At the centre: Sars has subpoenaed a number of Julius Malema's associates. Photo: Sizwe Ndingane At the centre: Sars has subpoenaed a number of Julius Malema's associates. Photo: Sizwe Ndingane
Several of Julius Malema’s allies have been subpoenaed to appear before a secret judicial inquiry for suspected tax evasion and other related offences, a move that could see long-time associates turning against the embattled ANC Youth League leader.
The inquiry – expected to draw the largest number of suspects in the history of tax investigations – was convened after some business people and government officials refused to co-operate with the taxman.
Malema, who has not been subpoenaed, is expected to be the spider at the centre of the tax-web and his name could dominate the inquiry.
Those subpoenaed – who are linked through their dealings in government contracts – are expected to appear at the inquiry in Pretoria, starting next week.
Malema said yesterday that he did “not know anything” about the inquiry, but added that he was prepared to answer any question from the taxman if called.
Asked whether or not he was concerned that those subpoenaed might implicate him, Malema responded: “If Sars wants me, I will go and answer on my behalf. I have got no problem with that.”
The inquiry is a judicial body set up in terms of the Income Tax Act and will be headed by Advocate Piet PJJ Marais SC. The presiding officer of the inquiry has the powers equivalent to those of the judge of the special court. He can “enforce the attendance of witnesses and compel them to give evidence or to produce evidential material”.
The order to hold the inquiry was granted last month by Deputy Judge President of the Gauteng North High Court Willem van der Merwe.
The suspects face a jail term if they lie to the inquiry. Unlike in a criminal investigation, they cannot refuse to answer questions.
But “no incriminating evidence so obtained shall be admissible in any criminal proceedings against the person giving such evidence” unless they lie.
But evidence could be used by Sars “in any subsequent proceedings to which the person whose affairs are investigated is a party or to which a person who had dealings with such person is a party”.
A source close to Malema “fears” that some of the businessmen and officials subpoenaed “may have paid bribes and kickbacks” to the youth leader, and might turn against him “to save their skin”.
“They are facing an uneasy dilemma. If they lie, they will be handed over to the police… So, they might take the (bait and) incriminate themselves, get (the immunity) and deliver (Malema) to Sars and the Hawks. This is it. Time is up for (Malema).”
The Sunday Independent understands that Sars officials want their investigation to be professional and fair, and this is why the taxman has refused to conduct a joint operation with the Hawks. But Sars will hand over the cases to the Hawks should they find criminal acts during its own investigations.
Sars spokesman Adrian Lackay said the taxman “has consistently held the position that it does not and cannot comment publicly on the affairs of any taxpayer regardless of whether it is a business, a trust or individual taxpayer”.
“Taxpayer confidentiality extends to whether or not a taxpayer is under investigation. Taxpayer confidentiality ends only when a matter is formally brought before a court of law, other than a tax court. It then becomes a matter for public record,” he said this week.
The Sunday Independent spoke to more than 10 Limpopo businessmen known to be close to Malema this week. Most said they were aware of the inquiry.
According to documents in the possession of The Sunday Independent, businessmen linked to 19 companies – which could also be associated with the embattled youth leader – have been summoned.
The companies include SGL Engineering Projects, where Malema was a director, Gwama Properties and On-Point Engineers, which are co-owned by Malema’s Ratanang family trust. The trust was reportedly used by Malema to accept questionable income from companies that won Limpopo government contracts. Another company to be scrutinised by the inquiry is the Gwangwa Family Trust, which is linked to businessman and Malema’s associate Lesiba Gwangwa.
Gwangwa’s lawyer Mpoyana Ledwaba confirmed that the businessman had been subpoenaed.
“Our client has always co-operated with the… authorities in the past and there is no reason why he will not co-operate this time around. Our client is a law-abiding citizen,” said Ledwaba. Ledwaba denied that Gwangwa had refused to co-operate, adding that his client was never approached by Sars except for the inquiry. The documents in the The Sunday Independent’s possession show that the inquiry is expected to probe Gwangwa and his family trust’s alleged failure to “pay income tax on true and correct sizeable income”.
“Failure in rendering full and true income tax returns to Sars. Failure to annually submit income tax returns as required.”
The inquiry will also probe suspected tax offences relating to Gwangwa’s returns for the “year ending or after 1 March 2005”.
This includes failure to file and submit income tax or “to show the true gross income in their income tax returns submitted” and suspected tax evasion by allegedly making “false entries in the income tax returns”.
Another affected businessman is Abathote Thomas Rasethaba, the younger brother of businessman Sello Rasethaba, a close friend of Malema. Thomas Rasethaba is said to be an accountant who registered and sold shell companies to businessmen, including Gwangwa. However, his associates said Thomas Rasethaba did not deal in government tenders.
According to two businessmen close to Thomas Rasethaba, Sars summoned him to clarify why his name appeared in several companies linked to Gwangwa and others.
Thomas Rasethaba yesterday confirmed that he had been summoned to the inquiry, adding that he would co-operate and clear his name.
“I used to run a company that sold shell companies, and I suspect that I might not have been resigned as a director in some of the shell companies I sold. I intend checking all the records to ensure that I have been resigned,” said Thomas Rasethaba.
Those subpoenaed were asked to bring “documents” such as:
l Share register and shareholder agreement.
l Bank and financial statements relating to each bank account.
l Detailed assets register, lists of debtors and creditors and loan account details (including the loan account ledgers).
l Debtors book; cheques issued and proof of electronic fund transfers made.
l Deposit and pay slips.
l Tenders submitted.
l Agreements entered into relating to any sub-contractors appointed.
l Proof of declaration and payment of dividends to shareholders.
The inquiry has warned the affected parties that failure to comply could lead to imprisonment.
During the application for the inquiry, Sars supplied information to Judge van der Merwe who satisfied himself that the taxes of the people subpoenaed were not in order or some of them had committed tax offences and the inquiry “is likely to reveal such information, documents or things”. - Sunday Independent