(Bloomberg) -- Sasfin Holdings Ltd. rejected a 4.87 billion rand ($255 million) damages claim brought by the South African tax agency related to allegations of money laundering and bribery by former employees and clients of its banking business. 

“The claim, which we emphatically reject, will involve a protracted trial action, and the matter is only likely to conclude in several years’ time,” Sasfin Chief Executive Officer Michael Sassoon said in an e-mailed statement. 

The South African Revenue Service’s civil claim comes after the news organization Al Jazeera reported in an expose last year that Sasfin Bank staff as well as others from South Africa’s Standard Bank Group Ltd. and Absa Bank Ltd., were involved in laundering money in exchange for bribes from an international gold smuggling syndicate with strong ties to Zimbabwe. 

The case goes back to 2014 when a criminal syndicate colluded with former employees of Sasfin Bank who were operating outside of their scope and authority of employment, according to Sassoon. SARS has subsequently been unable to collect income tax, value-added tax and penalties allegedly owed by former foreign-exchange clients of the bank, he said.

“As soon as Sasfin became aware of the collusion, it took decisive action and instituted an independent investigation which resulted in the termination of relationships with implicated clients and employees and the opening of criminal cases against them,” he said. “It is unjust for banks to be held liable to SARS for taxes that their clients have failed to pay.” 

The tax body’s Commissioner Edward Kieswetter confirmed that it has instituted legal proceedings against Sasfin Bank but would not go into any details on the legal issues related to liability and compensation for any losses incurred by the fiscus.

“SARS conducted a thorough investigation into various South African taxpayers who had not made true and accurate tax disclosures to SARS,” Kieswetter said in an e-mailed statement on Tuesday. “The investigation revealed that the taxpayers had colluded to expatriate funds offshore in a manner that obscured tracing the expatriated payments and jeopardizes the recovery of tax in South Africa.” 

Following the claim, Sasfin has obtained legal opinion on the case. 

“Of importance is that this is not a tax claim, but a claim for damages and has nothing to do with Sasfin’s own tax affairs,” Sassoon said. “Sasfin has concluded that the claim will not result in the recognition of any liability and that it has no effect on its capital position.”

--With assistance from Ntando Thukwana and Adelaide Changole.

(Updates with comments from SARS from the sixth paragraph)

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