Sars guns for Sasfin for allegedly lying about its tax disclosure

The Commissioner for the South African Revenue Service (Sars), Edward Kieswetter, has confirmed that the revenue service has instituted legal proceedings against Sasfin Bank.

Sars has conducted a thorough investigation into various South African taxpayers who had not made true and accurate tax disclosures to it.

Expatriated funds offshore

“The investigation revealed that the taxpayers had colluded to expatriate funds offshore. This was dpone in a manner that obscured tracing the expatriated payments and jeopardises the recovery of tax in South Africa,” Sars said on Tuesday. 

“The commissioner’s position is that it is inappropriate to comment on the question of liability and compensation for the fiscus’ loss. [That’s because] these are legal issues that are now before the South African judicial system. Given this development, Sars said it will not be making any further comment.”

The commissioner affirmed his commitment to pursue the enforcement and recovery of taxes. This he said was done without fear, favour or prejudice in the interest of upholding the fiscal integrity of the South African tax system.

Bank informs shareholders 

Meanwhile, in an announcement on Tuesday, shareholders of Sasfin Holdings were advised that Sasfin Bank was served a civil summons. The summons is for a total amount of R4,872,327,649.27 plus interest and costs. These are in the form of a damages claim, instituted by Sars.

“This summons, which was received on 9 January 2024, arises from Sars’ purported inability to collect income tax, value added tax and penalties. [These are] allegedly owed by former foreign exchange clients of the bank.

Safin blames its foreign clients

“Former foreign exchange clients of the bank operated as a syndicate that ran an unlawful scheme. …The scheme was to facilitate the expatriation of money out of South Africa and colluded with former employees of the bank. These operated outside the scope of their employment.”

Sasfin Holdings also added that the bank took decisive action when it became aware of this unlawful scheme. This included instituting an expanded investigation led by an independent forensic consultancy.

Bank took action on implicated clients 

This resulted in the termination of relationships with the implicated clients and employees. The move was followed by opening of criminal cases against them.

“Subsequent to receiving the summons, Sasfin Bank engaged transparently with the relevant regulators on the matter. [The bank] obtained a legal opinion from ENS. This was authored by Professor Dale Hutchinson, Professor Michael Katz and Aslam Moosajee. Also endorsed by Advocaye Wim Trengove SC.

Denies liability

“The legal opinion is unequivocal that the claim falls outside of the recognised parameters of applicable law. It has a very remote likelihood of success. On the basis of this legal opinion, Sasfin Holdings concluded that the claim will not result in the recognition of any liability.”

In the Stock Exchange News Services announcement, the board of directors of Sasfin Holdings responded. The board said it “remains of the view that Sars’ claim has no merit and has little chance of success”.

“The bank will therefore defend the claim. And given that this involves a defended trial action, the matter is only likely to come to trial in several years’ time,” said Sasfin Holdings.


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