A construction company from the Free State, Mol Pro Consulting, is suing the South African Revenue Service (SARS) for a massive R950 million in damages. The lawsuit follows claims that SARS failed to properly investigate a hijacking of the company’s eFiling profile. The Sunday Times reports that this oversight caused significant financial loss and tax compliance issues for the company.
Shutdown and Legal Battle
Mol Pro Consulting, which was once a thriving construction business, had its tax clearance certificate revoked, leading to the company being shut down. SARS accused the company of defrauding the tax authority of R116.7 million. As a result, the company’s directors, brothers Khotatso and Tumelo Moletsane, have faced multiple court appearances—20 in total—over the past four years.
However, the case took a significant turn in February 2024 when the National Prosecuting Authority (NPA) dropped all charges against the company and its directors. The legal team for Mol Pro was able to prove that SARS had withheld an internal report that could have validated the company’s claims that its eFiling account had been hijacked.
Internal SARS Documents Exposed
Mol Pro’s lawyers obtained internal documents from SARS, revealing some concerning details. These documents pointed to collusion between SARS’ Anti-Corruption Unit and its Criminal Investigations (CI) department. A CI investigator allegedly broke governance rules during the investigation into Mol Pro.
One of the key revelations was that a former SARS employee, Mongezi Makroti, was wrongfully suspended. Makroti reportedly uncovered evidence that someone within SARS had taken control of Mol Pro’s eFiling account as early as 2019, altering the company’s records dating back to 2010.
Allegations Against SARS Investigators
The company also claims that a SARS investigator tried to influence an earlier audit by requesting the auditor alter her findings. Additionally, this investigator is accused of misleading the police and NPA by withholding crucial evidence, resulting in the criminal prosecution of the Moletsane brothers.
Mol Pro is seeking R950 million in compensation, which covers:
- R690 million for lost income over the past five years due to the hacking.
- R100 million in damages to the Moletsane brothers for personal financial loss and the loss of assets.
- R75 million for legal fees and the damage to their reputations from being linked to fraud allegations.
- R50 million owed to the company by government departments for completed projects that went unpaid because their tax clearance was revoked.
- R20 million for losses related to the forced sale of company assets at below-market prices.
SARS has declined to comment on these claims, citing the ongoing legal process.
eFiling Hijackings on the Rise
Mol Pro Consulting isn’t alone in its struggle. There has been a significant rise in eFiling profile hijackings, with many reports surfacing in 2024. Tax practitioners claim these incidents have been increasingly common since 2021.
These hijackings usually occur through methods like vishing (voice phishing) and other social engineering tactics, allowing fraudsters to gain access to eFiling profiles. Once inside, they divert tax refunds to bank accounts set up with fraudulent information. By the time the victim realises something is wrong, the money is already withdrawn, and it becomes difficult to recover the funds.
Tax Ombud Investigates eFiling Security
In August 2024, the Office of the Tax Ombud (OTO) launched an investigation into the growing issue of eFiling profile hijackings. The OTO described the issue as both “systemic” and “emerging,” noting that the number of complaints was alarming.
SARS has welcomed the OTO’s investigation, with SARS Commissioner Edward Kieswetter stating that the tax authority is cooperating fully. Kieswetter acknowledged the importance of rebuilding trust and improving security protocols to prevent further eFiling hijackings. He also noted that some of the perpetrators involved in these hijackings are linked to international crime syndicates.
Conclusion
As eFiling hijackings continue to rise, the case of Mol Pro Consulting sheds light on the growing concerns surrounding SARS’ security protocols. With R950 million at stake, this lawsuit could set a precedent for how future cases involving eFiling fraud are handled. Whether Mol Pro will succeed in its legal battle remains to be seen, but the company’s fight has already exposed significant flaws within the system.
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