'Not everyone at Zimra is corrupt' - Interview

Zimbabwe Revenue Authority chairperson Willia Bonyongwe . . . "Zimra is such a critical institution of Government and the board has taken a very strong stance against corruption"

The Interview with Christopher Charamba of the Herald.

CC: ZIMRA has launched investigation into vehicles imported between January 2014 and June 2016 following an audit that revealed vehicles were smuggled into the country. If this turns out to be true, how was such a smuggling operation able to continue undetected for over two years?

WB: Firstly, the exercise underway is a compliance check which is risk-based to verify whether motor vehicles imported comply with the law. Our compliance checks are ongoing and we appeal to all stakeholders to always cooperate so as to deal with corruption and increase voluntary compliance.

It is a fact that cars were smuggled or under-declared at ports of entry. We have audit findings which indicate that there is nothing very special about that period January 2014 and June 2016, except the audit we did on two agents who imported vehicles for our executives covered the same period.

The audit revealed that those same agents brought in 210 luxury vehicles which were undervalued. Zimra is following up on the importers and some have already started paying what is due.

Meanwhile, the audit has been widened to include all importing agents. It is with this in mind that the notice was put to encourage the affected people to come forward to facilitate the current audits. As for our officers, disciplinary action is being taken as per the authority's code of conduct. The public is urged to use our Zimra Anti-Corruption hotline to report any corrupt officials.

The second part of your question is why it went undetected for so long. Well Chris, corrupt activities are done in secret and deliberately hidden. Detection is often after the fact, and just as well for tax purposes, the prescription period is six years. However, we are determined to ensure that all taxes are paid in full.

CC: How will Zimra effectively check all motor vehicles that were imported between the two years and is there a legal framework that supports this probe?

WB: Zimra will rely on its systems and the human resources available to check the status of Customs clearance for motor vehicles. Special teams have been set up to facilitate these checks.

We also routinely collaborate with other law enforcement agencies, and they can help with roadblocks etc.

We are currently implementing a comprehensive automation process which will link our database with that of the Central Vehicle Registry (CVR) and other Government agencies as part of e-Government. Thus in the medium to long-term, verification will be instant.

The public notice is also to members of the public, especially those who bought vehicles from car dealers or gave agents money to import vehicles for them that there could be problems.

As for the legality of this exercise, we believe it's legal. Zimra is empowered by Section 223A of the Customs and Excise Act Chapter 23:02 to carry out post-clearance checks. Where goods were not properly cleared, Zimra is empowered to revisit the clearance in order to regularise it.

CC: In an instance where there was a change of ownership, how can Zimra guarantee that the vehicle was imported legally?

WB: Our system captures number plates and also the chassis and engine numbers which do not change. These numbers are stored in the authority's computer systems for vehicles that come through the normal channel and can be checked.

In cases of outright smuggling, chassis and engine numbers will not be found in Zimra systems, and that would be a criminal case.

CC: There have also been multiple incidents of corruption at the border posts. What is Zimra doing to curb such practices and ensure that there is accountability and good corporate governance?

WB: You are very right about corruption in Zimra, it is endemic. I am so shocked by the stories I hear from the public about some of our staff and their lifestyles. The Anti-Corruption Hotline has been an invaluable source of information on corrupt activities in Zimra.

But I must point out that not everyone in Zimra is corrupt, we still have some upright, God-fearing, diligent and committed people working for Zimra and we celebrate them. However, the board is determined to uproot corruption, but changing the culture is a huge task.

We will need the cooperation of the public, the national leadership, other law enforcement agencies and the judiciary. I am saying the issue of corruption is beyond Zimra, it is a national issue.

Zimbabwe cannot go on life as usual without addressing this issue which has cost us so much growth, so much development. As a nation our moral bar has become so low.

In June last year when we were appointed, Finance and Economic Development Minister, Hon. Chinamasa, tasked the board to deal with corruption and automation as keys to increasing the tax base and revenue collection. Therefore, one of the first things we did was to set up an Anti-Corruption Hotline for us to gauge the magnitude of the problem.

We also had a media campaign to educate staff and the public about the adverse impact of tax evasion and corruption, and to give people an avenue to report.

Most people think if you cut a deal you have benefited, but if roads are not in good shape you can damage your car or you could even die in an accident. You could cut a deal today, but when you go to hospital you could die because there is no medicine. If teachers are not paid because of all the deals people make, that cost is too high.

We are grateful to those who have provided us with information, be they members of the public or our staff. The information is so precise and vital.

Zimra is such a critical institution of Government and the board has taken a very strong stance against corruption.

This is the reason why when the issue of the executive cars was brought to us we had to send them on leave to find out how their cars were undervalued on importation. We have since broadened the forensic investigations to cover all control systems and ICT operating systems. We have other initiatives to minimise human intervention.

CC: Relating to the issue of corruption, one of the issues affecting that is how revenue has been collected, what programmes does Zimra have in place to enhance revenue collection with a focus on integrating ICT systems into the process?

WB: Indeed, the use of ICT will eliminate a great deal of the corruption going forward.

Corruption occurs because of motive, opportunity and weak control systems. Firstly, by limiting the interface between the two groups and doing business in the system and online we reduce opportunity.

Motive is more difficult to eliminate because it's a cultural and a societal issue. Our moral bar has been lowered. As we know people are no longer ashamed to amass wealth through theft or corruption.

What we need is a national paradigm shift. We should not treat those people as role models for our children. Crime should not go unpunished and people must know it doesn't pay.

In India they have what is known as disgorgement, where you repay all you gained from the crime plus penalties. Our fine schedules are not deterrent at all.

From a tax point of view, I would advocate more lifestyle audits as they have in other countries for people to at least pay their taxes. Starting with the authority's staff of course. Maybe then the mindset could shift because the motive won't be so high.

Another specific mandate for this board is accelerating the automation process and increasing the tax net to increase revenue.

I have said before and I reiterate that it is a cause for shame that we do not have a cargo tracking system in Zimbabwe, given our position as the transit route to all countries in the North.

We have set ourselves up for smuggling and transit fraud, the opportunity is there. This must have cost us billions of US dollars over the years. Most cargo tracking systems range from $1 million to about $4 million depending on the level of complexity.

However, something is being done now, the AfDB has availed $3,5 million for that purpose.

We are informed that they have completed the tendering process and actually awarded the contract to the successful bidder, although we do not have a name yet.

But the process could take a year or so to complete. This is why in the interim the board resolved to develop an in-house system to plug the fiscal haemorrhage immediately. This was supposed to be commissioned at the end of June 2016, but regrettably the deadline was missed. We hope the approval will be given soon because this can be done in-house within 30 days.

As you may know, we started fiscalisation in 2010 /2011. We are only finalising it now by directly connecting the fiscal gadgets to our servers. This improves efficiency and accuracy of the data and reduces corruption opportunities.

So we will now begin to benefit fully from fiscalisation. The good thing is that those machines which were activated are giving us all the data dating back to 2011. Management is going through that right now, reconciling with the declarations.

The Tax Management System is still under development but has already been rolled out and it is real-time and very versatile. We believe these efforts will increase our efficiency in revenue collection. But revenue collection remains a function of the performance of the economy first and foremost.

Unfortunately, we are witnessing most companies reporting weaker performance this year. Our efficiency initiatives can only take us so far; the bottom line is the economy must recover.

CC: Following the introduction of SI64/ 2016, there were demonstrations at the Beitbridge Border Post and a Zimra warehouse was torched. Will there be compensation for the goods that were lost? And what procedures do the individuals who had goods stored need to go through?

WB: May I take the opportunity to correct the misconception that Zimra is responsible for constructing the SI64 /2016 or that it can vary any aspect of the said instrument at implementation stage. Most of the anger against Zimra was due to this false impression.

The SI is a law and any variation by Zimra would be breaking the law. Government makes policy relating to taxes and Zimra merely implements them and has no authority to vary any aspect of it until the policymakers change it.

We are happy that in this case there was a quick review at least to facilitate families bringing in their groceries. We are aware that some people still have issues with it or some aspects of it, on the other hand others applaud it. Either way, people should engage the policymakers for any changes to be made.

May I also, on behalf of Zimra take this opportunity to commiserate with all those importers who lost their goods, it was really regrettable. My heart goes out to them, because I know times are hard and for most people capital would be in those goods, and they have incurred heavy losses. My prayer is that it never happens again.

Having said that, those goods were destroyed whilst in a State warehouse. The law, under Section 232 of the Customs and Excise Act Chapter 23:02 states that: The State shall in no case be liable in respect of any loss or diminution of or accident to any goods in any State warehouse.

Unfortunately, therefore in terms of the law, there is no provision for the State to compensate for losses incurred by clients under such circumstances. Thus, sadly our hands are tied and we are not in a position to compensate anyone

CC: On the issue of SI64/ 2016, a number of the people affected by the introduction of this statutory instrument were informal traders. What measures are in place at law and at Zimra to collect tax revenue from the informal sector?

WB: In an effort to enhance compliance from this sector, the Government came up with Presumptive Taxes, both inland and at the border. Presumptive Tax is a simplified tax regime which facilitates payment of tax by the informal sector.

Some of these businesses are not small but do serious business with the big players. They supply wholesalers, supermarkets, mines, hospitals e.t.c, and we are being brought into the net as they are discovered in their clients' databases. Very soon fiscal gadgets will be widespread, but again we encourage them to visit Zimra and regularise their relationship.

CC: Zimra suspended a number of senior executives including Commissioner-General Gershem Pasi while a forensic audit was being carried out. What is the latest update relating to their suspension and the audit?

WB: The said officials are not on suspension but are on paid leave pending finalisation of the forensic audit. The forensic audit will provide us with a holistic view of the operations for our way forward.

A forensic audit is a thorough investigation and scrutinises all documents relevant to the case. Quite often it involves further investigation/study in related areas. It not only points out the breach of procedures, but quantifies it accurately and abrogates culpability. That is why it takes more time.

Like I said, due process was started later than initially envisaged. The governance procedures of engaging an auditor are lengthy, we have to go through the Auditor-General who in turn has to liaise with the State Procurement Board.

Every stage has a time-frame for example, when you float a tender, you wait for a certain period for them to respond, then give them time again to prepare the tender documents e.t.c. But we are happy with the process and I am glad to report that the first part of the audit relating to the executive payroll and procurement services is almost coming to an end in the next two weeks or so. The other aspect, which is the audit of the operating systems will take a little longer, but has also commenced.