Pravin Gordhan, Commissioner of the South African Revenue Services (SARS) - a highly successful Customs officer of Indian Origin
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After graduating, Gordhan was employed at Durban's King Edward VIII Hospital for seven years (1974-1981). But this "was just a job, there wasn't a passion or a calling". His real passion was in the struggle against apartheid. From 1974, Gordhan became an executive member of the Natal Indian Congress and was in contact with ANC leaders and activists released from Robben Island.
The provincial administration fired Gordhan in 1981 after he was detained under the Internal Security Act. By then, he was co-ordinator of one of the most sophisticated internal campaigns of the time, the campaign against the election of the South African Indian Council.
He saw his first period in detention as "a test of your principles, a test of your resilience and your moral codes". He saw it as a growth experience. "It teaches you humility, it teaches you how to cope with -- and learn the meaning of -- powerlessness, but it also teaches you that even in that powerless situation you've got to learn to manipulate the other side, which I must say I did very successfully."
He was arrested again in 1990. Released in 1991, he became a senior negotiator in Codesa 1 and 2 and in subsequent negotiations. After 1994 he represented the ANC in parliament. He played a role in drafting the 1996 constitution and chaired the parliamentary committee on constitutional affairs. Here, he said he learnt to find ways of arriving at consensus and finding compromises on difficult legislative issues.
Joining SARS
In 1998 Gordhan made it known that he had reached a stage in Parliament where he wanted a new challenge. He was asked to join SARS, which needed serious transformation.
Gordhan joined the organisation as deputy commissioner in March 1998 and by November 1999 he had taken on the role of commissioner.
He said he had always wanted to demonstrate that a public institution was able to work effectively and efficiently, and the transformation of SARS presented this opportunity. "It's not just about changing the organisation, it's also about changing society. Because if you don't understand why you need to pay taxes you don't take SARS seriously and then I'm wasting my time here." He said he saw his job as twofold: collecting money and changing the compliance climate in SA, where not paying tax had become a public sport. Gordhan said the aggressive use of tax avoidance schemes, often based on sophisticated financing structures, had become widespread during the 1980s and had resulted in significant losses of tax revenue. He defined his job as a one of "mass mobilisation" -- not too different from what he had done during the struggle.
SARS had 100 different offices countrywide and was bureaucratic and inefficient. Skills were poor and experience levels were remnants of the apartheid era. He needed to get the right people to do the right jobs, building skills and capabilities. The customs environment was at best under-resourced and neglected, and its administration was in need of revitalisation and integration.
Furthermore, there was a category of sophisticated high net-worth individuals in SA that, together with the corporate sector, had tax planning advice on par with the best in the world.
Gordhan realised that large-scale process engineering and structural change were necessary to transform SARS. Moreover, to improve compliance, he needed to ensure two things: that SARS provided good service to taxpayers and that the law was enforced effectively. In making these changes he did not try to do it all himself but made sure to draw on the experience of those who had been in the system for a long time -- some up to 30 years.
The tax reform process between 1994 and 1999 had been concerned mainly with the administration of the tax system, tax policy changes, the collection of taxes and closing the tax gap. What was needed now was a compliance strategy that maintained a balance between encouraging and enforcing compliance.
At SARS, he was often found on the office floor talking to different levels of staff. He preferred to lead from the back quietly, but was not afraid to be in front if it was required of him. He saw his natural tendency as protective, in that he would take responsibility for a problem and protect the other person if it meant that person would be able to continue doing his or her job as a result. He said, "I know the buck stops with me. If it is possible to get a consensus position, then we will get one. If it's impossible then I will make one."
Gordhan said he thrived on seeing his staff meeting their challenges and displaying the right kind of maturity and contextual understanding. When his staff achieved beyond expectation, he celebrated their work. His passion to get South Africans to do the right thing had been contagious, particularly to his staff.
In 2000, SARS put in place a transformation model called Siyakha. The short-term changes in this model dealt with factors such as infrastructure (technology, special units, call centres and service centres), process improvements, teaming and skills upgrading. The short- to medium-term factors included new business architecture, policy changes and organisational design. In the medium to long term the transformation strategy focused on a new automation and technology platform, and continual policy and process improvements.
Gordhan said one of the most important factors that had improved as a result of the implementation of Siyakha -- as well as other initiatives including a focused recruitment strategy -- was the demographics of the organisation. Since March 2001 black representation had increased 41%. The organisation therefore managed to transform despite the no-retrenchment policy that the minister of finance had called for when he joined SARS.
Recipe for Success
In Gordhan's mind the recipe for the organisation's success was a combination of political will and support, having the right resources to work with, and having support from the relevant political powers without any interference.
He ascribed the success of SARS to a group of leaders who were able to develop a coherent vision of where they wanted to go, who possessed the energy and the will to take the risks involved in getting there, and had the ability to mobilise people around that vision. He also felt that a contextual understanding of the economic environment -- especially as far as the private sector was concerned -- was absolutely critical, and that it was a factor with which many South Africans grappled.
Achievements
By March 2007, 10 years into its chapter as an integrated, administratively autonomous customs and revenue administration, SARS had much to celebrate. It had been successful in collecting revenues and absorbing the growth in the number of registered tax payers -- an average of 10% a year -- while integrating and transforming the organisation.
Revenue collection has grown from R123bn in 1995-96 to R496bn in 2006-07, a growth trajectory driven by strong GDP growth, moderate levels of inflation, together with improvements in the levels of compliance, improved taxpayer behaviour and tax policy changes.
In addition, SARS had been able to improve taxpayer and trader service levels.
However, there was still way too much paperwork -- an estimated half a billion pieces of paper in the 90 offices - and Gordhan wanted the organisation to move towards being a paperless tax office. The organisation was in the process of simplifying the system for the taxpayer, and newly promulgated anti-avoidance laws would make it that much harder for people to avoid paying their taxes.