Negligent taxpayers could face jail-time in SA

Source: Supermarket & Retailer

With Government’s draft response being released in the Parliamentary Debate on 13 October 2020, non-compliant taxpayers, be it intentionally or negligently, may soon be facing some serious jail-time.

The draft response proposes a strict, no nonsense approach from the South African Revenue Service (SARS) when it comes to the taxpayer’s compliance, shifting the burden of proof to fall more heavily on the taxpayer than ever before.

SARS-Treasury team-up

Under the current tax regime, a key element of any offence is that it is committed “willfully and without just cause” by the taxpayer, with negligence resulting in a mere wrap on the knuckles in most instances.

The July 2020 Draft TALAB (Tax Administration Laws Amendment Bill) proposes to change this entirely, by the removal of the term “willfully” from the legislation, taking away one more line of defense to taxpayers across the country. This proposed amendment was met with fierce resistance by tax practitioners and taxpayers alike, opposing the opening of this particular can of worms.

In last week’s proceedings, National Treasury and SARS took the opportunity to shoot their shot, proposing this amendment to the Standing Committee on Finance.

Although some leniencies were permitted, the two authorities held their ground on the need for a change in law, more specifically the standards used to measure taxpayers’ behaviour, to enable easier convictions for tax related offences.

Enabling legislative amendments

Although the proposed amendments will have no impact on the existing sanctions for non-compliance, they will widen the net for SARS to catch taxpayers off-guard, and impose these sanctions, for what could be something as simple as a typographical error when completing a return, or any of the other 100 mistakes which may be committed due to human error, which may be viewed as negligent on the part of the taxpayer.

It must be noted that “intent” was not entirely done away with, but rather drawn in to permit more severe sanctions in this instance as these acts are borderline tax evasion, where the “intent” is to defraud SARS.

Strategically speaking, this is a bold yet brilliant move from the SARS-Treasury team, as the inclusion of “negligence”, and retaining of “intent” allows the non-compliance net to be cast wide enough to catch even the smallest fish.

The split

The existing offences are proposed to be split into two categories, being that which requires “intent”, where the heavier burden of proof falls on SARS, and that which either “intent” or “negligence” will suffice, shifting the weight of the burden more on to the taxpayer than ever before.

The existing sanctions, including some serious jail-time and/or a financial fatality in the form of a fine, will remain unchanged, with the case-appropriate sanction being left to the discretion of either SARS (for minor offences) or the National Prosecuting Authority (“NPA”) (in the instance of more severe offences).

First-mover advantage

In order to protect yourself from SARS, it remains the best strategy that you always ensure compliance. Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate tax advisory, ensuring the necessary steps are taken to protect both yourself and your bank balance from paying the price for what could be the smallest of mistakes.

However, where things do go wrong, SARS must be engaged legally, and we generally find them utmost agreeable where a correct tax strategy is followed.

As a rule of thumb, any and all correspondence received from SARS should be immediately addressed, by a qualified tax specialist or tax attorney, which will not only serve to safeguard the taxpayer against SARS implementing collection measures, but also being specialists in their own right, the taxpayer will be correctly advised on the most appropriate solution to ensure their tax compliance.

 

The murder of Lieutenant-Colonel Charl Kinnear has lifted the veil on the unlawful use of location-based data provided to companies by Vodacom and MTN, says MyBroadband.

Kinnear’s movements were tracked using this location-based information. His phone was tracked from 08:00 to 15:25 on the day of his murder, and he was assassinated at 15:00. Kinnear, a section commander in an anti-gang unit, was assassinated in front of his home in Bishop Lavis, Cape Town on Friday 18 September.

On 23 September, Daily Maverick reported that the criminals who plotted the shooting of Kinnear used a location-based service to track his cellphone.

This case uncovered the widespread abuse of location-based data from mobile operators to track the movement of South Africans without their knowledge or consent.

  • This highly sensitive and personal data was available to a wide range of companies, including vehicle tracking firms, security companies, and even credit bureaus
  • MTN was not aware that the data they provided to these third parties was abused until the South African Police Service (SAPS) brought it to their attention
  • MTN provided companies access to their subscribers’ location information in good faith
  • Based on the previous information and feedback from MTN, third parties have, or had, access to the following information about MTN subscribers: last activity information; the location of a subscriber and the ability to bill a subscriber for content and related services
  • Vodacom said in terms of contractual partnership agreements, users must give consent to be tracked, but a partner allowed its service providers to bypass the controls
  • Vodacom said while it is technically possible for WASPs to bypass Vodacom’s controls, it “would be irresponsible to suggest widespread abuse of the system”.

Antivirus pioneer John McAfee arrested

By Sam Jones for The Guardian

The antivirus software entrepreneur John McAfee, who has been indicted for tax evasion in the US after allegedly failing to declare earnings running into millions of dollars, has been arrested by Spanish police while attempting to board a flight from Barcelona to Istanbul.

A June indictment charging McAfee with tax evasion and wilful failure to file tax returns was unsealed in federal court in Memphis, Tennessee, on Monday after McAfee’s arrest in Spain, where extradition is pending, the US attorney’s office said.

McAfee, 75, has been charged with evading taxes after failing to report millions earned promoting cryptocurrencies, consulting work, speaking engagements and the sale of the rights to his life story for a documentary.

According to prosecutors, he hid assets from the Internal Revenue Service, including real estate property, a vehicle and a yacht, in the names of other people.

The securities and exchange commission has also brought civil charges against McAfee, alleging he made more than $23.1m (£18m) in undisclosed compensation from false and misleading cryptocurrency recommendations.

A Spanish police source said McAfee had been arrested at Barcelona’s El Prat airport on 3 October.

“He was travelling to Istanbul and when his documents were run through the database, it emerged that he was the subject of a US warrant on fraud charges,” said the source.

Judicial sources told Reuters McAfee had appeared before a high court judge via videolink after his arrest and had been remanded in custody in a Catalan jail pending the extradition process.

Following his detention, McAfee’s official Instagram account posted a “Free McAfee” message accompanied by a photo of him.

The US indictment alleges that McAfee failed to file tax returns from 2014 to 2018, despite receiving “considerable income” from several sources. The indictment does not allege that McAfee received any income or had any connection with the antivirus software company bearing his name during those years, prosecutors said.

If convicted of all charges, he could face up to 30 years in prison.

Since making a fortune with the antivirus software in the 1980s that still bears his name, McAfee has become a self-styled crypto-currency guru, and has 1 million followers on Twitter.

But in recent years, his personal life had drawn as much interest as his professional achievements. He became the subject of frenzied media scrutiny following the unsolved 2012 murder of a neighbour in Belize. McAfee said he knew nothing about the murder, but was worried he may have been the attacker’s intended target.

When the police found him living with a 17-year-old girl and discovered a large arsenal of weapons in his home in the Central American country, McAfee disappeared on a month-long flight that drew breathless media coverage.

The dead neighbour’s family later filed a wrongful death suit against McAfee and last year a court in Florida found against him, ordering him to pay the family more than $25m.

In 2015, McAfee was arrested in the US for driving under the influence and possession of a gun while under the influence.

He was released from detention in the Dominican Republic in July 2019 after he and five others were suspected of travelling on a yacht carrying high-calibre weapons, ammunition and military-style gear, officials in the Caribbean island said at the time.

 

A warrant of arrest has been issued for ANC secretary-general Ace Magashule, according to Independent Media.

When asked about the matter, Magashule confirmed knowledge of his intended arrest saying “I’m aware. I’m aware,” he said. “It’s going to be a Hollywood style type of thing. But we will see,” Magashule said.

It is understood that Magashule will be arrested and charged over his role in the controversial Vrede Dairy Farm project. He will be charged for his alleged “failure to exercise oversight’’ relating to the Vrede Dairy Farm investigation.

However, News24 reported that ANC secretary-general Ace Magashule and his lawyer do not know whether there is a warrant of arrest against him, and the Hawks have dismissed it as fake news.

This came as rumours of his pending arrest prompted a political fightback among his supporters, with Magashule’s supporters labelling it as a “well-orchestrated usage of state organs to fight internal ANC factional battles”.

Magashule’s lawyer, Victor Nkhwashu, said they were not informed that there was a warrant of arrest for Magashule.

“We have not been informed about a warrant of arrest issued against our client. Save for the news article that is circulating in the media,” he said.

The ANC secretary-general is said to have asked his lawyers to reach out to the Hawks and the National Prosecuting Authority (NPA) for more information.

The Hawks have denied issuing any warrant against Magashule.

Hawks spokesperson Hangwani Mulaudzi described it as fake news. “Maybe there’s another Hawks we are not aware of,” he said on Tuesday evening.

3M expands actions to fight Covid fraud

Source: Medical Process Outsourcing

3M continues to fight the global pandemic from every angle, and help ensure a safe supply of needed personal protective equipment, by expanding its region-specific resources to report and stop fraud around the world.

The company has launched an aggressive legal effort to stop profiteers who are attempting to take advantage of the demand for 3M products used by healthcare workers and first responders. Building on this work, 3M has established hotlines around the world to report suspected fraud and has created online resources to help spot price-gouging, identify authentic 3M respirators and ensure products are from 3M authorised distributors.

3M has investigated more than 7 700 fraud reports globally, filed 19 lawsuits, and has been granted nine temporary restraining orders and seven preliminary injunctions. More than 13,500 false or deceptive social media posts, over 11 500 fraudulent e-commerce offerings and at least 235 deceptive domain names have been removed. 3M has been awarded damages or has received settlement payments in seven cases, with all proceeds being donated to COVID-19 related charities.

3M has not, and will not, increase the prices of its respirators as a result of the pandemic. 3M is a global company with factories that produce respirators and other critical products needed to fight COVID-19 in the U.S., Europe, Latin America and Asia.

To combat increased counterfeiting and online fraud during the COVID-19 outbreak, 3M is working with law enforcement and customs agencies in every region of the world.

3M is also engaged with many major e-marketplace operators to detect and disrupt fraudulent and counterfeit respirator offers, including Amazon, Alibaba, Mercadolibre, Lazada, eBay, Flipkart, Shopee, Made-in-China and several others.

In particular:

  • Since the pandemic began, 3M has worked with customs and law enforcement agencies around the world to seize approximately 3.5 million counterfeit respirators, either as the products are moving through customs, or in targeted raids against suspected resellers and manufacturers of counterfeit products.
  • 3M has engaged with law enforcement agencies to fight counterfeiting in more than 1,200 actions around the world.
    In Latin America, 3M has worked with customs agencies in more than 15 cases to seize counterfeit respirators being imported into the region from other parts of the world, with several of the seized consignments containing more than 10,000 counterfeit respirators.
  • In the United Arab Emirates, 3M has worked with police and the Dubai Department of Economic Development to seize over 600,000 counterfeit respirators.
  • In Vietnam, a 3M investigation led to a raid and seizure of more than 150,000 counterfeit respirators. The Hanoi and Ho Chi Minh City Market Management Bureaus also seized the manufacturing equipment used to make the fake respirators.
  • In Europe, 3M is fighting multiple cases of fraud involving bad actors using .nl, .uk and .pl domain names intended to deceive buyers with offers of nonexistent or fake 3M respirators. Other scams include using the names of 3M employees in fake invoices and certificates to claim a relationship to the company. 3M is taking legal action and is working with law enforcement through the European Union.
  • In India, 3M is working with law enforcement agencies in multiple states to investigate and raid manufacturing operations producing counterfeit N95 respirators, and resellers offering counterfeit N95 respirators to the public, seizing fake products and holding bad actors responsible.
  • In South Africa, 3M is investigating numerous cases of fraud and the sale of counterfeit respirators. In two recent cases, South African customs seized over 100 000 counterfeit 3M respirators.

These are just some examples of the many actions 3M is taking to stop and deter fraud to protect people around the world.

 

Anonymous ZA levels accusations at MTI

By Jan Vermeulen for MyBroadband

A hacker collective calling itself Anonymous ZA has released explosive details about Mirror Trading International (MTI), stating that at least R4-billion in bitcoin has flowed through the scheme.

In response, MTI told MyBroadband the information stems from private member data that was illegally obtained and that it is “inaccurate at best”.

Mirror Trading International is a South African registered company offering Forex trading services by using an automated system to trade with the trading pool on behalf of its members.

Johann Steynberg is the CEO and founder of MTI, which focuses on Bitcoin trading and promising members a “truly passive income”.

According to MTI, it has over 90 000 active members in 177 countries, and its numbers are growing daily.

MTI made headlines recently after the Financial Sector Conduct Authority (FSCA) said it was investigating the company.

The FSCA said the current business model of MTI requires it to be in possession of a financial service provider licence.

“MTI has informed us that they accept clients’ funds in the form of Bitcoin, pool the funds into one trading account on a forex derivate trading platform, and conduct high-frequency trading through the utilisation of a bot,” the FSCA said.

If this is being done as described, then this amounts to financial services, hence the licence requirement.

However, the FSCA has a much greater concern about MTI’s activities.

The company claims to have more than R2.9 billion in clients’ funds in trading accounts, but the FSCA has not been able to conclusively confirm that the funds exist.

“Moreover, the returns on the investments claimed by MTI seems far-fetched and unrealistic,” the FSCA said.

At the time, MTI said that its bot-trading is able to generate consistent profits of an average of 10% per month. More recently it said it has seen an average return of 0.5% per day.

The FSCA recommended that MTI clients request refunds into their own accounts as soon as possible.

The Texas State Securities Board has also issued an emergency cease-and-desist order against MTI and accused it of perpetrating fraud through an illegal international multilevel marketing programme.

Canada’s Autorité des Marchés Financiers (AMF) has placed MTI on its list of illegal online platforms, issuing a warning that MTI illegally solicits investors.

Anonymous ZA publishes information about MTI
Anonymous ZA has published financial information about MTI online based on data collected through MTI’s members portal – mymticlub.com.

According to Anonymous ZA, it discovered glaring security vulnerabilities in the online systems of MTI, which it exploited to extract information about the inner workings of the scheme.

Anonymous ZA said the vulnerability that exposed MTI’s “back office” system was a lack of basic authentication.

Any registered member who is logged into the system could view the information of any other member’s account by simply changing a parameter in the URL.

“All data was acquired using simple enumeration and scraping techniques on the mymticlub.com site,” stated Anonymous ZA.

“No hacks were performed because the lack of basic security did not require it. Just incrementing an id=? parameter on various URLs provided all the data that you see here.”

Using this weakness, it was able to glean detailed information about MTI’s system and see the full names, usernames, e-mail addresses, bitcoin balances, and earnings linked to every account.

Anonymous ZA then published an anonymised copy of the data, which was current as of 14 September 2020, on a dark web site called MTILeaks.

It said the MTI database shows the company has handled over 22,984 bitcoin in member deposits, amounting to over R4 billion.

The data shows that members have withdrawn nearly 15,653 bitcoin (close to R2.9 billion), which means the scheme should still have at least 7,331 bitcoin (over R1.3 billion) of members’ capital in its accounts.

However, the data also shows that the scheme has allocated almost 9,916 bitcoin (over R1.8 billion) to members in interest and bonuses.

This means that MTI must have a minimum of 17,247 bitcoin (over R3.1 billion) to cover the remaining deposits and earnings of all members who have not yet been withdrawn from the scheme.

MyBroadband asked MTI CEO Johann Steynberg if the company has that much liquidity and if he could provide MTI’s bitcoin wallet addresses to prove that the company has the assets to cover its obligations.

Steynberg did not answer the question in his initial response to MyBroadband.

In a subsequent statement to MyBroadband, MTI said it declined to comment.

Source: Business Insider SA

The Unemployment Insurance Fund (UIF) is still not paying out special coronavirus grants as it tries to verify the identity documents of those who applied over recent months.

The delay has resulted in new cut-off dates for applications for the so-called Temporary Employer/Employee Relief Scheme (TERS):

The final deadline for TERS applications for March to May 2020 is September 25.
TERS applications for June close on October 15.
TERS applications for July to September 15 close on October 30.
The UIF’s process to pay out the TERS grants has been marred with irregularities.

In a new report, the auditor-general outlined various problems it found with the TERS system, including that the UIF did not sufficiently corroborate information it received from applicants.

This resulted in fraudulent payments, which included:

  • Almost R696 million was paid to foreigners who have not made UIF contributions in the past 12 months
  • More than 50 children under the age of 15 received payments
  • More than R440 000 was paid out to the accounts of dead people
  • Almost R170 000 was paid to prisoners
  • More than R30-million was paid to people with invalid identity numbers
  • It also found that there was “double dipping” of more than R140 million – thousands of people who already get state grants, including students and disability grant recipients also received TERS payments.
  • The AG report resulted in the suspension of top UIF executives, including its commissioner Teboho Maruping.

The UIF took the TERS platform offline over the past weekend to implement changes to its systems, as recommended by the AG. The system was supposed to be restored by Monday, but by Tuesday it was still down.

“Currently payments are still on hold as the [UIF] is still working with the Department of Home Affairs and other government databases to verify about 5 million identity documents of Covid-19 TERS applications. This is done to ensure that payments are made to deserving and authentic workers,” said Marsha Bronkhorst, acting UIF Commissioner, in a statement.

“We are aware of the negative impact this delay has caused and is causing. But in the interests of mitigating the risks which have been identified both by our Risk Unit and the Auditor General, we unfortunately have to pause payments,” she added.

In total, the UIF has paid out almost R42-billion in 9.5-million payments to workers.

From July, claims will only cover employees whose employers are:

  • not permitted to commence operations under lockdown regulations
  • unable to make alternative arrangements for vulnerable workers (those above the age of 60 years, or with co-morbidities), such as working from home
  • unable to make use of their services because of the coronavirus restrictions, for example on how many employees can be in the workplace at the same time.

 

Source: Business Insider 

Information apparently drawn from a massive leak of its data is “on the Internet”, credit bureau Experian admitted on Tuesday night.

To date the company has insisted it had contained the breach, after handing over data on millions of South Africans, and bank account details of businesses, to someone it describes as a fraudster.

Now it says it will work to stop the further spread of the information.

As part of its investigation, “we have identified files which we believe contain Experian data relating to the incident on the internet,” Experian said in a statement.

“We continue to investigate these files and will take all steps available to us to reduce further dissemination if possible.”

It also claimed – in direct contradiction to a timeline it has confirmed – to have taken “immediate steps to make sure that individuals and businesses in South Africa could take steps to protect themselves” once it became aware of the breach.

Experian announced the breach publicly in August, and banks started to issue warnings to their customers that the leaked information may be used to scam them.

What the company failed to mention, until questioned by Business Insider South Africa, was that it had handed over the information in late May, and noticed it had done so nearly two months later, in July.

It took nearly another month to investigate and obtain a private seizure order to recover the hardware on which the data had been stored.

Only after that did Experian tell consumers about the breach.

Having seized the hardware, the company said, it had contained the incident.

“We have been monitoring the various platforms (i.e. the dark web) to ascertain whether the data is being offered for sale. We also employed a leading digital forensic investigator to assist us with our efforts,” Experian said, when Business Insider asked how it knew the information had not been sold or distributed in the nearly three months it was with the “fraudster”.

“Also, from our internal investigations we ascertained that the fraudster conducts an insurance and credit services market place and uses the information to contact consumers in order to offer services to consumers.”

Experian has not said how it initially failed to detect the spread of the information, or exactly how it intends to contain the data this time around.

 

Source: Evina

Extensive data collection and analysis has lead to the Paris-based anti-fraud firm Evina determining that one out of every three mobile subscription attempts in South Africa is fraudulent.
South African cellular users are very often subscribed to mobile services without their consent.

After Kenya, South Africa is the African country most affected by fraud that daily fleeces millions from the mobile accounts of cellular users around the globe.

“As Africa’s most advanced economy, it is particularly tragic that South African mobile users are falling victim to subscription frauds that are well managed in many other countries,” says David Lotfi, CEO of Evina.

This when consumers across the globe are under significant financial pressure following the worst of the Covid-19 pandemic.

Fraud is not treated seriously enough by the various mobile payment actors and this can be seen in the fact that 31% of mobile subscription requests in South Africa in July were fraudulent.

This is deeply concerning and the solution is not to block mobile value-added subscriptions by default but to manage the problem with better tools and expertise.

South Africans are mostly at risk from a very basic fraudulent mobile activity, clickjacking.

This is a malicious technique tricking a user into clicking on something different from what the user perceives, thus potentially revealing confidential information.

“Clickjacking is a type of mobile-based fraud that is more than five years old and could be blocked very quickly if local market players took this threat seriously,” Lotfi says.

To a lesser extent, South African mobile users are also targets of a whole range of nefarious applications commonly available for app store download and these include everything from flashlight to wallpaper, pedometer, file manager and video maker apps.

Source: MyBroadband

New evidence has revealed widespread airtime theft and fraudulent WASP subscriptions on Vodacom’s network, showing that the company failed to act decisively against the criminals.

The latest evidence follows an industry investigation which revealed airtime theft on a mass scale from Vodacom’s prepaid customers.

What sets the latest evidence apart is that it comes from a prominent company which uses machine-to-machine communications and IoT devices with prepaid SIMs from Vodacom.

It is therefore impossible for these SIMs to pro-actively subscribe to WASP services, which means this data provides conclusive evidence of fraudulent subscriptions and airtime theft.

The company’s chief executive, who asked to remain anonymous because of his relationship with Vodacom, told MyBroadband hundreds of their SIMs have been hit by airtime theft.

The company experienced theft on both brand-new SIMs and SIMs which have been in devices for years.

He said Vodacom refuses to acknowledge any problem and added that it is very difficult to get refunds for the stolen airtime.

Only around 5% to 10% of the airtime theft which they logged with Vodacom were refunded.

He said it requires considerable effort to get a refund, which is further complicated as it is impossible to approach Vodacom with a list of SIMs from which airtime was stolen.

“You need to phone in as a single prepaid customer and go through the motions of trying to convince them that the SIM is in a device with no human access,” he said.

“You have to hound them repeatedly to get the refund to be processed, and you often just give up after a while.”

The evidence further showed that the same WASPs continue to steal airtime from SIMs long after it was reported to Vodacom.

The data provided to MyBroadband stretches back for many months and conclusively proves:

  • There is widespread fraud and airtime theft on Vodacom’s network to this day.
  • Vodacom was made aware of this fraud and airtime theft, for a long time, but failed to act decisively.
  • The same companies continue to steal airtime from Vodacom’s subscribers.

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