Inside the ‘toxic’ relationship between Godongwana and Kieswetter

Finance minister Enoch Godongwana snubbed overtures from Sars commissioner Edward Kieswetter to discuss proposals to improve tax collection on several occasions ahead of this week’s unprecedented postponement of the R2-trillion budget.

This emerged this week as senior government officials from multiple departments lifted the lid on the extent of the tensions between Godongwana and Kieswetter. But Godongwana refuted claims that the two do not get along and labelled the allegations as "rubbish".

But sources the Sunday Times spoke to said tension between the two had been brewing for at least a year before Godongwana’s outburst that was caught on camera after a press briefing this week.

This is according to sources within government departments with intimate knowledge of operations at Sars and the National Treasury.

Well-placed officials told the Sunday Times this week that the working relationship between Godongwana and Kieswetter has been sour since February last year, when the Sars chief announced that President Cyril Ramaphosa had extended his employment by a further two years.

Insiders said that since then relations between the two had deteriorated, with Godongwana feeling undermined because Kieswetter had directly negotiated his contract with the president without going through him.

Kieswetter’s term at Sars was due end in April 2024, but was extended by two years in February of that year after negotiations with Ramaphosa.

It has also been established that the relationship between the two is so sour that Godongwana — in the period before the dramatic postponement of the budget on Wednesday — ignored repeated requests for a meeting from Kieswetter.

The Sars commissioner wanted to meet Godongwana to share ideas on improving tax collection and other related matters as part of the Treasury’s preparation of the more than R2-trillion budget.

The tabling of the budget was postponed by parliament on Wednesday after parties in the government of national unity objected to Godongwana’s proposal to increase VAT from 15% to 17%. This in a bid to raise R58bn because tax revenue had declined due to the economy’s underperformance.

These revelations explain why Godongwana was caught speaking ill of Kieswetter on a live TV mic at the end of a press conference at parliament, where he announced a revised budget would be tabled on March 12.

Unaware the mic was live, Godongwana — in a conversation with his director-general Duncan Pieterse and minister in the Presidency Khumbudzo Ntshavheni — said Kieswetter was “making me angry, even here he comes up with this rubbish”.

This was in reference to Kieswetter telling an Allan Gray event two weeks ago that tax hikes were not necessary, and the finance ministers should allocate more resources to Sars to help improve its capacity to chase about R800bn in uncollected taxes.

Kieswetter also said Sars’ budget should be increased by R3bn to boost its capacity to collect more taxes.

Ntshavheni also shared her irritation with Kieswetter, rhetorically asking Godongwana in Zulu, “by the way, when is he leaving?”

According to one insider, who asked to remain unnamed for fear of reprisals: “They just don’t see eye to eye. He’s been sending many requests to the minister’s office asking for meetings and the minister ignored him.

“There’s been tension between him and the minister since he went straight to the president to negotiate the extension of his contract.”

Kieswetter had not responded to requests for comment at the time of publication.

Godongwana said it was "rubbish" to suggest that he has a long-standing problem with Kieswetter as their relationship dates back to before their current positions.

His problem was not with Kieswetter but was irritated by the recurring questions that keep bringing up the comments that the Sars commissioner was against the proposal to increase VAT.

Godongwana told the Sunday Times that he spoke to Kieswetter about the comments attributed to him on Monday, days before he was scheduled to deliver the budget speech.

In their engagements, Godongwana says, Kieswetter told him that the reports were not accurate and that it was now "irritating" that the question keeps coming up.

"There's absolutely no problem except that we disagreed on a matter, other than that there is nothing. Even on this VAT I can send you a WhatsApp, that thing he said it a long time ago. My irritation is that everybody is asking me about it, that's what I'm saying I'm angry about. He sent me a WhatsApp on Monday before the budget. When we woke up on Monday he said the newspapers are malicious — I can send you that. So there is absolutely no problem," said Godongwana.

Sometimes [Kieswetter] continues, even in parliament, to say that if we can give him more money, we’ll probably not need these taxes [hiked].

—  Enoch Godongwana, finance minister

Asked to respond to claims that the two were not on speaking terms, he said: "That's rubbish, I mean we've got [a] standing meeting. I phoned him about the Business Day story, he sends it to me as his answer saying this is a malicious heading. That's what he says to me on Monday before Wednesday. My irritation is that it's being used all over the place. It's not about him."

But during an interview with the SABC on Friday Godongwana repeated his irritation with Kieswetter’s opposition to tax hikes.

“Sometimes he continues, even in parliament, to say that if we can give him more money, we’ll probably not need these taxes [hiked]. I don’t think it’s correct for him, as part of the team, to be doing that.”

Godongwana said he should have raised his concerns at the revenue analysis committee, comprised of the National Treasury, Sars and the SA Reserve Bank.

“Those people who make the forecast. And that’s the forum in which he should be raising these issues, [rather] than going all over the place.”

Ramaphosa’s spokesperson Vincent Magwenya said the president had a professional history with both Godongwana and Kieswetter, and neither of them could claim to be closer to him than the other.

“Sars remains a very stable and extremely well-managed and led institution. There is no instability at Sars, especially arising from disagreements between the minister and the commissioner,” said Magwenya.

“If there was instability at Sars, the president will have every reason to be concerned and intervene. Holding differing views in a workplace is healthy. The president expects various levels of government leadership to always manage differences in a collegial and professional manner.”

Another official described the relationship between the two as “toxic”, saying Godongwana was looking forward to the appointment of a new Sars commissioner next year.

Insiders also argued that by making the remarks at the Allan Gray event, Kieswetter demonstrated that “he had lobbied against the VAT hike”. Godongwana had apparently not informed Kieswetter of the hike. The insiders said Treasury officials loyal to Kieswetter had leaked the planned VAT increase to him, hence the comments he made at the Allan Gray event.

Other Treasury and government officials said Kieswetter was too powerful — reporting directly to the president and bypassing the finance minister.

“Despite recommendations, there is still no board in place to hold Kieswetter accountable, both Tito [Mboweni] and Enoch have not implemented that,” said one source, in reference to a recommendation of the Davis tax commission.

The Sars commissioner is also said to wield power over the supposedly independent Office of the Tax Ombud.

A senior tripartite alliance leader — who also asked not to be named — said Kieswetter was frustrated about a perceived lack of “assistance from Enoch’s office”.

“There has got to be [a] line between the minister of finance and the Sars commissioner because the law is responsible for the enforcement of tax law and the other for formulating tax policy.

“That is why Trevor [Manuel, former finance minister] had that relationship with Pravin Gordhan, and it enabled him to get the resources [he] needed. The moment that relationship is frosty, it impedes the work of the commission.

“One of the problems we have about Kieswetter is that he shoots from the mouth all the time — even on matters of tax policy, which are not his forte — because he’s got a direct line to the president and that would have Enoch irritated.”

Another Treasury official alleged that Sars was wasting resources by overpaying its senior staff and management while asking for more allocations every year. They referred to the pay scales, saying a deputy commissioner at Sars earned more than a deputy-director general at the Treasury.