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How whistle-blowers are gaming the Zimra system

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WHILE the gazetting of a statutory instrument on whistle-blowers who help sniff out tax evaders was seen as a useful move in promoting accountability, recent events and investigations have shown that the system is not watertight after all.

BERNARD MPOFU

There are concerns pertaining to the culture of opaqueness around how the whistle-blowers’ facility operates. A large number of conflicted transactions has over the years aided underhanded dealings.

As first reported by The NewsHawks, massive corruption — which has dragged on for years — is rocking the Zimbabwe Revenue Authority (Zimra)’s multi-million-dollar whistle-blower fund which the tax collector’s senior officials are looting in cahoots with a corrupt network of informants acting on insider information.

Following The NewsHawks’ recent report, Zimra sources have provided further details, including an audit report dating back five years which lifts the lid on the frenzied looting of the whistle-blower fund. The audit covered the period 2009-2016.

However, the plunder has continued unabated. Millions in taxpayers’ funds have been stolen through the racket. The network works like this: senior Zimra officials get information from whistle-blowers and then help them to consolidate and process their cases fast using inside information for a huge cut.

This week, The NewsHawks spoke to insiders and other sources on how the Zimra whistle-blowers’ facility is fraught with irregularities as well as how whistle-blowers like Evans Kujinga (pictured) could have managed to cash in millions of dollars from the facility.

Under the whistle-blower facility, Zimra is supposed to reward legitimate informants on cases relating to tax evasion under Section 34B of the Revenue Authority Act (Chapter 23:11) as read with Statutory Instrument 150 of 2020.
Statutory Instrument 150 of 2020, gazetted on 26 June 2020, regulates the payment of rewards to informants upon whistleblowing and recovery of revenue.

The reward is 10% of the amount recovered on the basis of information supplied. Corrupt Zimra officials always manipulate that.

Zimra also undertakes to protect the identity of the informants at all times as provided for in the secrecy provisions of the Revenue Authority Act, but it has failed to do so and is endangering whistle-blowers.

Information gathered by The NewsHawks shows that the whistle-blower facility was designed in a way to ensure that those who come forward with information are positioned to know the tax situation of companies or rather insiders.

“At most a person can do whistleblowing for not more than two companies,” a source familiar with the system said.

But Kujinga, described by sources as a smooth operator,  has under his name 80 companies which have been reported to Zimra for violating the country’s tax laws.

This ordinarily would have raised eyebrows to insiders. But how did he ever lay his hands on critical information that has made him pocket millions of dollars from the facility?

Mastering the system

Insiders said Kujinga, whom at one time enrolled at the University of Zimbabwe medical school, knows his way around.

“He monopolised the facility and became a de facto legitimate agent for other agents,” another source said.

Sources said one way which whistle-blowers like Kujinga could have collected critical information on companies was by approaching businesses and misleading them that they wanted to partner them.

“Once they were in possession of the company profile which included the clients and bank accounts, some whistle-blowers would visit the Zimra debt office and bribe officers in that office to check whether or not those companies were tax compliant,” a source said.

“If not, they would pay the Commissioner (Investigations) personal assistant to schedule an appointment with them. In this meeting, the commissioner would act swiftly by instructing the investigations officers to carry out an on-site visit on the said companies. Because 90% of the job would have been done, the companies would quite often be found on the wrong side of the law and some would negotiate for payment plans. In line with the regulations, a whistle-blower would have a meeting with the Commissioner of Investigations who would be in the company of the Director of International Affairs. These people can be bribed.”

Other whistle-blowers would find it difficult to access the Commissioner of Investigations, the source added.

“You would find backlogs of over 50 companies and some cases would not be attended to because the whistle-blowers who made the reports had no influence. For those who were influential, they would also deal directly with the debt office in making follow-ups for the payments,” the source said.

The source said once the tax obligations are paid or payment plans are agreed upon, some whistle-blowers are informed by insiders on such arrangements and promptly they would demand their pound of flesh.

It is also established that during an investigation conducted at Zimra, external auditors Deloitte interviewed officers from the debt office who admitted that they had received payments from one of the whistle-blowers to provide them with insider information. This information was then handed over to the Zimra internal audit team.

Banks as conduits 

Sources said shrewd whistle-blowers also work with bank employees who would provide information of companies’ cashflow positions.

“Some bank employees were also bribed by whistle-blowers to provide critical information on companies,” a source said.
High-profile whistle-blowers as agents

The sources said once high-profile whistle-blowers established that other leads provided by little-known informers were turned down, they would, in turn, approach them, promising to facilitate the process in return for a fee.

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