The news grew juicier by the week: Hush money was paid to a former spymaster during apartheid to keep quiet about the illegal espionage. The rogue unit even set up a brothel to go undercover, the reports claimed. As the shocking details emerged, Mr. A year later, KPMG came back with its results, confirming widespread abuses of power. The newspaper, The Sunday Times, later retracted its articles. The retractions came much too late for the tax agency. Even more damaging, the lurid tales of corruption and intrigue inside what was once an A.
The shortfalls have left the nation with fewer resources to tackle its most pressing needs — housing, education, health — in a society that has grown even more unequal under the A. And in a stinging blow to the impoverished South Africans who have voted the party into power and kept it there for decades, the gaps have forced the government to raise the value-added tax on products for the first time since the end of apartheid — a move expected to hurt poor people the most.
Much of the national ire over the scandal has focused on KPMG, which helped the chaos along by rubber-stamping some explosive accusations that it could not prove. Now the firm is facing collapse in South Africa, raising withering questions about the role Western companies play in providing a sheen of legitimacy while enabling corruption. Private banks like Barclays Africa, one of the largest on the continent, have also ended their relationship with KPMG, citing the risks to their reputations. Yet the fate of the tax agency is still up in the air.
It is only one of many government institutions that have been weakened through years of infighting and corruption by the party that built them. The A. Ramaphosa, immediately after taking office in February, vowed to save the agency. He suspended Mr. Moyane, though the bitter, public fight to fire him is still being waged. Moyane of meddling in the KPMG inquiry, misleading Parliament and failing to properly investigate allegations of corruption, money laundering and tax evasion by his own deputy — charges that Mr.
Moyane is preparing to rebut in court. For the leader of a country that often symbolizes the historic pursuit of democracy in Africa and beyond, Mr. Zuma certainly seemed to have grown weary of it himself, current and former officials say. During one of his visits to the president, Mr. Pillay said, Mr.
Zuma started off making small talk but was clearly exasperated, openly complaining about the questions lawmakers expected him to answer.
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Pillay recalled Mr. Zuma saying.
The president had faced volleys of outrage, especially over the lavish use of public money to upgrade his private homestead. Pillay recounted Mr. On top of that, one of Mr. Pillay insisted that he never wanted to pursue Mr. Zuma directly through a formal investigation, but that the president seemed convinced otherwise. Pillay was no stranger to conflict. He had been a commander in the military wing of the A. Years later, at the tax agency, he led enforcement operations, hiring a coterie of former spies, police agents and investigators to go after tax cheats aggressively.
His efforts earned him international recognition. Under apartheid, people had avoided paying taxes altogether, many as a form of protest against the government. But democracy brought legitimacy and, with it, compliance, according to a World Bank study. Government records show that from the end of apartheid in through , the number of people paying taxes nearly quadrupled. During the presidency of Thabo Mbeki, people cheated, of course, but the revenue service was largely protected from political interference, Mr.
But under Mr. He and two other former officials now face criminal charges in a case that many experts see as politically motivated. Neither Mr. Zuma nor his choice for a replacement, Mr. Moyane, agreed to be interviewed. But Mr. Moyane, a little-known development economist who had been plucked from running prisons to lead the tax agency, has strongly defended his independence.
Moyane insisted on television. I am not owned by anyone. Moyane earned a national reputation as Mr. A former anti-apartheid operative as well, Mr. Moyane had known Mr. Zuma for nearly four decades. They met in Mozambique in the late s, when Mr. Zuma led the A. Their families were close, too. Barely two weeks after Mr. Moyane took office, the wild stories began appearing in The Sunday Times, fed by unnamed sources inside the tax agency. The paper reported that Mr. The Sunday Times retracted most of the articles — 18 months later.
It settled with Mr. Pillay and another tax agency employee named in the accounts. Citing the news reports, Mr. Moyane quickly suspended Mr. Pillay, who resigned a few months later. Many investigations into the tax problems of politically connected individuals came to a halt. The impact on the nation goes far beyond that, threatening to drag South Africa back toward the days when people looked at the state of their government — and decided not to support it.
Beyond that, nearly half of the shortfall in the last budget year came from personal income taxes that officials had expected to collect but never did, according to the National Treasury. The trend worries the government, which relies heavily on personal income tax, about half of which is paid by the top 1 percent of South Africans. The tax agency says it has made one million calls to remind taxpayers of their obligation to pay. One was the erosion of tax morality, which was caused by increasing levels of government corruption. The scandal did not end with the wreckage at the tax agency.
The torrent of unproved accusations gave Mr. Zuma and his allies enough ammunition to grab control over another prize — the state coffers in the National Treasury. This chapter of the story, in particular, relied on the cooperation of a Western company that carried great weight and credibility in South Africa: KPMG. A year later, the firm produced a report confirming that a division inside the agency — officially known as the High Risk Investigation Unit — had been set up illegally and gone rogue.
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It was the proof that seemed to justify Mr. He had joined the firm just a few months after Mr. Testifying in an arms-deal case involving Mr. Zuma, Mr. Not surprisingly, Mr. Now, they found themselves on opposite sides of a showdown roiling the nation. Tech culture.
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Murray will play Nishikori for a place in the semi-finals of the French Open. Tim Henman was a guest at Murray's wedding. Nishikori beat Murray at last year's US Open.