Bain & Co partner Vittorio Massone provided suspended SA Revenue Services (SARS) commissioner Tom Moyane with a new structure for the agency before either men even set foot at SARS.
Evidence at the commission of inquiry chaired by retired judge Robert Nugent on Tuesday appeared to suggest that far from being misled and have its work used for a sinister agenda, Bain, one of the world’s top three consultants, helped craft plans that weakened the agency so much that South Africans eventually paid the price through higher taxes as the government struggled to plug resultant revenue shortfalls, which were also due to a weakening economy.
In another twist, Massone failed to pitch at Tuesday’s hearing as expected, with the commission being told that he was ill and receiving treatment in his native Italy.
Nugent said failing to fix SARS would have dire consequences. It also emerged that Bain misled the public about the corrective action it said it was taking. While the firm said it would be setting aside the R164m it was paid by SARS and be directed by Nugent on what to do with it, the judge said they had not told the commission this. It was misleading to say they would return the money when it would be Bain themselves deciding what to do with it, Nugent said.
Massone provided "executive coaching" to Moyane to realise his ambition of becoming commissioner of the tax agency and met him eight times, while he was still prisons boss.
After he took over at the tax agency in 2014, he awarded the restructuring contract to Bain.
In his affidavit to the commission, Massone detailed his meetings with Moyane and admitted to meeting former president Jacob Zuma, though he denied discussing SARS or Moyane with Zuma.
In the first meeting between Moyane and Massone in October 2013, the latter recommended that SARS be radically "refreshed" to transform it, based only on publicly available information. Moyane was made commissioner in September 2014. Massone admitted that he had helped Moyane realise his ambitions to become tax boss and also that he had presented a "first 100 days" report to him on SARS, in which he had already tabled a new structure for the tax agency — this was in June 2014, three months before Moyane was appointed as SARS commissioner.
While Bain had previously testified that its work could have been used for other purposes, Tuesday’s hearing shows Massone helped formulate Moyane’s agenda.
Evidence leader advocate Carol Steinberg showed how the 100-days presentation included a slide which called for "neutralising" certain people at the tax agency.
While Bain’s vice-president Stuart Min, who was subpoenaed to appear before the inquiry, said the term neutralise was part of Bain’s "nomenclature" and simply meant getting negative employees on board, Steinberg showed that the meaning in the SARS context was more sinister.
She read out an e-mail between Massone and a colleague at Bain in which they were celebrating the resignation of former COO Barry Hore, whom the consultancy had described in its early meetings with Moyane as having too much power.
Massone said in the e-mail trail celebrating Hore’s departure: "Now, I am scared by Tom, this guy was supposed to be untouchable and it took Tom just a few weeks to make him resign, scary."
Steinberg said the e-mail trail suggested that an "innocent reading" of what Massone meant by "neutralising" individuals at SARS was not correct.
"Right from the word go, the concentration of power in the chief operating officer was identified … and there was an attempt to neutralise him and that is precisely what happened," she said.
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