Eskom Contractor Embroiled in Multi-Million Rand Tax Evasion Scandal

In a landmark preservation order, the South African Revenue Service (SARS) has tightened the noose on Solomon Lamola, a high-flying Eskom contractor and alleged tax evader, reclaiming millions of rands owed to the national fiscus. Lamola, an industrial engineer and sole director of Manyeleti Consulting and Magogudi Construction, companies providing services to Eskom, stands accused of unprecedented financial irregularities, accumulating hefty tax bills, and associations with an alleged coal export syndicate.

This astute preservation order, authorized by the High Court in Pretoria, ensures SARS’ authority over a breadth of assets including 45 vehicles, 59 properties, and stakeholdings in ten non-compliant companies. Upon securing the order, the High Court permitted SARS to manage the assets and operations of Lamola’s businesses, impeding any further asset transactions during ongoing investigations.

Lamola’s disregard for tax compliance stretches back to 2011, with personal and corporate tax returns left unsubmitted, amounting to a staggering tax debt of over R190 million. Circumventing South Africa’s tax laws, SARS identified that PAYE deductions and UIF contributions of the workers in Lamola’s companies were never remitted to the requisite statutory bodies. These discoveries position SARS in a showdown to recoup what is due and bring tax evaders to justice.

Questioned on the contractual engagements with Manyeleti and Magogudi, Eskom confirmed their tax compliance at the point of contract award but maintained silence on their subsequent failure to uphold compliance. The power utility emphasized its procedure to routinely check suppliers' tax status and issue rectification notices upon expiration, dismissing the need for a preliminary investigation due to perceived compliance.

The travail for Lamola and his companies exacerbates with over 385 employees facing salary delays as a ramification of the imposed preservation order by SARS. In a bid for leniency, Manyeleti and Magogudi argued financial distress and implored the court to reconsider SARS’ austere measures, a plea squarely dismissed citing lack of substantial evidence.

The unfolding legal drama sees Lamola challenging the court’s decision—attacking it on the grounds of breaching confidentiality as outlined by the Tax Administration Act. However, the High Court stood firm on its stance, delineating the Act’s confidentiality provisions as non-applicable to implicated parties in the preservation order claims.

The spotlight on Lamola and his associated entities intensifies as Eskom currently reassesses its contractual terms with the companies in question. The High Court’s verdict and subsequent actions by SARS and Eskom serve as a palpable deterrent to tax evasion and mark a decisive step in South Africa’s fight against economic crime.