The New SARS Commissioner and the Phala Phala Controversy
Dr. Johnstone Makhubu, the newly appointed commissioner of the South African Revenue Service (SARS), has made it clear that he will not publicly discuss the tax compliance status of President Cyril Ramaphosa’s Phala Phala farm in the absence of formal structures. This statement comes amid growing public scrutiny over the handling of the matter by several key institutions, including SARS, the Public Protector, and the South African Reserve Bank (SARB).
The controversy stems from a Constitutional Court judgment that reopened the possibility of impeaching President Ramaphosa for alleged violations of the Constitution and the law. Specifically, the court referred to the section 89 Independent Panel report, which suggested that Ramaphosa may have committed serious misconduct by failing to report the theft of undeclared foreign currency from his farm in Bela-Bela, Limpopo, in February 2020.
This development has sparked widespread criticism, with many questioning the integrity and transparency of the institutions involved. The panel, chaired by former Chief Justice Sandile Ngcobo, found prima facie evidence of potential constitutional and legal breaches, leading to calls for Ramaphosa to either resign or be recalled by the African National Congress (ANC). Despite this, the ANC has remained steadfast in its support of the president.
Makhubu recently addressed the National Assembly’s Standing Committee on Finance, where he emphasized that he would not comment on taxpayer matters beyond the scope of existing consent. He explained:
“I have taken time to review the documents that informed our decisions and our utterances and one of the things I’ve found is that the consent that was given by taxpayers was very specific to time periods and therefore I’m not at liberty at this point to discuss any taxpayer matter that goes beyond those periods because then I would be violating the confidentiality provisions that are put forward in defence of taxpayers.”
He further stated that if SARS needs to make representations, it will do so through “duly constituted structures.” This approach is not seen as an avoidance of accountability but rather a commitment to following proper procedures.
Previous Findings and Ongoing Concerns
In March 2023, Makhubu’s predecessor, Edward Kieswetter, revealed that audits had been completed without any adverse findings regarding Ramaphosa, the Ntaba Nyoni Estate, and the Ntaba Nyoni Feedlot, which includes the Phala Phala farm. According to Kieswetter, these entities were found to be compliant with their tax obligations.
However, concerns persist. The uMkhonto weSizwe Party (MKP) MP and former cabinet minister Des van Rooyen raised questions about SARS’ ethical and compliance standards, particularly in relation to the Phala Phala matter. He noted that while Kieswetter’s team found no issues, MKP believed there were serious violations of tax laws.
Van Rooyen asked Makhubu whether new evidence emerged after 2023 that might require SARS to revisit its earlier findings. Makhubu responded that he could not comment on events outside his tenure, as he is bound by the same confidentiality rules that applied to his predecessor.
Despite this, Makhubu assured the committee that he is continuing the same approach that was in place under Kieswetter. He added that he is committed to ensuring SARS operates independently and without fear, favor, or prejudice.
Calls for Accountability
The SA Federation of Trade Unions (Saftu) has also voiced concerns about the role of the SARB and the Public Protector in the Phala Phala saga. Saftu called for the resignation of Public Protector Kholeka Gcaleka and SARB governor Lesetja Kganyago, arguing that their actions have damaged public trust in the impartiality and independence of key institutions.
Gcaleka’s office clarified that she is not a participant in the parliamentary process or the Constitutional Court case. It also noted that the court’s judgment did not assess or overturn her report, nor did it engage with her conclusions or remedial actions.
The SARB has not commented on the matter but previously stated that there was no violation of exchange control regulations. It emphasized that merely possessing foreign currency was not regulated by the regulations.
As the debate continues, the role of SARS and other institutions in upholding transparency and accountability remains under intense scrutiny. With Makhubu now at the helm, the coming months will be critical in determining how the agency navigates these complex and high-profile issues.
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