The South African Revenue Service is one of many government institutions in South Africa that have been used in the Judicial Commission of Inquiry into State Capture. In addition, a special commission set up to investigate the internal management of the agency found massive management errors. Professor Mills Soko spoke to Commissioner Edward Kieswetter about the turnaround at the state institution.
Mills Soko: You worked as a power plant manager at the state utility company Eskom, which is currently in so much trouble. What was your experience working there? And what do you think of when you observe the utility today?
Edward Kieswetter: I was a young 33-year-old when I was appointed to run a small power plant. We had a very scaffolded environment, surrounded by people steeped in practical experience and institutional memory.
In the decade I was privileged to be there, we transformed Eskom from an average performing utility to a globally admired one. In 2000, it was operating continuously with over 90% availability, a breakdown rate of 3% or less, and scheduled maintenance of 7%.
I am fortunate that I have now been invited to sit on the technical committee that the Presidency has called together to try to solve the challenges facing the electricity supply.
During the period of state capture, institutions like Eskom – as well as the South African Revenue Service, the National Prosecuting Authority and many others – were deliberately and deliberately hollowed out to serve a corrupt purpose.
I can tell you from my own experience that the damage to these institutions is deep and painful, and it will take a lot of sustained effort and focus for us to restore and build for the future.
This is our country’s challenge. The state’s capacity has been significantly weakened by the period of state capture. But we must also be honest enough to say that there has been a steady decline over a number of years that has brought us to a point where we are largely a state that does not have the capacity it needs to serve the country.
Mills Soko: You were appointed Commissioner of the South African Revenue Service in May 2019. What have you learned? Achieved?
Edward Kieswetter: I have to tell you that the actual damage done by the South African Revenue Service is considerably deeper than any commission of inquiry could ever report.
One of the things we were able to do is put in place a very focused modernization program that makes filing for most taxpayers a non-event. We believe that the best service is no service. We don’t want to be better at queue management, we want to address the root causes so we don’t have queues.
So we have introduced a value proposition for over 3 million taxpayers called auto assessment. We use data and artificial intelligence to select taxpayers for further audit or investigation. But we will also use data and technology to provide a seamless experience for most taxpayers.
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Mills Soko: How were you received by the employees?
Edward Kieswetter: The sad reality of state capture and South Africa’s political dynamics at the institutional level is that it forces you to choose sides. And when people choose sides, they lose objectivity.
When you enter an organization that has been deliberately divided with corrupt intent, you have employees who have taken sides. The South African Revenue Service is no different. We still have people who have not given up affiliation with a particular side or faction.
So a very clear message from me to all our managers and our employees is that we are not politicians: we do our work without fear, favor or prejudice.
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Mills Soko: Do we think organizations have become free from state capture?
Edward Kieswetter: The answer is no. I don’t think there are any institutions in South Africa that have been completely cured of state capture. The political dynamics in the country today, the power struggle – within a political party or across political parties – is a very active attempt to keep alive the endowment that the people gained from the conquest of the state.
South Africa is still plagued by the remnants of state capture and the 10-year period of the previous administration. It has rubbed off on this administration. We need only look at the level of corruption that manifested itself during the procurement phase of the COVID response. We have a long way to go to heal ourselves from the ills of state capture.
Mills Soko: How much progress has been made in removing state capture at the South African Revenue Service?
Edward Kieswetter: The Nugent report made some 27 recommendations. The first was to look at the management of the organization to evaluate the EXCO. And we have really dealt with that. We reached an agreement with a number of senior managers and we have parted ways.
After years of being stripped of critical vacancies due to financial constraints, last year we started to start recruiting people and giving people some inward mobility into more meaningful roles.
We established a listening campaign where staff could call in and talk and report some things that needed to be addressed.
We introduced a charter on employee rights, which we socialize through change management.
We also introduced an internal compensation process. We have just over 30 people who felt they were personally compromised. We are in the final stages of an external repair process.
We appointed an advisory committee that used eminent lawyers independent of the South African Revenue Service to take representation from those we settled with.
We have meetings underway to recover wasteful and fruitless spending from a number of executives caught up in this, specifically in relation to the global management consultancy, Bain & Company. We have started a process to recover the money plus interest that they have paid. And we have handed the cases over to the Hawks, the South African Police Service’s Priority Crime Investigation Directorate and the National Prosecuting Authority for further investigation. When the prosecution is ready to commence prosecution, we will be drawn into this to present evidence and to support that process.
We have also been working with our counterparts in the US on the wrongdoing at Bain to try to ensure that Bain is brought to account. We believe that there is a strong enough case for them to be investigated seriously to see if there are criminal cases to be held accountable for.
Mills Soko: During those difficult years, the South African Revenue Service lost a lot of good people. Have you been able to woo back?
Edward Kieswetter One of the things we entertain is building a pool of so-called graybeards (and female equivalents). We want them to be part of a resource that younger, more or less experienced people can draw on.
We also introduce newly graduated, young people into the organization, so we keep the generational mix. We have established a junior board so that we can institutionalize the voice of people under the age of 35.
*This is an extract from the Wits Business School Leadership Dialogue. The full interview is available here.
Mills MarketProfessor: International Business & Strategy, Wits Business School, University of the Witwatersrand
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