A Sandton-based ICT firm suffered a R20 million loss due to a hack on the South African Revenue Service (SARS) e-filing system. Despite the magnitude of the financial loss, SARS has not initiated an investigation even after more than a year. The incident exposes possible vulnerabilities in SARS’s system and raises concerns about internal corruption and its ability to enforce security measures.
R20 Million Tax Return Hack
The hack involved unauthorized changes to the banking details used for the firm’s tax returns, resulting in the theft of R20 million. Despite the seriousness of the breach, SARS has yet to investigate, leaving the firm in financial distress and uncertainty.
Independent Investigation Findings
An independent investigator revealed that such hacks require a high level of access, potentially at the director level, implying involvement from someone within the company. Alternatively, the investigator suggested that a SARS employee could have carried out the hack, pointing to possible internal corruption. Despite these serious concerns, SARS has been slow to respond.
Legal Action by the Company
The unnamed ICT firm has taken legal action, issuing a summons to SARS for damages, accusing the agency of negligence in addressing the hack. Due to SARS’s lack of response, the company’s frustration has grown, pushing it to seek justice through the courts.
Similar Incidents: Mol Pro Consulting Case
Mol Pro Consulting, a construction firm, experienced a similar situation. Allegations emerged that a former SARS employee hacked its e-filing account, manipulated its records, and led to accusations that Mol Pro defrauded SARS of R116 million. This forced the company to shut down, and its tax clearance was revoked.
Internal Investigation Findings
An internal probe revealed that the former SARS employee had taken control of Mol Pro’s financial records in 2019 and altered filings dating back to 2010. This individual was linked to other fraudulent profiles involving over 20 companies. Despite this, SARS and the National Prosecuting Authority (NPA) continue to pursue charges against Mol Pro and its directors, raising questions about the fairness and motives behind the investigation.
Statements from Mol Pro
Mol Pro’s director, Khothatso Moletsane, expressed frustration, claiming that SARS investigations have been used to target and destroy their business. He also highlighted instances of fraudulent charges being generated by a faceless SARS agent, leading to repeated arrests of the company’s directors over the past five years.
Suspected Corruption and Ombud Investigation
Due to growing concerns about internal corruption at SARS, the finance minister authorized the office of the tax ombud (OTO) to investigate the agency’s failure to assist fraud victims. This investigation aims to address systemic issues within the agency and improve its enforcement capabilities.
Public Workshop and Systemic Review
In June, the tax ombud held a public workshop to gather insights from taxpayers and tax practitioners about the hacking of e-filing profiles. Based on this information, the ombud secured the finance minister’s approval for a systemic review of SARS. Gert van Heerden, OTO’s Senior Manager for Legal Services, stated that SARS has been informed of the review, which will follow a process similar to those conducted in 2017 and 2018, with full cooperation from the agency.
Impact of State Capture on SARS
A former government employee familiar with SARS’s operations explained that the agency’s enforcement capabilities were severely weakened during the state capture era. While SARS has improved under Commissioner Kieswetter, the previous degradation of its systems and the departure of key executives significantly impacted its ability to enforce laws and maintain a robust modernization initiative. The result is a diminished fear of SARS’s once formidable enforcement power.
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