The South African Revenue Service (SARS) spearheaded an intergovernmental operation spanning five provinces to disrupt a sophisticated coal smuggling syndicate. SARS alleges that this syndicate played a substantial role in exacerbating the country’s energy crisis and load shedding.
Sars Targets Syndicate Accused of Exacerbating Load Shedding
Tax Crimes and Syndicate’s Impact on Load Shedding
The operation was launched following information about tax crimes committed by the coal-smuggling syndicate. SARS stated that the success of the operation was due to exceptional intergovernmental cooperation and information sharing through the Natjoints Energy Safety & Security Priority Committee.
Provinces Affected and Key Suspects
The coal smugglers targeted in this operation operate in five provinces: Gauteng, Mpumalanga, KwaZulu-Natal, the Free State, and Limpopo. Among the suspects are former Eskom employees who are alleged to have facilitated procurement fraud, along with other individuals involved in diverting high-grade coal.
Gross Contraventions Discovered
SARS found links between individuals and related entities, uncovering possible gross contraventions from a tax perspective. These contraventions include non-registration for income tax, VAT, or PAYE; failure to submit tax returns; under-declaration of income; claiming undue VAT refunds; and making false submissions (fraud).
Sophisticated Smuggling Network
SARS suspects that the sophisticated coal-smuggling network involves both local and foreign nationals. The coal trucks, originally destined for power stations, are rerouted to designated coal yards. There, high-grade coal is replaced with low-grade or substandard product.
The high-grade coal is either exported or sold, while the low-grade coal is often blended with scrap or other materials and then delivered to power stations.
Impact on Eskom and Load Shedding
The low-grade coal is detrimental to the infrastructure of Eskom power stations, significantly contributing to the challenges faced by the utility in generating electricity for the South African grid.
SARS stressed that such operations are crucial in preventing the loss of revenue to the fiscus and ultimately aim to help South Africans return to a lifestyle without load shedding.