Taxman sued for R950 million after eFiling hijack

A Free State construction company has sued the South African Revenue Service (Sars) for R950 million in damages after the tax service allegedly failed to fully investigate an e-filing hack which resulted in tax compliance issues, Sunday Times reports.

Mol Pro Consulting was forced to shut down operations and had its tax clearance revoked after allegations that it had defrauded Sars out of R116.7 million.

The company’s directors — brothers Khotatso and Tumelo Moletsane — have appeared in court 20 times in the past four years to face charges relating to the allegations.

In February 2024, the National Prosecuting Authority (NPA) dropped its case against the company and its directors after Mol Pro’s legal team made representations proving that Sars withheld an internal report proving their eFiling hijacking claims.

The company’s lawyers had received internal Sars documents, which showed collusion between the agency’s anti-corruption unit and Criminal Investigations (CI).

The documents allegedly revealed that a CI investigator had flouted governance regulations in their original investigation into Mol Pro.

Mol Pro’s legal team has also alleged that a former Sars employee — Mongezi Makroti — was wrongfully suspended after an internal Sars investigation found he had taken over Mol Pro’s eFiling in 2019 and altered the company’s filings going back to 2010.

Makroti is alleged to have uncovered the internal conspiracy to target the company.

In addition, Mol Pro has accused a Sars investigator of attempting to influence an earlier audit by Sars into Mol Pro by requesting that the auditor amend her report.

The investigator allegedly “intentionally misled the police and the NPA by withholding evidence and records of the audit findings of Sars’ auditor when she caused the criminal prosecution that was instituted against the plaintiffs”.

The R950-million financial compensation sought by Mol Pro and its directors include:

• R690 million for loss of income since the alleged hacking five years ago.
• R100 million in damages to the Moletsane brothers for loss of income and personal assets over the five years.
• R75 million in legal fees and for reputational damage caused by their names being linked to criminal charges in the press and having to arrive in court bound in handcuffs and shackles.
• R50 million owed by government departments for completed projects which could not be paid because the company’s tax clearance certificate was withdrawn.
• R20 million in financial losses due to the forced selling of Mol Pro’s assets at less than market value.

Sars has refused to provide comment on the allegations, stating the matter was with the NPA and was “sub judice“.

The taxman has continued to deny that its employees were involved in compromising taxpayers’ eFiling profiles.

eFiling hijackings surging

Mol Pro is not the only company alleging its eFiling profile was hijacked, although many complaints on the issue have emerged more recently.

Sars reported a rise in eFiling profile hijackings in early 2024, while tax practitioners have claimed these incidents first started becoming more regular from 2021.

The details required to get into the profiles are typically gained through vishing and other social engineering attacks.

Once they have gained access, the hijackers redirect tax refunds to bank accounts set up with fraudulent details.

The money is withdrawn long before the victim realises what has happened and notifies the bank which holds the fraudulent account.

In August 2024, the Office of the Tax Ombud (OTO) announced it was investigating”systemic and emerging” issues regarding eFiling profile hijacking.

The OTO explained the review was necessary given the number of complaints it had received about eFiling hijackings and the slow progress with resolving the issue.

The OTO said Sars should garner a high degree of trust, but the fact that its security protocols could be bypassed with speed and ease raised serious questions.

The agency has welcomed the OTO’s review.

“Sars is cooperating with OTO and looks forward to the recommendations that will be made on how best to combat the scourge of profile hijacking,” said Sars commissioner Edward Kieswetter.

The tax collector also recently warned that its investigations into cases of eFiling profile hijacking had shown the perpetrators were linked to global syndicates.