
envisaged in section 6(4)(ii) of the Public Protector Act.

f. Regarding whether Mr Pillay was appointed to the position of Deputy

SARS Commissioner and subsequently as SARS Commissioner whilst
he did not possess the necessary qualifications for the positions, and if
so, whether such conduct amounts to maladministration

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 (aa) The allegation whether Mr Pillay was appointed to the position of Deputy
SARS Commissioner and subsequently as SARS Commissioner, whilst he did
not possess the necessary qualifications, is substantiated.

(bb) The position of Deputy SARS Commissioner was a new title and/or position in
SARS formulated through a new business model.

(cc) The new business model identified persons holding executive positions
through skills and expertise, aligned values and principles as well as
behavioural competencies.

(dd) The sole use of the new business model as a blanket benchmark for the
appointment of Mr Pillay, specifically, to the position of Deputy SARS
Commissioner was irregular and in violation of section 195 of the Constitution.

(xii) The appropriate remedial action I am taking in pursuit of section 182(1) (c),
with the view of placing the Complainant as close as possible to where she
would have been had improper conduct or maladministration not occurred, is
the following:

(a) The President of the Republic of South Africa:

(i) To take note of the findings in this report in so far as they related to the
erstwhile Minister of Finance, Mr Gordhan and to take appropriate
disciplinary action against him for his violation of the Constitution and the
Executive Ethics Code within 30 days of issuing of this report.

(b) The Speaker of the National Assembly:

(i) Within 14 working days of receipt of this Report, refer Mr Gordhan’s

violation of the Code of Ethical Conduct and Disclosure of Members’
Interests for Assembly and Permanent Council Members to the Joint
Committee on Ethics and Members’ Interests for consideration in terms of
the provisions of paragraph 10 of the Parliament Code of Ethics.

(c) The Minister of State Security to:

(i) Within 90 days of the issuing of this Report, acting in line with Intelligence
Services Amendment Act, implement, in totality the OIGI report dated 31
October 2014.

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 (ii) Within 30 days ensure that all intelligence equipment utilised by the SARS
intelligence unit is returned, audited and placed into the custodian of the
State Security Agency.

(iii) Within 14 days of the issuing of this report avail a declassified copy of the
OIGI report dated 31 October 2014.

(d) The National Director of Public Prosecutions to note:

(i) That I am aware that there are currently criminal proceedings currently
underway against the implicated former SARS officials and that effective
steps should be taken to finalise the court process as the matter has been
remanded several times already.

(e) The Commissioner of the South African Police Service to:

(i) Within 60 days, investigate the criminal conduct of Messrs Gordhan, Pillay
and officials involved in the SARS intelligence unit, for violation of section
209 of the Constitution and section 3 of the National Strategic Intelligence
Act including Mr Magashula’s conduct of lying under oath.

I look forward to the full implementation of remedial action in all these reports.
I reiterate that the mere action of instituting review proceedings does not
suspend implementation. If anyone wish to both institute review proceedings
and suspend the implementation, I advise them to obtain a court interdict
staying implementation. It is important that we draw a distinction between an
appeal and a review. Failure to do this might amount to acting in a manner that
is inconsistent with the Constitution and the law.

I wish to close with the following quotes, one from the iconic late former
President Nelson Mandela and another from the Bible. At height of the struggle
against apartheid, President Mandela said:

“I have cherished the ideal of a democratic and free society in which all
persons live together in harmony and with equal opportunities. It is an
ideal which I hope to live for and to achieve. But if needs be, it is an ideal
for which I man prepared to die.”

The book of Esther, Chapter 4, reads thus: “And so I will go to the King,
which is against the law; and if I perish, I perish!”

Thank you.

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