The Western Cape high court on Friday sentenced two Cape Town executives to prison for defrauding Sars of more than R100m.

Luis Filipe Duarte D’Alemeida Fernandes and Nazmien Warner, who were charged with running a VAT fraud scheme for seven years, were given terms of 17 and 16 years after being convicted on 487 counts, including racketeering, money laundering, fraud and corruption.

The National Prosecuting Authority (NPA) said the men entered into a plea and sentencing agreement with the state on Friday morning.

It said Fernandes pleaded guilty to racketeering, money laundering, fraud and corruption charges.

Fernandes was a member of three entities, ICE International Commodities and Exports CC, B and F Trading CC and Icomarket CC.

He used the three entities to pretend to Sars that they acquired goods, which they then exported to Namibia, Angola and other African states, and then claimed back VAT on the goods. However, those goods were never bought nor exported.

VAT is not paid on goods which are exported and vendors are entitled to claim VAT back from Sars for legitimate VAT bearing expenses.  

Sars requested invoices in order to substantiate the three entities' VAT refund claims.

The entities at first obtained and submitted forged invoices from a third party.

From 2012, Fernandes forged the invoices and Warner, who was the bookkeeper for the three entities, submitted them.  

Fernandes also forged the customs documents to submit to Sars.

Warner assisted with the submission of the returns and the forged documents.

The accused also confessed that they recruited Sars auditor Charles Kamies to assist them with authorisation of the refunds and to get the refunds paid out quickly.

Sars paid out an amount of close to R112m in refunds. Most of these refunds were channelled through the bank account of Baqarah Investments CC, of which Warner had control.

The money was to fund several failed business ventures, including an internet gaming and social interaction website, low-cost housing projects in Namibia and Cameroon, the importation and installation of revolving doors and a pre-paid fuel card.

The proceeds were also used for travelling, buying vehicles and sustaining a high standard of living and luxuries.  

Warner also invested his share in properties.

As part of the settlement, Warner agreed to the confiscation of nine properties and a further R900,000 in cash, which originated from the sale of one of his properties.

Both accused agreed to testify in the trial of their co-accused, Kamies, whose case was postponed.

Prosecutor Freek Geyser said he hoped the sentence sends a clear message that the NPA, Sars and the police were committed to address such complex criminal schemes.

“We trust the sentence imposed today sends the clear message that crime does not pay, and attacks on the fiscus by means of fraudulent tax schemes will not be tolerated.

"We will continue in our efforts to ensure that all taxpayers comply with the tax legislation in our country by prosecuting offenders without fear, favour or prejudice," Geyser said.

He said as could be seen from the evidence presented in this case, tax offences were serious and had a devastating effect on the country's economy.

"Part of this agreement is that the state, through the Asset Forfeiture Unit, has obtained a forfeiture order to have the assets of (Warner), as well as the affected gifts in the hands of other parties, declared forfeited to the state,” Geyser said.