Hefty sentences for members of syndicate who defrauded SARS of R100m

The High Court in Johannesburg this week sentenced members of a multimillion-rand tax fraud syndicate to a cumulative 205 years behind bars for 391 counts, including fraud, forgery, uttering, corruption, and money laundering.

The syndicate defrauded the South African Revenue Service (SARS) between 2009 and 2015 by submitting returns alleging that entities registered in their names incurred VAT expenses, the National Prosecuting Authority (NPA) said in a statement.

The group claimed to have imported diesel and stored it in tanks belonging to Vopak and Sasol Oil and then sold it, at a price inclusive of VAT, to Engen, Imperial Bulk Services, FPS, and Unitrans.

The syndicate claimed 14% VAT for the diesel they claimed to have imported, even though diesel is a zero-rated supply. They also claimed VAT for storage fees.

Forged invoices purporting to have been issued by Sasol and Vopak, as well as storage agreements, were submitted to SARS in support of the fraudulent claims.

At the time of their arrest in 2015, the syndicate had claimed R200 million in VAT refunds, and SARS had paid out R100m.

According to News24, court documents showed that the syndicate’s claims were successful because a SARS employee apparently expedited the payouts and tipped off the group to investigations linked to the entities used to defraud SARS.

The NPA said the kingpins of the syndicate were Jeremiah Musiwacho Dube and Maxwell Ndlovu Mavudzi, two Zimbabwean nationals who fraudulently acquired South African citizenship, Dr Sello Rathete, and Boaz Chilala, a Zambian national who evaded arrest and is still at large.

Dube and Mavudzi were sentenced to effective terms of imprisonment of 65 years each, and Rathete was sentenced to 15 years.

The other members of syndicate who will serve time in prison are:

• Dube’ s wife, Rebecca: 25 years.
• Dube’s friend, Edward Shoniwa: 15 years. According to the prosecution, Shoniwa allowed the syndicate to use his company, Terra Logistix, to submit seven fraudulent VAT refund claims of just under R6m. SARS paid about R4.1m.
• Dube’s girlfriend, Moliehi Constance Ramone: 10 years.
• Bongani Mbonani: five years.

Dube’s brother, Christopher, absconded after his co-accused were convicted when his bail was extended. The authorities are still searching for him.

Christopher Dube’s girlfriend, Zamaswazi Audrey Radebe, was sentenced to five years. According to the State, her company was used to make fraudulent VAT claims.

The NPA said SARS received an anonymous tip-off informing it of the suspicious activities carried out by the accused. Evidence led by SARS Criminal Investigators said the tip-off assisted the investigating team in tracking all the entities involved and the flow of funds in the bank accounts, “which greatly assisted in joining the dots”.

According to News24, the tip-off came from Rebecca Dube after she discovered that her husband was having an affair with Ramone. According to court documents, Jeremiah Dube gave Ramone a monthly allowance, often amounting to R90 000, and they went on multiple international trips.

During the SARS investigation, Mavudzi and Dube tried to bribe a senior SARS official by offering him R150 000 so that one their false claims would be paid out.

The NPA said the accused adopted the “Stalingrad strategy” that prolonged the trial for eight years. They brought interlocutory applications and appeals up to the Supreme Court of Appeal and the Constitutional Court “in attempts to evade justice”.

Two members of the group who were charged, Adam Phiri and Daniel Khanyile, turned State witnesses.

Two of the accused died during the trial:

• Prizzer Ndlovu, who made headlines in 2017 after reports that a group of ANC members falsely accused her of receiving R15m from the former ANC national chairperson and former National Assembly Speaker Baleka Mbete for a prayer event she organised.
• Octavia Thabile Nkosi, a former ANC councillor in the City of Johannesburg.