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Multi-million dollar whistleblowing corruption scandal rocks Zimra

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Multi-million dollar whistleblowing corruption scandal rocks Zimra

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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.

OWEN GAGARE

In April, The NewsHawks reported Zimra was caught in a corruption storm in which its senior officers were accused of conniving with tax evaders in exchange for payment and par-taking in attendant financial rewards.

This endangers the security of whistle-blowers and damages the image of the tax collector. The most recent case involved three whistle-blowers — Norman Nyabadza, Martin Macharaga and Evans Kujinga — who had reported notorious Harare land baron Felix Munyaradzi to Zimra for tax evasion involving US$12 million.

Zimra in March wrote to Munyaradzi demanding payment or else they would garnish his business accounts. Munyaradzi was in March given seven days to pay or face the consequences.Under the whistle-blower facility, Zimra is supposed to re-ward legitimate informants on cases relating to tax evasion un-der 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 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 even 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 and endangered whistle-blowers.

Following The NewsHawks’recent report, Zimra sources have provided further details, including an audit report dating five years which shows a frenzy of looting of public funds under the whistle-blower facility. The audit covered the period 2009-2016.

However, the plunder has continued unabated. Millions in taxpayers’ funds have been stolen through 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.

Alternatively, and more corruptly, senior Zimra officials use inside information on individuals and companies’ tax returns and tax evasion to empower their cronies to come and report cases in return for huge payments, which they then share.

This becomes lucrative fake whistle-blowing. The money-spinning fraudulent scheme has been so lucrative that one whistle-blower infiltrated the Zimra system, guaranteeing himself US$15 million. But the use of insider information led to a prejudice to Zimra of US$10 million on one occasion. One prolific whistle-blower – Kujinga – who was an informant to over 80 cases obtained much of the information from inside Zimra to support his cases.

At the time of audit, he had been paid over US$1 million and stood to be paid over US$15 million when all collections due had been paid up. This money was at various stages of processing: cash due for payment; cash in debt which was being collected; money from cases under audit, matters not yet audited and transactions submitted.

The interactions between the audit team and Zimra officials were revealing. “Debt Management: This stage was very vital as Zimra officers would view client ac-counts and provide information about the tax status of each client to Kujinga such as which tax heads the client was not com-plying on.

“The same debt management officers would also quicken the payments collection for clients reported by Kujinga through constant follow up. The same officers would also provide in-formation on which client had paid and how much.

This information was crucial for follow-ing up with the commissioner. This was also evidenced by the specific information Kujinga would use when doing the fol-low-ups form instance knowing when Liquid Telecoms had paid US$150 000.00 to Zimra,” the audit report says.

“Internal audit interviewed the officers involved as follows: Munashe Bozhiwa – he said he knew Kujinga since 2014 as a tax consultant who frequently visited Zimra offices and also agreed that he had been receiving some monies from him both as physical cash and through Ecocash over a long period of time.“Evelyn Musorah — she worked in debt management section.

She said she had known Kujinga since 2007, and was a family friend. She joined Zim-ra in 2014 and met Kujinga at Kurima House where he said he was doing some tax consultan-cy work. Since then they have been discussing various tax is-sues. They exchanged various amounts of money over the period through Ecocash, cash and bank transfers.“

Brian Gombera — Since 2012 he was deployed at the debt management section. His duties included monitoring client accounts and advising them to update their records accordingly. He knew Evans Kujinga since 2004. He met him later at Kurima House in his capacity as a tax consultant and would as-sist him but could not remember the names of the clients he represented. As a friend they would borrow and lend various amounts of money to each other. 

“Simbarashe Katiyo – He got to know Kujinga since 2007. After joining Zimra in 2011 Multimillion-dollar whistleblowing corruption scandal rocks Zimra fundhe met Evans Kujinga. Some-time in 2014 and assisted him as a tax consultant who would ask almost everything about Zimra, Customs and Taxation such as how to apply for a tax clearance, how to propose a payment plan, garnish orders, tax amnesty, and upliftment among other things. He did not verify whether Kujinga was a registered tax consultant or not and could not remember the specific clients Kujinga represented but was very inquisitive about how things were done in the Debt Management section. He also received monies from him through Ecocash and cash.”

Kujinga’s 80 cases

There are over 80 cases which were reported by Kujinga. The amount set to be paid to him was over US$15m, at various stages of processing. At one time Zimra anticipated collecting US$176 251 404.47 and paying to whistle-blowers US$16 725 140.45.

Kujinga would make a killing overnight.

“The Zimra commissioner investigation played an import-ant role through ensuring constant follow up to ensure that cases submitted by Kujinga were quickly audited, processed and paid. Evidence on the file clearly showed that Kujinga’s cases received excessive attention from the commissioner through constant follow ups. Many other cases received since 2010 were never actioned,” it says.

“Internal audit recommends that since this information was obtained internally and unprocedurally, any further payments to the whistle-blowers should be stopped. Recovery processes should be instituted to recover all the monies paid to the whistle-blower(s). The respective whistle-blower should be black listed from submitting any further cases. Further investigations should be carried out.”

Disciplinary action should also be instituted against Zimra officers involved in providing tax information to outsiders for corrupt financial benefit, the audit says.

This series of cases of corruption happened during Zimra Commissioner-General Gershem Pasi’s time, continued during under Faith Mazani’s time and is still happening now acting boss Rameck Masaire.

Documents obtained by The NewsHawks from Zimra, which claims its values include integrity, transparency and fairness, show that top officials at the tax collector are at the forefront of illegally and criminally collaborating with corrupt tax evaders for financial benefit without regard for the safety of whis-tle-blowers.The internal audit reveals that “there were no laid down procedures in the administration of the whistle-blower facility resulting in gross abuse.

”The findings indicate that in some cases client bills were being reduced without basis, resulting in loss of revenue. In another case, Kujinga was paid more than what was due to him. The audit reveals a case which was reported to Zimra twice by two different informants using the names Diamond Mining Corporation and on the second instance just DMC. Pay-outs were made in both instances.

“A whistle-blower case was not accepted for investigation after it was reported by the Commissioner-General and Commissioner investigations to be under an audit which never took place. Resultant potential revenue was in the region of US$15 million,” the report reveals.

“There were cases where whistle-blowers were overly frustrated by some kind of red tape in Zimra. Issues of whistle-blower frustration: failure to investi-gate reported rampant transfer pricing; allocating a high-pro-file whistle-blower case to Loss Control who did not have the requisite skill…One case was denied the whistle-blower status but was later allocated to Loss Control and the resulting audit yielded 1 500 times less than the expected yield from a full-scale audit.”

The audit also reveals Zimra is not consistent in the way the 10% reward to whistle-blowers is paid. “In some instances, payment was based on the collections from the revenue head that is identified by the whistle-blower to be prejudiced. In other instances, payment to whistle-blower was based on total prejudice regardless of whether whistle-blower had identified that revenue head on his re-port,” the audit says.

“Zimra took excessively long to pay whistle-blowers after payment was received from client. Payment to whistle-blowers was on an as-and-when basis resulting in long engagements with the whistle-blower which com-promised their anonymity and resulted in their victimisation in some instances.”

Insider information

Internal auditors interviewed several Zimra employees in the debt management office, including Bozhiwa, Musorah, Gombera and Katiyo worked with Kujinga.

They all confessed receiving money from him on several occasions.Some of the companies the network dealt with included cases involving prominent companies such as Mbada Diamonds, ZTE Corporation, Afdis, Zimbabwe Sugar Sales, Gecko Private Limited, AE Electrical Lighting, PTY Holdings, Zimbabwe Energy Regulatory Authority, Mashwede Holdings, Cargo Carriers and Postal and Telecommunications Regulatory Authority of Zimbabwe, among many others.

Potraz scandal

The audit reveals that in 2013, Zimra’s commissioner in charge of investigations Anna Mutombodzi rejected information provided by a whistle-blower “because the information was insufficient but the submitted documents were retained by the commissioner.

”The whistle-blowers, however, later learnt that the same case was given to Kujinga to cash in with Zimra officials. “Internal audit investigations reveal that the case was reported on 21 July 2013 and audited and has since been fully paid. 

A total prejudice of US$455 404.47 was established and US$45 540.47 was paid to Kujinga,” it says.

The DMC case

The case, according to the audit, was whistle-blown twice, at first using the name Diamond Mining Corporation (DMC) and on the second occasion just as DMC. The first case was report-ed on 12 August 2011 under case number 01/09/12/2011. 

The case was audited and US$255 162.04 was established to be owing and was recovered. An amount of US$25 552.20 was paid to the whistle-blower on 19 November 2012.On the second occasion, the case was reported under DMC P/L and case number 01/10/10/2013.

This was for the same Pay-As-You-Earn (Paye) tax-head. The whistle-blower was also paid.

Wrong whistle-blower paid

The audit reveals that Pasi authorised a payment of US$55 909.87 on 10 September 2012 to a whistle-blower against the advice of the commissioner investigations after Raffles Fashions was reported as non-tax compliant. 

The whistle-blower reported a case on 3 December 2009 through a hand-written letter, but the whistle-blower did not identify himself and remained anonymous. The whistle-blower did not complete the informant form.

 “The client was audited and a final audit report was produced on 14 June 2011. A total bill of US$554 576.86 prejudice was raised for Raffles,” the audit says.

“On 13 July 2011 when Raffles had started making payments towards settlement of the bill with US$215 863.41 having been paid, an individual appeared and claimed that he was the whistle-blower. The information submitted by the client clearly indicated that it was obtained from inside the Company as the informant was intimate with the operations of the company… There was no connection between the whistle-blower who submitted this letter initially and the claimant.“On 8 September 2011 Mrs Mutombodzi wrote a letter to the Commissioner-General highlighting the discrepancies and recommended that he should not be paid.

The Com-missioner-General however, in-structed that Chirenje should be given the benefit of doubt and be paid.”

Failure to investigate

The audit has found that some of the cases that were reported by whistle-blowers were never investigated.

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