King breaks silence on Sars wars

by Peter de Ionno - Business Report

Dave King, whose multimillion-rand battle with the taxman has made him the country's most notorious alleged tax dodger, yesterday broke his eight-year silence, claiming that tax commissioner Pravin Gordhan had abused his powers in a personal vendetta against him.

King has fought furiously to hang on to the proceeds of the controversial 1998 JSE listing and the sale of shares held by him and a Guernsey trust in Specialised Outsourcing Limited, whose shares listed at R1.20 and rapidly rose to R80.

The firm's market capitalisation rose from R50 million at listing to more than R3.5 billion before the rush subsided and the share price collapsed amid market recrimination.

About 70 percent of the shares were held by King and trusts that had him and his family as beneficiaries. A central point of dispute in the fight with the SA Revenue Service (Sars) is whether the proceeds of the sale should be treated as capital or income, making it liable for taxation.

King faces a claim for more than R900 million in tax. Ben Nevis, the holding company that is controlled by the Guernsey trust, faces a Sars claim of R1.3 billion.

King said yesterday that he had spent about R150 million - and claimed that Sars had spent more than R200 million - in round after round of court appearances.

King faces about 322 charges, including fraud, money laundering, racketeering and tax evasion between 1990 and 2001. He is also facing charges of failing to submit tax returns between 2002 and 2005. If convicted, he could face a minimum of 15 years in jail.

Sars's response to King's accusations of abuse of process and of using criminal charges to intimidate and force tax payers into submission was to point out that fear of an extended prison term was the reason for King's "constant filibustering".

Despite King's protestations that he was prepared to pay his taxes and that his offers of a settlement at R300 million had been rejected, Sars responded with this statement: "King has had numerous opportunities over the past eight years to make a full and frank disclosure to Sars about his assets, income and tax affairs. He has so far steadfastly refused to do so, or alternatively has provided false information. In fact, King has repeatedly acted erratically by entering into negotiations with Sars under the pretence that he wants to resolve his tax affairs and has continuously walked away from negotiations."

For three hours King told his story, pacing back and forth in a reception room at the Johannesburg Country Club, speaking with a soft Scottish burr that recalled his Glaswegian origins. He said he had laboured to distil his tale from 300 000 pieces of paper into a 28-page statement.

But in the end, none of what he had to say - including allegations that unethical tactics were being used to enforce tax collection - was startling or surprising.