The SA Revenue Services wants R1.9bn from alleged Tembisa Hospital kingpin Hangwani Morgan Maumela, who has still not been formally charged in the looting scandal, reports News24, and who the Receiver has accused of “trying to frustrate SARS in executing its constitutional mandate to collect revenue”.
Maumela, his mother, Mboneni Maumela, and his sister, Rumani Maumela, acting in their capacities as trustees of the MHR Family Trust at the centre of it all, are challenging the massive bill in the Gauteng High Court and have lodged a contempt application against SARS, arguing that the taxman breached an order handed down in August 2024.
The application has been brought in two parts: the first aimed at securing permission to have the matter heard in the High Court, rather than the Tax Court, and the second at setting aside the assessments and the revenue service’s decision to issue them.
The filings set out how SARS first flagged the tax returns of Maumela’s trust for “verification” in 2022.
In December 2023, SARS got a preservation order against the trust, and a curator was appointed.
The preservation order was discharged eight months later, on 2 August 2024, with him agreeing to “co-operate”, and for an audit to be concluded within 60 days: it also provided for a “settlement period” of another 60 days “to engage and settle the matter”.
“Major assets” could not be dissipated during this period, and the curator was to stay on in an oversight role.
But it didn’t take SARS 60 days to conduct its audit, and in the interim, it had already sent Maumela a notification of audit in May. A letter of findings was issued in early July, in which he was notified that R1 173 999 930 of the R1 174 049 818 the trust had claimed as deductions was likely to be disallowed.
“The amounts … comprised mainly round amounts paid to various … unidentified individuals, companies linked to Mr Maumela, namely Galloping Limpopo, More Concerts, etc. There were further substantial payments made for luxury vehicles as well as properties,” it read.
“SARS found no evidence to indicate that these payments were incurred in the production of the taxpayer’s income and therefore qualified for a deduction in terms of the relevant provisions of the Income Tax Act.”
Payments described as ‘salaries’ were also identified on the bank statements, but SARS found the taxpayer was neither registered for employee tax nor could the recipients be identified. Similarly, there was no proof that salaries were paid in connection with the production of income.
Only R49 887.19 in bank charges could be confirmed.
And on 13 August, just 11 days after the 2 August order, Maumela was slapped with a letter of assessment, with SARS saying it had “made adjustments of a material nature relating to the overstatement of expenses claimed as deductions … on its 2018 to 2022 tax returns” and that he owed R1 929 830 817, inclusive of “normal tax, penalties and interest”.
This, along with the trust’s behaviour – considered “intentional tax evasion” – and its conduct in failing to cough up records requested by SARS, was deemed “obstructive”.
Two days later, a letter of demand was dispatched.
Maumela’s new accountant
Maumela, however, said that in a settlement meeting the trust attorneys and accountant had with SARS in May 2024, “they made it clear that the annual financial statements previously submitted for the tax periods in dispute .. were not, through any fault of the trust, properly prepared, submitted and finalised and that they were preparing new ones”.
He further maintained that a new accountant had been brought in and uncovered that they had not properly accounted for “certain expenditure and revenue items, which if properly accounted for, would not only rectify the previous errors but significantly reduce the tax liabilities of the entities”.
This, he said, had been shared with SARS as had information around “various inter-company loan transactions between the trust and related entities” and the fact that they were preparing a “loan matrix” to explain the flow of funds. He said they had agreed to submit new financial statements to SARS, which would then use those for the audit.
Maumela said the correct statements were ultimately submitted but argued that SARS had not properly considered them or, ultimately, conducted a “proper” audit.
Disputed by SARS
But in its papers, SARS said the trust hadn’t co-operated. Sandy Tsumaki, senior manager in the syndicated tax and customs crime
division dealing with illicit economic activity (tax), said SARS’ efforts to engage the trustees were futile, and its requests for information saw only a handful of documents provided, with the trust not having submitted any information during the audit.
SARS could not accept the veracity of what were described as loans, specifically, because no loan agreements or ledgers were provided, and the statements were unsigned and “said to be prepared on a going concern basis when the taxpayer has been technically insolvent since its inception”.
“The taxpayer has had no capacity to repay the amounts received as it has no source of income declared to SARS except for minimal interest on investments,” Tsumaki said, adding that R1bn in loans was claimed against income of around just R13m.
He pointed to separate contempt proceedings Maumela had lodged against SARS and pending proceedings before the Tax Court, accusing the trust of trying “to frustrate SARS in executing its constitutional mandate to collect revenue”.
Tembisa fraud, money laundering
Maumela was allegedly a central figure in an extraction network at Tembisa Hospital, run in collusion with the Gauteng Health Department, with entities linked to him raking in at least R800m via illegal contracts awarded by the hospital in the fraud, money laundering and racketeering scheme.
Last year, the Asset Forfeiture Unit froze luxury cars, houses and a party boat linked to Maumela worth a combined R325m
His financial links and tender dealings have also come under intense scrutiny at the Madlanga Commission.
The review application got under way on Thursday, but the proceedings have not yet addressed its merits. Instead, they kicked off with arguments on Part A of the application, focusing on whether the High Court had jurisdiction to hear the matter or whether it should rather be heard in the Tax Court.
Judgment was reserved.
See more from MedicalBrief archives:
Millions in assets to be seized from alleged Tembisa-linked looter
Tembisa Hospital kingpin loses more supercars