Second Blow for Prosecution as SARS Witness Makes Damaging Admissions in Panday Case

In a dramatic turn of events, the corruption case against multimillionaire Durban businessman Thoshan Panday hangs in the balance as the state's primary witness, Goodwill Sithole from the South African Revenue Service (SARS), admitted to making mistakes during his audit of Panday's business.

The revelations come amid serious allegations of fraud, corruption, and tax evasion facing Panday, whose company, GoldCoast, is embroiled in a significant fraud case linked to the 2010 FIFA World Cup.

During court proceedings on Thursday, Sithole, an Operational Specialist in the Enforcement Investigative Audit Division at SARS, conceded that he relied on incomplete documentation and acknowledged errors in his audit process .

He revealed that discrepancies in income and VAT declarations stemmed not only from Panday's submissions but also from faults on his part. "Under the declaration form, there was a mistake on the accountant's side, and I also made some mistakes during the audit," Sithole stated.

These admissions not only raise doubts about the state's evidence but also place significant pressure on the prosecution team. Cross-examined by Senior Counsel Michelle Helens, Sithole further clarified that his audit was a 'desktop audit', meaning he considered only the documentation provided to him and did not verify each invoice.

This point was highlighted by prosecutor Talita Louw, who argued that Panday had submitted false claims, including documents indicated as submitted late. Helens quickly rebutted this assertion, stating that the core issue revolved around the interpretation of personal and company expenses that SARS had not recognised. Panday is at the centre of an extensive investigation, with the National Prosecuting Authority (NPA) alleging that his businesses received more than R47 million in payments from the South African Police Service (SAPS) between 2009 and 2010 under questionable circumstances.

The fraud case implicates several individuals close to Panday, including family members and police officials, and forms part of an elaborate scheme suggested by prosecutors to inflate accommodation contracts during the World Cup. However, charges that were furnished against his family were subsequently withdrawn due to lack of evidence. GoldCoast Trading CC, as per the indictment, allegedly secured approximately 80% of the World Cup accommodation contracts at purportedly inflated rates.

The tax accusations encompass systematic deception and misrepresentation across various business entities and tax periods. Louw stated in court, "The information contained in the VAT returns was in all material respects untrue and incorrect," maintaining that Panday misrepresented the amounts received from his businesses. Today's development marks the second major setback for the IDAC/NPA, as last week the state was dealt a severe blow when the judge ordered the State to hand over cellphone recordings it had "illegally" intercepted.

Delivering the judgment at the time, Judge Nompumelelo Hadebe said in her view it was important for the preparation of the accused's case for them to know under what circumstances the evidence had been obtained. She also emphasised that it was essential to understand what information was presented to the designated judges that satisfied them that a case had been made for the issuance of the directions. Judge Hadebe said that this could only be ascertained if the accused were made privy to the information given to the judges.

The judge further stated that to admit evidence provided by an accused person against himself without his knowledge as a result of the unlawful monitoring of his conversation with someone else would offend against the notion of basic fairness. This would be comparable to the admission of evidence of a confession or admission made by an accused person without having been informed of his right to legal representation, which would result in an unfair trial.

"Having considered the evidence in this application, I am satisfied that the accused have made a case for the orders they seek. In the circumstances, the following order shall be issued:"

1. The respondent is ordered to provide accused 1 and 3 with the information as specified in Annexure A of the First Index to the Notice to Compel within 21 days from the date of this order."

2. The respondent is ordered to provide accused 4-9 with the information as detailed in Annexure B of the First Index to the Notice to Compel within 21 days from the date of this order.

"Panday's Response to the ruling reacting to the order, Panday said he was pleased with the judgment handed down by Justice Hadebe. He explained that his legal team had been making requests to the State for crucial information relating to the charges against him, and for years the State had failed to provide this information.

This necessitated the formal court application against the State, he said."In the application, I brought to light the conviction of certain police officers who illegally intercepted the minister's phone calls. They did this by lying under oath in applications to intercept telephone lines. Some of these same police officers were involved in my matter, and even worse, were opposing my request for information," Panday stated.

"I also conducted investigations that unearthed the fact that a businessman's cellphone number was slipped in as one of my supposed telephone numbers."The State now has 21 days to provide the information referred to in the court order. I believe that when the State reveals the information, it will show even more abuse of power by the police in the interception and monitoring applications," said Panday.