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SARS Targets Sasfin with R4.8 Billion Damages Claim for Tax Evasion Complicity

Published March 01, 2024
4 months ago

The South African Revenue Service (SARS) has initiated a hefty R4.8 billion damages claim against Sasfin Bank, signaling its steadfast affair to tackle tax evasion and safeguard the fiscal integrity of the nation's economy. SARS Commissioner Edward Kieswetter has confirmed this potent legal stride, which has put one of South Africa's financial institutions, Sasfin, in the spotlight for all the wrong reasons.

This announcement came shortly after Sasfin made public the details of the claim in a Sens announcement, a disclosure facility for companies listed on the Johannesburg Stock Exchange (JSE). SARS's intensive examination into the tax disclosure practices of various South African taxpayers unearthed a scheme involving collusion to illegally send funds offshore. The carefully orchestrated activities were designed to render the tracing of these payments nearly impossible, thereby jeopardizing South Africa's tax income recovery efforts.

Sasfin's potential involvement has cast a shadow over the bank's operations, particularly given its response to a related legal battle. In November, Gold Leaf Tobacco Corporation engaged Sasfin in a legal tussle by demanding a full exposition of the bank’s inquiries into potentially manipulated financial records. Sasfin asserted that the original bank statements were lost, and any reconstructed statements from obsolete computer systems would be unreliable. Gold Leaf Tobacco's motion was ultimately dismissed, with the court ordering it to pay the legal costs.

The mention of Gold Leaf Tobacco is pertinent given its involvement in the so-called Gold Mafia investigation, which unveiled a web of corruption implicating officials at Sasfin and operatives from Gold Leaf Tobacco. The collusion was believed to have facilitated large-scale launderings of stolen tax monies, the proceeds of which were funneled out of South Africa.

In their response, SARS has asserted the non-negotiable nature of tax enforcement and due recovery and has thus refrained from further public discourse on legal matters currently under judicial scrutiny. Kieswetter's stern commitment to tax enforcement was underscored by SARS's successful interventions in the illicit tobacco and alcohol trade during the current financial year—the recovery of a staggering R13.5 billion stands as testament to their assertive and relentless approach.

Moreover, the proactive steps taken by SARS have included the approval and installation of CCTV systems in licensed customs and excise warehouses, with Gold Leaf and British American Tobacco experiencing this enhanced surveillance as early as February of the past year.

It is worth noting that this legal conflict has widespread implications for the financial sector and for corporate governance in South Africa. The hefty R4.8 billion claim could set a precedent and serve as a warning to other financial institutions about their potential liability in facilitating tax evasion or illicit financial activities.

The unfolding legal drama between SARS and Sasfin Bank is a vivid reminder of the responsibilities financial institutions bear in the fight against economic crimes. It also accentuates the government's unyielding approach to curtailing activities that undermine the economic health of the nation. As the legal processes evolve, industry observers and South African citizens alike will be watching closely to see how this high-stakes conflict is resolved and what it means for the integrity and accountability within South Africa's banking sector.

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