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By Amanda Visser

Moneyweb: Journalist

Proposed legislation aims to prevent state capture

A key area is the issue of depoliticising appointment processes.

Draft legislation to address the ability of corrupt elements to capture a democratic state and the poor governance at key state entities that allowed this to happen is on the cards.

National Treasury said on Friday that draft legislation could be published as early as January to give effect to important proposals contained in the reports arising from the Zondo Commission of Inquiry into Allegations of State Capture and the Nugent Commission of Inquiry into Tax Administration and Governance at Sars (South African Revenue Service).

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Ismail Momoniat, former director-general at National Treasury, says the focus must be on real corruption that leads to financial losses and getting proposals to limit the scope for corruption legislated.

In his keynote address at the 10th birthday celebrations of the Office of the Tax Ombud (OTO) in Pretoria, Momoniat said that although the country has been rebuilding some of the captured institutions, such as Sars, many of the changes are still not “grounded in law”.

Depoliticise appointments

A key area is the issue of depoliticising appointment processes.

“You don’t want people who are nice-to-politicians people. You do not want people who are political. You want someone who understands what a business is and not to get operationally involved.”

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The architecture of South Africa’s tax system should take the lessons from the state capture era to heart. Currently, there is still a lot of power in the hands of the Sars commissioner to be used at his discretion.

Sars, like Eskom, is an absolute monopoly with very intrusive powers. Even if there are good people, there will be abuse.

“They get used to having power and to exercis[ing] that power,” notes Momoniat.

“It is all well if we have a good commissioner, as we have now had for many years. But we need just one bad example, and then you have trouble.

“You can never get rid of corruption or abuse, but you can reduce the scope for it.”

Momoniat says the first step is ensuring the appointment processes focus on merit and that no one person has absolute power. Following the democratic elections in 1994, there was quite a bit of naivety, and the government operated a lot in good faith.

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However, when state capture happened, people did what the politicians instructed them to do, even though they were wrong. Within the architecture of our tax system, there must be checks and balances.

Checks and balances

The establishment of the OTO 10 years ago was to offer some checks and balances against the powers of Sars.

Former tax ombud Bernard Ngoepe fiercely favoured an independent OTO to balance the powers of Sars with the rights of taxpayers.

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Momoniat says it is important to “conceptualise” independence. The country has many “independent state entities”.

He referred to the Office of the Public Protector and how things have gone from an absolute high under Thuli Madonsela to an absolute low under Busisiwe Mkhwebane.

People with too much power can destroy an institution and, in the process, destroy faith in democracy.

Momoniat acknowledges that the country clearly needs an independent or autonomous tax ombud. “But we need to agree on what we mean by that. I think there is a role for the inspector general as well. Personally, that is my view.”

Judge Robert Nugent, in his report, recommended the appointment of an inspector general for Sars. At the OTO’s birthday celebrations, Nugent said after the Tom Moyane era (Sars commissioner during the state capture years), the air at Sars reeked of fear and suspicion.

When former Sars spokesman Adrian Lackay brought the maladministration of Sars to parliament’s attention, his concerns were “rubbished”.

Nugent believes an inspector general could play a vital role by providing someone for people to talk to when there is a problem and to ensure they are heard when expressing their concerns.

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Momoniat says SA is still a very toxic environment, and corruption remains entrenched.

“We are in crisis management. There are these floods of corruption coming. It is not as bad as it was, but a lot of people who were complicit are still there, and there is still corruption.”

This article was republished from Moneyweb. Read the original here

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