South African Revenue Service (Sars) Commissioner Tom Moyane on Monday, said the controversial “rogue spy unit” report, which has since been withdrawn by its compilers, auditing firm KPMG, was not faulty.

“Is the report problematic? I want to say that the report by KPMG is not flawed. In fact, the report from KPMG confirms conclusively, deeply so, that there was prima facie wrong doing in this organisation … that they were people involved in really serious problems that are not tax related,” Moyane told a media briefing in Pretoria.

“So I didn’t find the report as flawed. On the contrary when the report was given to us, it gave one goose bumps that what Sikhakhane had unearthed was just a tip of the iceberg. That is why the [Directorate for Priority Crime Investigation, known as the] Hawks, requested from us a copy of the report and that is why the investigation is continuing.”

An earlier investigation led by Advocate Muzi Sikhakhane — which probed allegations that Sars established a covert intelligence unit which engaged in surveillance and unlawful interception of conversations, unlawfully revealed taxpayers’ information and traced vehicles — had confirmed the existence of that covert unit at the institution.

KPMG last week announced that it had withdrawn its report based on the work the audit firm did for Sars and on behalf of the Gupta family.

On Monday, Moyane announced a set of counter actions the revenue authority is considering against KPMG, after the withdrawal of the report.

“Sars has been completely taken aback by KPMG’s aberrant and unethical conduct. KPMG unilaterally announced the purported withdrawal of its report despite the existence of a service level agreement governing the relationship between the parties [Sars and KPMG],” said Moyane.

Moyane said the KPMG report, in law, belonged to Sars and the auditing firm had surrendered all rights to it to the revenue service.

“This abhorrent, unethical and unprofessional conduct by KPMG has left Sars with no option but to consider the following legal route: to institute legal proceedings against KPMG for reputational damage to Sars including but not limited to a civil claim; to report KPMG to the relevant statutory audit bodies both locally and internationally; to report KPMG to the minister of finance with the aim to blacklist KPMG for its unethical, unlawful, and illegal behaviour.”

He said Sars was also considering the following routes, to fight the auditing firm: “Report KPMG to the minister of finance to consider stopping all work currently performed by KPMG in other departments as well as any work in the pipeline until all the work KPMG conducted for the State have been investigated and reviewed for quality and proper auditing and expected standards”.

Moyane said Sars might also “immediately seize any work which KPMG is currently performing for Sars and assess the work KPMG has performed in the last 10 years with the aim to determine whether there was a value for money and whether Sars should demand its money”.

Lastly, the revenue service is also considering reporting KPMG to Parliament through Scopa, with “the aim to investigate the immoral conduct of KPMG and determine the appropriate action”, said Moyane.

At the same briefing, ANC whip in the Standing Committee on Public Accounts (Scopa) Nyami Booi said the committee had taken exception on KPMG’s conduct.

“We quite clearly take serious exception to the way KPMG has handled this particular matter. This is taxpayers’ money, it’s not their money. Our interest as Scopa has always been to look at why taxpayers’ money has to be wasted, and not be accounted for. We will be going into the matter. We will be challenging KPMG through a parliamentary point of view. We will definitely be going deeper.”

As the fallout deepens from the withdrawal of the report, KPMG said it would donate the R40-million it earned in fees from Gupta-controlled firms to charity and refund R23-million it earned after compiling the “rogue” report for Sars.

On Friday, KPMG South Africa appointed Nhlamu Dlomu as its new chief executive. Dlomu said that she was committed to restore the embattled audit firm’s fundamental values of ethics and integrity in a bid to salvage its credibility as she takes over the helm at a time of deepening crisis.

This came as Trevor Hoole tendered his resignation on Friday as the chief executive KPMG SA, with chief operating officer and country risk management partner Steven Louw also stepping down. Five other senior partners of KPMG SA also decided to leave the firm.

KPMG SA would also be taking disciplinary action seeking the dismissal of Jacques Wessels, the lead partner on the audits of the non-listed Gupta entities.

KPMG drew heavy criticism regarding the “Sars Report” it delivered after it was commissioned by the revenue service to investigate allegations of wrongdoing by an intelligence unit set up while Pravin Gordhan served as Sars commissioner.

Former finance minister Gordhan has welcomed the withdrawal of the controversial report.