The South African Revenue Service (SARS) and Sasol appear to be dragging their feet in their investigation about suspicions of tax evasion and BBBEE fronting at the engineering company NJM Heat Treatment and NDE Services (NJM).
The taxman and Sasol were informed of the suspicious unlawful activities at NJM by the entity’s former CEO Jack Madzivhandila in 2021.
In the letter he wrote to Sasol and SARS, Madzivhandila said he noted during his stint at the company that it was not operating in accordance to required standards. He said he lost his patience and resigned in 2019. “Whilst I have resigned as the company’s CEO and still deciding whether I should also resign as a director, I feel that I am duty bound to report the conducts of the other directors to all relevant authorities, including all clients, of which Sasol is one of them,” reads the letter.
Madzivhandila said his main concerns were fronting, misrepresentations of financials with an aim of getting higher and better BBBEE scoring by the company.
He said NJM claimed to be 51% black-women owned after the majority of its shares were acquired by two businesswomen including Vanessa Chungu. Chungu is said to have acquired 25% shares from different persons or entities who held them at the time of the sale of the shares.
The ex-CEO said Chungu did not have the capital to purchase the 25%.
He said he received information that the purchase price of Chungu’s shares was discounted from R15-million to R12-million.
She was expected to pay the staggering quantum from the dividends payable to her as shareholder of the company.
“My understanding is further that Chungu will not be provided with the issued shares certificate and will not be able to deal with the shares as she deems fit because she has not paid for them. The company on the other hand is getting benefits by presenting to clients and other stakeholders that NJM is 51% black-women owned.”
He also lamented that for at least four years the entity has not declared and paid any dividends, making it difficult for Chungu to pay for her shares.
Madzivhandila also flagged questionable transactions in the company’s financial records.
He said that NJM’s turnover for the year 2018-2019 was R68 124 289.24.
“I was of the view that the company would apply for the BBBEE rating through verification. I was surprised to see that the 2018–2019 annual financial statements were manipulated with a turnover reduction by over R19 000 000 to R49053 653.
Sasol’s spend on NJM for this period and other periods thereafter can clearly show that NJM’s turnovers for these financial periods were more than the declared turnovers,” reads the complaint.
Madzivhandila said the statements were not tabled at an annual general meeting of shareholders and therefore not accepted or ratified by the shareholders as required in terms of the law and shareholders agreement.
He also said that manipulation of the annual financial statement was done so that the BBBEE status could not be verified, saying this was akin to fraud.
Sasol spokesperson, Alex Anderson said the company rejected fronting and all forms of dishonesty and had zero tolerance of illegal or dishonest conduct. However, he declined to indicate how far the company was with its investigation of Madzivhandila’s complaint.
“The Sasol ethics process is confidential and we do not disclose any details related to calls, nor the identity of entities, whistle-blowers nor current or past investigations.
“This is to protect the integrity of the process and the personal information of all those involved.”
SARS said it was constantly investigating matters of non-compliance and the attendant tax-related crimes that go with it but declined to answer specific questions about NJM.
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