My experiences at Mellodramatik Murkathon South Africa. Part 3

 A multi-part story of deceit and corruption.

The Parent Company

Mureno  Skoche

Parent company involvement in MMSA was minimal, there was a strong language bond between Jester and his peers in Europe, and no one ever suspected that the local company was on the brink of collapse, due to reduced sales and loss of customer confidence due to apathy on the part of Jester, who had not visited certain key customers for anything up to 10 years prior to his retirement. This became obvious when on tour of customers; he was treated in some cases with such surprise by them. He appeared to have spent his time, either at the office, or taking extended lunch breaks to be with his ill partner.

It also became clear from comments passed by the CEO of the parent company, that they were aware of his limitations, if not his personal circumstances with regard to his partner. The managing director of the parent company was an abrasive, arrogant individual that engendered conflict at all levels of the organization. Consequently he was kept in the dark by his subordinates as much as possible with the aim of limiting conflict, and avoiding becoming the target of his violent temper. He appeared to be person desperately clinging to his position, with no real grasp of the culture of the company, and or the essence of the company’s business, which was selling machines, as opposed to launch pad for his strident irrational outbursts. He would neither tolerate discussion or what he perceived to be dissent of any kind, and this almost resulted in a physical confrontation between us in 2004. Something I was not averse to, but refrained because it happened in Europe, and I had no desire to run afoul of the German authorities. Thankfully that individuals tenure was remarkably short, and I did not spend any more time in Germany at the factory, than was absolutely necessary, and time I did spend, I avoided contact with him, preferring to deal with his subordinates and promoting the business in that manner.

Kalharry Bothdown

His successor as a result of some impromptu shuffling by the parent company in the USA, had been his boss before, but was given additional responsibilities with his abrupt departure, was an individual thoroughly schooled and integrated in the company.  Kalharry, from day one, had a vision and a mission for the company which he had no trouble getting the majority of the staff to support and promote. I thoroughly enjoyed working with him, and shared his vision for the company, to the extent that I compiled an extensive business plan to grow MMSA and to take advantage of the prevailing BEE legislation. Regrettably Kalharry had a serious falling out with the US management and left suddenly as well some time later, so the growth plan for MMSA was never implemented.

Gean Mincehere

After Kalharry’s abrupt departure, the replacement was Gean Mincehere, with no experience in the plastics industry, no business qualifications, a slightly dubious past, which appeared to be linked to what many considered to be his boyfriend, although I have never seen any reason to support these views, in the M&A sphere, linked to a consulting company in Switzerland. My initial assessment of Mincehere was weak, but dangerous due to his lack of formal qualifications, and he appeared to have spent the last few years prior to his joining Melodramatik, languishing in the shadow of his alleged boyfriend.

That taken into account, and a large deal in the offing, I contacted Mincehere, and asked him to come to South Africa, to see our largest customer in Africa, with me, as that customer was well aware of the developments in Melodramatik, and they required some kind of assurance that their principal machinery supplier was able to support them into the future. The reply I received was a lengthy excuse as to why his schedule did not permit that at that time. My reply was to issue a direct order for him to get on the next available flight if he was maintain any possibility of winning that order that year. All due credit, he did take instructions quite well, and a few days later, he was on his way to South Africa.  Oddly, his first point of call was not MMSA as anyone may have reasonably expected, instead he was entertained by two of our biggest competitors, Mixico (then agents for Arbtech, and through a subsidiary, for a Chinese Injection machine brand) and ETT, the company formed by the breakaway technicians of MMSA. His actions were brought to my attention by a local magazine writer who saw him and his accomplices at a well-known local river resort, on the weekend prior to his visit to MMSA, which he visited only on the Tuesday, the Monday having been taken up with business meetings at competitors of MMSA. When I confronted him with these facts, he did not bother denying them. Possibly my demeanor may have indicated an intolerance to any denial.

On that highly suspicious and untrusting note, we travelled to Cape Town to see the customer where the deal had to be closed. Conditions around the sale were discussed, Mincehere made some vacuous comments to the customer, and I walked away with the order. Mission accomplished, or so I thought. During the course of speaking to various line managers at the customer, Mincehere would take these customers aside when he fondly believed I was unaware of actions, and interrogate them regarding my presence and performance at the customer. After one such aside with one of the line managers, when I sarcastically enquired if he had heard what he wanted to hear, he had the unmitigated effrontery to inform me that that particular line manger had just saved my job. I realized right there; that not only was Mincehere incompetent, he was dangerous, and I commenced documenting every action and communication between us. I ceased to discuss anything telephonically, due to his penchant for inveterate lying after the fact, as I had observed with his visit to the competitors of MMSA, so I started to build a scenario where I eventually trapped him into giving me a written admission of the real reason for his dealings with our competitors. His intention was to close down MMSA and to award the service and sales to an outside company, so that the parent company would not have to carry any responsibility for the local company. This was not an unreasonable strategy, and under normal circumstances it should have been communicate to the company’s employees, the legal aspects of the closure dealt with, and business would have continued under the control of the preferred company. Instead Mincehere chose to do nothing to close the company down, but rather than incur the expense of closure, he instead chose to accuse me of dishonesty, and attempted to suspend me some time later.

The incompetence accompanying the attempted suspension saw the suspension fall flat, and the audit which was carried out immediately after that, cleared me of any wrong doing. No further mention at the time was made of the suspension; Mincehere seemed to think that if he did not bring up the subject again, then it would resolve itself. This was not the case, seeing as we had received a clean audit, I resolved to re-examine the package I was receiving from the company, as I t had not been reviewed for five years. When I had raised this with Mincehere, he had responded by being evasive and mumbling something about EBIT performance of the company, so I convened a meeting of the remuneration committee, and tabled a proposal to address the parent company’s negligence and to adjust my package accordingly. The documentation pertaining to the actions of the remuneration committee was forwarded to Mincehere for information, and comment.  No reaction was ever received, to date, it is not known whether he ever read it, or for that matter understood it.

Communication with Mincehere was always difficult, as he has a disconcerting habit of when he responds to communication, his replies are never connected to the original communication, so, one would write to him about sales for example, and he would reply regarding marketing, or administration. He would initiate communication about a specific issue, receive replies which addressed all of the points he had raised, and reply about something completely divorced from the initial subject. His communications quickly took on the aspect of case building, but due to their disjointed nature, he was never able to sustain communication for long enough to actually build a case of failure to comply with instructions, or insubordination, due to his replies never being in sequence with the replies to his original points. Perhaps the finer details of communication were lost in translation.

Supporting competitors

Since February of 2007, Mincehere was covertly providing support and material assistance to our competitors. We came upon information in the market place that pointed to the fact that our competitors were being supplied with parts directly from the factory. We however had no documentary proof that this was taking place, and I could confront Mincehere with hearsay information and tell him to stop. In that regard, we got a lucky break, one of our Business associates of long standing received a set of documents in error, and we were able to obtain copies from them which proved beyond any doubt, that the factory was indeed supplying our competitors with means to damage the business of MMSA. So when Mincehere once again travelled to South Africa, I arranged a surprise meeting at my attorneys to resolve the issue and to negotiate the terms of a separation package as clearly the relationship had deteriorated to the extent that Mincehere was prepared to damage the brand in order to prove a personal point. Because at the same meeting he made the statement that he would not negotiate, and that him and a colleague would “take over the company” and resolve the matter that way. The meeting however was aborted when Mincehere left in a huff and waited for a taxicab in the reception area of the lawyer’s office.

My experiences at Mellodramatik Murkathon South Africa. Part 2

A multi-part story of deceit and corruption.

More discoveries

Taccountovic and Da Silva

Shortly after Jester’s departure, his longtime companion Ludmilla, died as a result of advanced cancer, a fact Jester had concealed from everyone, as I believe that he felt if it was known that his urgent need to retire was driven by Ludmilla’s impending death, as she had been advised by her doctors that there was no possibility of survival. Almost simultaneous with Jester’s departure, I was advised by the then accountant, Mr. Taccountovic, that he was retiring to Pietermaritzburg, and would not be able to continue as the company accountant. In order to maintain some kind of continuity, another competent accountant was sought, and a Mr. Da Silva, took over from Taccountovic, who relocated with haste to Pietermaritzburg, leaving improperly documented books for the new accountant to reconcile and take ownership of.  According to Taccountovic, he had left perfect records, and perfect reports, however at the next month end it became apparent that he had used mostly a manual system for keeping the financial records of the company, the files were with him, and when asked for the files to be handed over, he demanded a fee of R10,000.00 for some excel files that after examination were not worth R10.00, any high schoolboy or girl, could with a few hours effort have produced them from scratch.

Jester very kindly offered to assist in the compilation of the month end reports, for a consultants fee, and it here that we learnt that the month end reports had been more or less fictitious for a number of years, as Jester had no understanding of the reporting structure, and how the various aspects of the financial reports integrated with each other. I resolved to dispense with Jester’s and Simonvic’s input and relied on Da Silva being able to satisfactorily liaise with Germany, and to for the first time, produce financial reports that were accurate and reliable, but most important of all, were not the result of data manipulation, to satisfy formulas that were not understood by the previous accountant. Da Silva, was a thoroughly professional, knowledgeable and computer literate person who first suggested that perhaps the old Ohio, command prompt accounting software which had remained without update or maintenance since 1988, should either be upgraded or replaced. This was investigated and options and prices obtained both from Ohio software, and from Softline Pastel, with Pastel being by far the most cost effective package, a windows update for Ohio, would have cost R80,000.00 for the software, and in the region of R50,00.00 for the data migration and integration. All of which would have been billed by Ohio at premium rates.

The Clowns

When this development became known in the company, there was extremely strong resistance to this change by the Clowns, who were adamant that they would not use the new system, and proceeded to willfully sabotage the process, to ensure that it failed to vindicate their opinions regarding the new system. To overcome the resistance, and outside consultant was contracted to provide training and insight into the functionality of the system, so that the Clowns could realize the value of the new software and become more familiar with it, and in so doing come to accept it as a fully functional useful tool in their daily work lives.

The sabotage continued, but with a new twist, Losly Clown started to short invoice parts, and in so doing cost the company some losses on spare parts sales. This was brought to his attention, and he was notified that he was to be disciplined for actions. The amounts involved would, had he been found guilty at an enquiry, have been recovered from him, so before the enquiry could proceed, Losly Clown abandoned the company, without notice, no doubt to escape the consequences of his actions. I quickly established that Lois Clown had gone to work for a competitor on the day following his desertion from the company, this was the company SST, started by the two technicians who had left the company, due to their involvement in theft of parts and hours. The rapidity of his engagement at that time suggested that he had made prearrangements to join the competitor in any event, and his incompetent behavior was some kind of vindictive behavior prior to his departure.

Tweela Clown, continued to be more openly obstructive, to the degree that she was informed of a pending hearing for insubordination, which she indicated, she was more than ready for, and that she would be turning the tables so to speak on me at this hearing. But during the course of preparing for the hearing, it was determined that Tweela was past the age of mandatory retirement, and had continued in employment only due to this fact not being made known to the company. She was served with a notification of retirement, and given thirty days pay, and sent on retirement. She however attempted to challenge her retirement at the CCMA, without any success. As her retirement was completely within the framework laid down by the labor laws of South Africa.

She did after the rejection of the motion by the CCMA; compose a letter to the company’s head office alleging financial irregularities and theft on my part. Subsequent audits proved these claims to be nothing other than attempts to tarnish my reputation and discredit me to the organization. I believe that Tweela managed to create a perception that I may have been an unsuitable and overly aggressive person, to manage the company, with our parent company, to whom she had aired her alleged grievances.

Tweela’s departure, however forced, offered an opportunity to train a debtors and creditors clerk from within the company, who was willing and able to learn the new Pastel system and add value to the company. This person was Beth Unfoggy who previously had been bullied by Tweela into doing most of Tweela’s work, while receiving none of the credit for it. Beth was offered the opportunity to take over Tweela’s old job, and she was quick to demonstrate after acceptance that she a person with a significantly higher aptitude for the bookkeeping tasks, than Tweela ever was.

Losly Clowns departure, likewise offered an opportunity, to take control of the stores, and to implement a logical system of stock control, using Pastel as the driver for total transparency and accountability of the maintenance of stock, and of the assurance of profit margins on spare parts sales, and service invoicing, two areas which had been covertly sabotaged by the Clowns. The person selected from within the company to do this was Gandalf Woodsman. Gandalf had previously experienced some difficulties with his duties as field service technician, but he had a reasonable knowledge of the products and of the parts which went into the products as spares. He was provided with extensive training to detect and bring to the attention of management any errors that arose as a result of Losly's negligent and malicious actions.

My experiences at Mellodramatik Murkathon South Africa.

 A multi-part story of deceit and corruption.

First Impressions

My relationship with Mellodramatik Murkathon South Africa (MMSA) started in April of 2003. The then incumbent Zerbert Jester wanted to retire at age 60 and he had to find a suitable successor in a relatively short space of time. I replied to an advertisement for a General Manager and having had previous executive experience with a major plastics company for about 14 years, I applied for and was appointed to the position, effectively starting work on the 15^th of April 2003.

My initial impressions of the company were not very positive, due to the evidence of neglect everywhere in the company. It became apparent that Jester was holding on for the day he could hand the mess over, take his pension and run, never to be seen again. The offices had been occupied in about 1988, and up until the date of my commencement, it is my belief that the same paint was still on the walls, as were the same carpets on the floor. Another shocking discovery from a technical viewpoint was that the accounting software in use at the time, was purchased in 1988, and had never been updated, or upgraded! In essence the software was being used a large expensive outdated invoice writing machine. To make matters worse, the software was so old that is still used the outdated command prompt line type of input system. More about that issue at a later point in the narrative.

Evidence of the neglect was everywhere in the company, the delivery vehicle used to deliver parts to customers was at least 10 to 12 years old, required regular repairs and looked decrepit, with differing color rear canopy to the body. After several months of repairs and expenses with the vehicle, I decided to replace with a newer model, and sold the old vehicle for a small amount. The new vehicle was considerably newer than the old, had better fuel efficiency, and was far more reliable. It had been in daily use as my personal vehicle for about a year, consequently it was in pristine condition, a fact much appreciated by the regular delivery driver.  This vehicle was supplied to the company at cost, and no obligation, other than to maintain and service the vehicle. This continued for the next three years, until the vehicle reached the end of its rental period.

The upper floors of the office block resembled an electronic scrap yard, with discarded and non-functioning electronic components scattered across every available working surface. Such was the influence of the previous so called managing director. It also became clear from the technicians interaction with him, that he was in no way in control of the company as far as the technicians were concerned, as they appeared to not take any note of his instructions or requests. He tried to hide his frustration with the technicians but grudgingly commented that “they were buggers, and you must watch them”. Wise words indeed, as they prompted me to scrutinize the actions of the technicians more closely, with alarming results. More regarding these results later as there were more immediate and urgent matters to attend to.

The accounts department, and department is used in its loosest form here, comprised of one unqualified, untrained debtors and creditors clerk, who had very little or no training on the outdated accounting package, which at that point ran on an archaic dedicated computer, suspected to be a 486 machine running windows 95 or 98 with a hopelessly underrated memory and no performance to speak of at all. The clerk preferred rather to enter all transactions in manual journals and these were then transferred to the “system” by the then accountant, a Mr. Taccountovic, who kept the books using Excel 97, and a hybridization of manual and electronic entries. This system made the required monthly reporting to the parent company in Germany, virtually impossible. The consequence of the non-standard, and multiple source reporting was to make the reporting extremely unreliable, and in most cases inaccurate. Reporting was a hit and miss affair, with numerous queries and constant adjustments required by the parent company, who had an accounts department that was accurate and efficient. 

Reception was manned by one person who had little or no latitude in the execution of her duties, that person reported informally to the debtors and creditors clerk, who referred to herself as the office manager. The receptionist, Ruth however had more potential to increase her performance than the debtors and creditors clerk, because through experience, and having been coerced to carry most of the workload for debtors and creditors, she was reasonably up to date on the status of most of the accounts.

Spare parts sales and the stores were under the supervision of the same person, one Losly Clown, whose office and stores were in a similar state of disarray. The kindest description of the parts sales office would be pigsty. Losly suffered from a compulsion to hoard old parts, for as he put it: “we never know when we might need them”, this resulted in his office resembling a mechanical parts scrap yard, vaguely redolent of the electronic parts graveyard next door to him, in the technicians area. The greatest shock was in fact in the stores, where old parts were mixed with new parts on the shelves, and no system of storage actually existed. So there was parts master list with corresponding bays and shelf locations, or quantities in stock for that matter. When I enquired how many days a stock take actually took, I was informed that it was done once a year, and took anything up to 3 months. Alarmingly, it appeared from the annual financial statements, that an annual net loss of parts to the value of some R40,000.00 had been reported, for that year, and a few years prior to that. Alarming because those reported losses could not be verified, and I was told that they reported thus, as it was accepted by the parent company and in the interest of consistent reporting, the amount was left at that level from one year to the next.

From April to September 2003 I discerned that the field service technicians were stealing parts, and doing work for customers off the books in company time. One of the technicians in fact had a cheque for payment delivered to him at MMSA for work he had done at a customer. On further analysis of the existing statistics, I determined that each technician was billing 50% of the hours they worked, for the company, and the other 50% for themselves. When confronted with this information, two of the technicians promptly left to continue in their own business, which they had built up while working for MMSA. This action effectively crippled the field service offering from MMSA to its customers. More details and facts about this event and its consequences will be explained later on in the narrative. Customer complaints regarding technicians were commonplace, with Slander Silimon, receiving the most complaints, principally for insulting customers. The most common complaint being reported was that he had called the customers idiots. 

The general state of the offices may have been grubby, but the general state of the warehouse and stores was FILTHY, it is difficult to explain the extent of the dirt and disorder that existed in the warehouse, from empty boxes piled haphazardly on the top floor of the store, to non-functioning machine parts piled on free standing racks in the warehouse, there was evidence of neglect and incompetence in maintaining the area. I also found that the lower floors of the building were given over to storage of obsolete and scrap parts as well. Over the next few months and years, a total of 20 000 Kg of scrap metal would be removed from the premises.

Most of the rest of 2003 was spent in training at the factory and in meeting current customers and getting to be familiar with the systems, as they were, in place in the company, and coming to grips with internal discipline, which at first impressions, seemed to comprise of fear of Jester, and his self-appointed office manager Tweela Clown. In September of 2003, Jester left the company abruptly citing his 60^th birthday and his intention to retire as the reason for his departure. This was only partially true, but the fact remained, that he effectively left the company.

The Food Riots of 2015

Riots continue unabated across Africa, with law enforcement and military forces unable to restore order, after food supplies controlled by companies which were in turn controlled by government aligned individuals, ground to a halt.  The reasons for the cessation of food production are many, but they can probably be broken down into the main causes more or less I chronological order.

• Land “redistribution” laws were enacted to make the then ruling party to appear to care about the masses and devolving land ownership back to the masses. In reality most of the land restitution deals involved simple financial scams by government insiders to avail themselves of funds they had themselves allocated to land restitution. Land and Development banks sponsored by government were systematically looted and stripped of funds, very often the projects they were sponsoring existed on paper only and were vehicles for the release of funds into accounts controlled by government and bank officials. These funds to all intents and purposes were then deviated to other accounts and found their way to offshore banks and havens under fictitious trust names.

• During the implementation of the land redistribution, no attention was paid to keeping arable lands productive, with a view to maintaining food independence and a steady reliable food supply. Clearly as most of the funds supposedly earmarked for development, were never received by any of the appropriate beneficiaries, many land redistributed, was immediately abandoned, and allowed to fall back into the hands of the weeds and wild fauna. Ironically, due to widespread corruption, some parcels of land were redistributed several times with similar outcomes as far the financial transactions were concerned. Due to a total lack of governance on the part of the corrupt government, and wholesale collusion on the part of the rotating land owners, the public was never made aware of the wholesale looting of public funds. The wholesale looting was facilitated by the hated Protection of Information Act, which prevented reporting on any “government” matters by the press, effectively keeping the world in the dark about the machinations of government which led to the eventual food apocalypse in Africa.

• Faced with declining and dangerously low food supplies in South Africa, which up until 2003, had been one of the African Countries best positioned in terms of food supply, the government of 2012 entered into negotiations with the large multinational food companies to in effect take over all of the arable lands which through the governments poor policies had ceased to produce food. The multinational food companies, through paying substantial bribes were able to secure long term contracts which in effect gave them free reign over the lands and everything produced on them. they managed to secure agreements  which gave them full control over the lands, and later argued that the lands were in effect not subject to the laws of the country, as agreed to be the largely incompetent government at the time. This gave rise to widespread labour abuses and many labourers being imported by the multinationals from China to work for them in South Africa, to produce food to be exported mostly to China and the USA.

•    Functional unemployment reached 80% of the labour force in 2014, due mostly to the collapse of the conventional agricultural sector, widespread unrest and the resulting crime, drove many of the skilled people still in the country to seek opportunities abroad, leaving a vacuum in the skills pool, which resulted in the average infant mortality rate rising to 25% of all new-born and a further 25% of all toddlers, dying prematurely. Adult life expectancy dropped to 35 years, with TB and HIV infection rates still rampant, and rising daily.  Secondary Diseases resulting from unattended corpses contaminating many liveable environments, ceased to measure after 2014, due to the skills flight of 2012, which effectively crippled the health system. Thousands of previously employed workers were unable to be employed by the new Foodcorps, due to the employment policies of the Foodcorps not having to follow the previous government’s racist guidelines of employment, and at the end of 2014, the leading cause of death was organ failure brought on by malnutrition.

• The government of 2012, had through violent oppression and fraud managed to stay in power, and continued to be funded by the Foodcorps, and continued to display a total lack of regard for the citizens, by re-introducing the death penalty for a range of offences. These offenses were for the most part, related to crimes against the Foodcorps, and were mostly for food theft from the conglomerates. Real crimes such as murder and corruption were no longer of any relevance to the government.  The resultant widespread deaths from opportunistic diseases among the population resulted in a movement to the lands which had not been taken by the Foodcorps,  by groups of people of all races, who determined to survive had seen unity as the only weapon at their disposal. These mostly secret groups focussed on food survival and on increasing the numbers of the group willing to help themselves. From these loose associations arose the revolt.

•  At first there were sporadic attacks on Foodcorps, largely spontaneous and unfocussed, venting the member’s anger at the government’s callous contempt for the citizenry. As the attacks grew bolder and more organised, they concentrated on the acquisition of weapons and equipment to ensure the movements ability to protect itself.  In the face of continued government brutality, the movement escalated its activities under the Banner of “all of the food for all of the people” Ironically echoing the empty rhetoric of the government of 2009, which the government of 2009, had never acted on, or had any intention of acting on, preferring instead to focus on their agendas of asset looting and self-enrichment. The government had become the hunted with rewards of food for every member captured or killed by the rebels,  with the outside world watching and not taking any action to stop the rebellion or help the government or the rebels.  

Scary? Improbable? Or completely possible?

SARS Episode Three: The Looting Continues.

Last month there were the stories of indefinitely delayed refunds by SARS, documented from a visit to SARS and conversations with SARS victims at a particular SARS office. At the time I thought the rot was limited to private taxpayers as they make up the bulk of the taxpaying population, being easy targets and not having corporate tax shelters to hide behind, and so just dutifully, if not reluctantly swelling the coffers of a quintessentially corrupt regime. 

Last Sunday evenings broadcast of Carte Blanche however not only confirmed the extent of the mismanagement within SARS, it also confirmed the extent of the corruption that allows information from SARS to be used to hijack companies, in order to fraudulently lay claim to tax refunds due to corporate customers.

It seems that South Africa has become an out of control country, unable to control the most basic aspects of good governance. All of the lack of control so evident in our society leads to wastage of valuable taxpayer funds. This leads to reduced social assistance to the needy, by diverting funds to the corrupt. 

To have SARS suddenly becoming an accomplice to the systematic theft of public funds is just unthinkable. The fact that the band of thugs previously known as CIPRO is intrinsically involved comes as no surprise. 

The real surprise and disappointment is that once again, a commercial undertaking such as Carte Blanche had to step forward to do the work of Law enforcement agencies, who have been aware of this practice for some time, as it is not the first case to come to the attention of the public. 

Why are we the public being used as tax cannon fodder, while the institutions we fund stand by while massive fraud is perpetrated on the whole country? 

It seems we have reached a point, where corruption has become government policy, and those who try to stop it, will be seen as the enemy.

Is this what we collectively fought for as a people, so that we could be free?

SARS episode Two - Refund what refund?

A few months ago, I detailed how SARS was deliberately delaying paying out tax refunds and today after meeting with Tax Practitioner over the same issue I learned some new facts. Some of the accounts of cases related to me almost defied explanation. The upshot seems to be that SARS has made a serious commitment to stop paying out any refunds due to the fiscus being depleted by prolific government spending. The only aspect of this I did not receive information on, was whether the delaying tactics were wholesale, or if they targeted certain tax brackets only. Some of the scams perpetrated on the taxpayers sound illegal, but according to the Tax Practitioner there is legislation in the pipeline which will in effect make SARS an entity which is above the constitution of South Africa. The legislation will give them seizure without legal process powers which quite honestly remove all constitutional rights from taxpayers. Simply put, if SARS alleges you owe them money, they can, without any legal process, or warrant enter your property and attach any assets as they see fit and hold the assets until such time you settle the alleged debt, irrespective of any extenuating circumstances. Frightening? I think so.

Anyway I digress with too much bad news at once, here are some of the current scams being used by SARS against individuals: 

The banking details scam.

The taxpayer has complied with all of the requirements for a refund, which may take anything upwards of 6 months to complete. SARS then sends the taxpayer a notification demanding the taxpayer confirm their banking details. On the surface this seems reasonable; however the confirmation has to be done in person at a SARS office.  The taxpayer duly sets off and goes to a SARS office, stands in line for an hour or so and presents a bank statement as proof banking details. So far so good, another 30 days go by without a refund and when the taxpayer enquires about the refund, they are told they have to confirm their banking details. Strange, you might say? Well it gets better, for the taxpayers savvy enough to have gotten the previous statement stamped as proof of submission of statement, they are told the statement is out of date and they have submit the most recent one. Another 30 days delay arranged in a few minutes by SARS.

Another interesting twist experienced by a taxpayer was on presenting a certified letter from his bank on demand for banking details, and having it accepted by SARS, and also not receiving the due refund for three months, on enquiry was told that the account he had given SARS via the certified Bank letter was invalid and the payment had been returned three times. The bank had no record of any such transactions. That taxpayer is still waiting for the refund due to him. It has been over 12 months so far.

The documentation scam

This seems to be a favourite scam at SARS due to its simplicity. A return will be filed via e-filing as per the normal procedure. A refund is deemed to be due to the taxpayer and the normal IT 34 notification of such will be sent to the taxpayer via whatever process they have selected to communicate with SARS, stipulating the statutory period for refund payment. This normally two dates, the first date is 21 days from the date of assessment,  the second date is normally 30 days from date of assessment and carries the stipulation that payment will made if there are no further queries raised by SARS in respect of the payment.

The normal strategy by SARS is to then inform the taxpayer that there documents missing from the assessment which normally is done via e-filing and copies are retained by the taxpayer. On checking the taxpayers submission records the missing documents are normally seen in the submitted fields, as they were used to initially calculate the tax due/credit, but in asking for them again, normally the return is reversed and then the refund becomes a tax liability because of the “missing” supporting documents. Supporting documents are then re-submitted along with an official objection to the recalculated tax liability which in some cases is up to the total tax payable, which has already been paid over to SARS.

The time to receive replies on these resubmissions of “missing” documents can run into many months and the average time resolve any queries are escalating to around 18 months. Tax practitioners are being told by SARS inspectors to engage specialist consultants who they recommend to resolve long standing disputes. These consultants are ex-SARS employees who have seen a niche market in which they can make easy money by dealing with their old colleagues in the system and have a steady source ion income guaranteed by internal systemic abuses within SARS.

VAT

In line with current legislation to tighten up on VAT fraud the conditions for registering as a VAT payer have been tightened up. Fair comment, the government was losing millions through fraudulent VAT claims. So far so good? So a company that against all odds was doing well enough to have increase their income to the point where they had to by law register for VAT, did the responsible thing and approached Tax Practitioner to assist them in their registration attempts. He duly downloaded the forms from the SARS website, completed his portion and couriered the forms to the client in Mpumalanga. The client completed his portion and then travelled to Nelspruit to lodge the forms and was promptly turned away because the forms were the wrong colour. He was given the same forms, but in the correct colour and told to resubmit them. He then couriered the forms to his Tax Practitioner who filled them in again and this time in order to preserve the colour, scanned them and e-mailed them to the client who printed them in colour, filled in his portion and again travelled to Nelspruit to lodge them. He was turned away because the signature of the Tax practitioner was not an original, he offered to email the form to the SARS office so they could check authenticity, and they refused him.

So the originals were couriered to him the next day by overnight bag. I still don’t know the outcome of this scenario, because it still remains unresolved as of today. The consequence for that particular business is an inability to trade with many of its suppliers, as it cannot supply them with a VAT number or a tax clearance certificate. This but one of many similar situations where en a country struggling to come out of a depression, SARS seems to be one of the biggest growth inhibitors to business in general. 

VAT refunds for companies are another saga altogether, the expected time to get a VAT refund for exports is given at between 18 months and three years for those that have successfully sued SARS after they faced financial ruin due to delayed payments. I will make this the topic of the next post, in order to keep this already long post more readable.

How long have I been waiting? Going on for 15 months so far, all the usual hoops have been jumped through. I wait with baited breath…