Johannesburg – The beleaguered Gupta family received much-needed relief this week in the form of a R70 million value-added tax (VAT) refund payment that raised serious eyebrows and concern in the South African Revenue Service (SARS).

News24 and City Press have learnt from four independent sources that the payment caused a huge fallout in SARS that necessitated the intervention of tax boss Tom Moyane.

SARS refused to comment on the matter and did not deny Moyane’s personal involvement in the Guptas’ windfall.

In the same week that the extent of the family’s capture of the state was laid bare through a massive email leak, SARS paid more than R70 million for the benefit of Oakbay Investments in a transaction that insiders say was far from regular.

The payment went through after various legal consultations both within and outside SARS caused by the closure of the Guptas’ bank accounts in South Africa. The family allegedly wanted the money to be paid into an overseas bank account or into the trust account of a lawyer.

VAT refunds are normally only paid into a taxpayer’s account, and not into the account of any proxy, SARS insiders say.

Closed accounts

The Gupta family has had issues with their banking after numerous South African banks closed their accounts citing “suspicious transactions” and reported them to the Financial Intelligence Centre (FIC). South Africa’s four biggest banks closed accounts linked to the Gupta family more than a year ago, citing the need to comply with international banking rules when dealing with customers and concern over their reputations.

The family, led by brothers Atul, Ajay and Rajesh, asked then finance minister Pravin Gordhan to stop the banks from terminating their accounts, spurring Gordhan to seek a court order in October stating that he cannot prevent lenders from cutting clients. Judgment was reserved in March.

Gordhan’s application included a document from the FIC, listing 72 reports of suspicious transactions totalling R6.8bn ($520m) that implicated members of the Gupta family and their companies. The court ruled that the document was not relevant to the application.

In September last year Mineral Resources Minister Mosebenzi Zwane, who has been at the receiving end of the Guptas’ largesse, announced a judicial commission of inquiry into the banks’ actions. This was later denied by Cabinet and President Jacob Zuma rebuked Zwane.

In March this year the Bank of Baroda’s South African branch also started closing accounts of companies controlled by the Gupta family.
The Mumbai-based lender was said to be winding down its relationship with companies related to the Gupta family to ensure it is in compliance with banking rules.

– Read more: Bank of Baroda SA closing Gupta accounts

It is unclear which bank account the family is currently using to trade and pay employees from. The Guptas originally requested the money to be paid into a bank account abroad.

“SARS officials refused because this would be contrary to the law and SARS procedures,” said one inside source. “SARS got an in-house legal opinion which confirmed it may not be done.”

Oakbay then allegedly asked if the money could be paid into a lawyer’s trust account.

This time SARS sought a legal opinion from an external senior counsel. Again the legal opinion came back saying the refund could not be paid in this way.

SARS officials then refused to make the payment on the basis that it wasn’t lawful and SARS policies didn’t allow it to happen.

Moyane intervention

At this point Moyane allegedly intervened and secured the payment to the Guptas. According to sources the refund was made begrudgingly by SARS staff and left tax employees feeling despondent and angry.

News24 and City Press was given a name of an unknown private company into which the VAT refund payment was finally made, but couldn’t confirm the veracity of the claim.

The Gupta family and their businesses are handled by the VIP taxpayer unit within SARS. This unit is intended for politicians, political parties, past and former senior government officials and their families and certain top business people considered strategic.

SARS spokesperson Sandile Memela would not confirm or deny anything, citing Section 69 of the Tax Administration Act, 2012, that doesn’t allow SARS to discuss or divulge information about the tax affairs of a taxpayer or trader.

“This includes comments on possible refunds paid to a taxpayer or trader.”

Gert van der Merwe, the lawyer for the Guptas, said he was not aware of any refund, but if any money from a refund was paid into a lawyer’s trust account, it wasn’t his.

“I haven’t received any payment from SARS.”

Media queries sent to Oakbay on Friday remained unanswered.