The South African Revenue Service (Sars) has slapped Sasfin Holdings with nearly R4.9 billion damages for allegations related to money laundering and bribery by former employees and clients of its banking business.
The Sars’ claim relates to the expatriation of money going back to 2014, in which a criminal syndicate colluded with former employees of Sasfin Bank who were operating outside of their scope and authority of employment.
Sasfin today said it has received an unprecedented civil summons last month for a total amount of R4.87bn plus interest and costs from Sars after the revenue collector failed to collect income tax, value-added tax, and penalties allegedly owed by former foreign exchange clients of Sasfin.
Last year, an explosive Al Jazeera investigation revealed that staff at three South African banks, including Sasfin, had been aiding and abetting a global gold smuggling ring by laundering money in exchange for bribes.
Former foreign exchange clients of the bank operated as a syndicate that ran an unlawful scheme to facilitate the expatriation of money out of South Africa and colluded with former employees of the bank who operated outside the scope of their employment.
However, Sasfin said it took decisive action as soon as it became aware of the collusion and instituted an independent investigation which resulted in the termination of relationships with implicated clients and employees and the opening of criminal cases against them.
As a result, the bank and wealth management company said it firmly rejected the Sars’ claim and leading local legal experts had advised that the summons had a very remote likelihood of success.
Sasfin said it engaged with the relevant regulators in a transparent manner subsequent to receiving this summons, and obtained a legal opinion from law firm ENS, authored by Professor Dale Hutchinson, Professor Michael Katz, and Aslam Moosajee, and endorsed by Advocate. Wim Trengove S.C.
Sasfin CEO Michael Sassoon said the legal opinion was unequivocal that the claim falls outside of the recognised parameters of applicable law and has a very remote likelihood of success.
“We are confident that the Sars claim has no merit. We have filed a notice of intention to defend the matter, which we will do rigorously. It is unjust for banks to be held liable to SARS for taxes that their clients have failed to pay,” Sassoon said.
“Of importance is that this is not a tax claim, but a claim for damages and has nothing to do with Sasfin’s own tax affairs. The claim, which we emphatically reject, will involve a protracted trial action, and the matter is only likely to conclude in several years’ time.“
Sasfin has concluded that the claim will not result in the recognition of any liability and that it has no effect on its capital position.
BUSINESS REPORT