The Zimbabwe Revenue Authority (Zimra) is conducting lifestyle audits for its staffers and dismissing and prosecuting those who cannot account for their wealth. Zimra commissioner-general, Faith Mazani (FM) told Alpha Media Holdings chairman Trevor Ncube (TN) that the revenue authority is working with the National Prosecuting Authority (NPA) to confiscate the proceeds of crimes.
Mazani told Ncube on the platform in Conversation with Trevor that the whistleblower project was also working well and had enabled Zimra to recover a lot of revenue.
Below are excerpts from the interview.
TN: You have been in the hot seat for almost two years, how has it been?
FM: It has been a very exciting two years having been part of Zimra before and gone through and learned quite a lot from the region and with my experience I came back excited to give back to the country and to give back to my organisation that I was part of creating. And yes, I have a number of things that I’ve managed to introduce and just connecting back to the staff that I left. Sharing what I learned has been quite exciting but like you are saying, there have been some surprises. I came back to the country 10 years on, in the new dispensation different things, different environment and that has presented quite a number of challenges. But I would like to say these have actually been instrumental in me recognising the value of what I can give.
TN: So you come back home, you are appointed commissioner general February 28, 2018 and you put together a five-year strategy, do you want to talk to us about the strategy?
FM: I think my coming-in looks like it was timed because I came at a time when the previous strategic plan 2014 to 2018 was coming to an end. I also came in like they said when the new dispensation was just coming in when Vision 2030 in the Transitional Stabilisation Programme was being rolled out. So our focus was on how to support Vision 2030. The Transitional Stabilisation Programme had five pillars, but we chose three. These are closing revenue fiscal leakages, ensuring fiscal balance and ease of doing business for facilitation of trade. So the strategic plan that we developed is focusing on ensuring, in terms of domestic resource mobilisation, that Zimbabwe, through its own resources, is able to meet its obligations. Of course, we still have the foreign currency challenge, but my desire is to [reach] where we can mobilise our resources, but also ensure that we improve our compliance, which is a major challenge. We seem to be still having the historic challenge where people don’t want to voluntarily contribute tax. Whenever somebody is importing something they want to look for somebody they know even within Zimra or outside Zimra, a political name and say: Can you help me? How can I can I avoid this? That is the kind of compliance culture that we do not have.
TN: So we don’t have a compliance culture to detect tax issues?
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FM: Yes, we don’t have. In Zimbabwe we don’t have that culture of the need to pay to build our country. So that was our biggest focus area in our strategic plan, but instead of using enforcement which we are used to, we garnish an account which we can prosecute. We then introduced the concepts in revenue administration to empower, and encourage voluntary compliance. Tax can never be voluntary because there is a law, but at least somebody knows that I have an obligation and also a consciousness that this money is for my advantage. I need services and I need to pay for them. So we used strategies like cooperative compliance and if you remember when I came I started engaging with the accounting firms, with the big companies. We paid particular attention to certain sectors and this is going to be the approach that we are using. But we are also coming in when the country is trying to improve on the ease of doing business rating. We are a part of a bigger ease of doing business strategy for the country in terms of us facilitating trade processing of export and ensuring that registration of taxpayers is as easy as possible. We realise that we have to work with other stakeholders but we have a big part to play. So our strategic plan is going to focus on those three pillars, but coming down to the actual operation and our processes, we want to improve the level of service to our tax payers.
We realise that automation is key and this is where we are coming in now with improving our automated processes, making our services available to our taxpayers.
It’s going to be very difficult because not many of us have computers to really do their books and records, but you may be aware that we are one of the few countries that started on the fiscalisation programme. What was supposed to have been done for us is to ensure that we have the data we analyse and process it.
We already have the information and we have e-services that are available to our taxpayers so that they capture the information and do their returns. From a customs perspective, we have already achieved quite a lot with our Asycuda services in that our taxpayers can do their entries wherever they are. They can just access the system and log in through their offices wherever they are. They can do their entries and one of the things that we are already ahead of other African countries particularly in this region, we already have the pre-clearance where before the consignment comes they can do the pre-clearance. And when it comes to our system and it can be processed, so these are the initiatives that we are promoting.
TN: So, one of the things in your pillars for your strategic plan is focused on people and you say because you realise that you cannot transform the organisation without transforming the people, talk to us about that.
FM: Yes, actually. I came up with this four Ps strategy just as I was preparing. Trying to reflect back I think naturally I have the concern on people. Yes, I knew I needed to really motivate the staff. I’m a Methodist preacher. I have been a youth pastor. I connect to the people and I want to understand what their needs are. When I was looking at the areas that needed attention, I deliberately decided to start with the people. I had learnt a lot about project management and I wanted it to be one of them and my focus on the people was really because I wanted to get the people to understand my vision, so I came up with the Ps and also because coming from this difficult environment where there was a salary freeze. We have staff working in the border posts where the environment is so difficult by the nature of our work. We have people that are having to move away from their families, I saw there was quite a mammoth task for me.
TN: What were the key challenges therefore as far as people are concerned?
FM: Of course, I came when the organisation had gone for five years without any salary increment because of the environment and also it was at a time when we just had a very painful forensic audit that had resulted in a number of the staff, particularly at executive level, leaving. There was a lot of fear which made decision-making very difficult. Because the processes were also not very clear, people were safer not doing anything but that affected the taxpayers that we wanted to serve. So I needed to motivate, give confidence to the staff and our industrial relations climate was at its lowest. It has been the most difficult to work on. I did a tour of border post stations and I saw some of the staff housing projects that I left when I was commissioner projects and planning in 2007. They had still not been completed because there was no budget support for them. So there were quite a lot of issues that I needed to focus on.
TN: They say that wounded people wound others and I think what the public got to experience in terms of interfacing with Zimra was that woundedness. Wolfish tax officials lashing out at the public and instances of corruption so forth, was that your experience?
FM: Yes, actually I was going to come to the issue of corruption. I realised the challenge that we face as Zimra to fight corruption and it’s one of the things that I decided I was going to take head-on, but it was because in the country it became the way of doing business.
TN: Sub-culture or a culture?
FM: Sub-culture, yes. So everybody was looking for a way of reducing their obligation. So in an environment where the remuneration was not that high our staff were actually enticed and the issue of corruption became a big challenge and it still is. People want to reduce their tax obligations, customs and they offer money. The officers can’t build their house for their family, can’t have a car like everybody else and they are tempted. So that makes corruption a big issue within Zimra, but like I said, closing revenue leakages became one of our top priorities, because this is an issue that the country has decided to take head-on. Those who are really serious are actually talking about fighting corruption and for us as Zimra, we had to take the front seat and fight it hard, but we had to start internally.
TN: Are you happy with the internal fight against corruption, are you winning it?
FM: It’s very difficult to win when you are actually facing it from outside. Why I’m saying we are facing it from outside is, yes, we have had cases of our officers who have committed fraud and they wanted to actually take advantage of systems and processes, but it’s a fight that we will have to hold hands with others outside Zimra. We can’t fight it on our own because we have introduced lifestyle audits which ask (staff members) we know you earn so much, tell us how much you have in terms of your assets. Show us your bank account so that we can see where your money is coming from. So officers and managers have to make an asset declaration and then we follow through and do the lifestyle audits. It reviews the things that are coming from outside, most of it is coming from bribes that are being paid to facilitate others. It becomes a criminal issue. We address corruption from Zimra through these lifestyle audits and through the use of the Code of Conduct. But you find this criminality, we can’t prosecute that person. They go for prosecution and they are like we are working with the police, working with the judges, we are working with the outside and this is where it becomes difficult because we are in an environment where corruption has sort of permeated and we’re dealing with syndicates.
TN: You have had senior members prosecuted following lifestyle audits or where they couldn’t justify some of the wealth that they have. Do you want to highlight some of those key cases that you’ve gone through?
FM: Yes, we do report in our quarterly reports on the statistics. I would not want to go through the names but yes, some of them have been in the papers. We had officers that were involved in fraud trying to intercept money and had actually prepared systems to divert to their accounts taking advantage of the loopholes in the system. We have had officers in Beitbridge who have been working in cahoots with other stakeholders and they must have made quite a lot of wealth. You are aware also that we started at the end of last year around September this project on checking on the motor vehicles imported, this is big.
TN: If this is big, how big is it?
FM: The registration of motor vehicles involves capturing the import information on our Asycuda system taking it through our domestic tax system and then printing a customs clearance certificate to go and register within CVR (Central Vehicle Registry), which is an outside organisation. We started in Plumtree, I think up to about 36 officers have been implicated in that. But it’s not just our officers but also members of the public. Even as we had started we worked with Zacc (Zimbabwe Anti-Corruption Commission) and the police. We have had to prosecute some of those members of the public at the Beitbridge Border Post where we took that campaign. There were people that were illegally doing clearing agency business for unregistered vehicles. They were processing importation for the public. We would want the public to know that either they can do it for themselves or they should use registered and licensed clearing agents so that they are not exposed to these syndicates. So it’s quite big in the sense that it involves a whole network.
TN: Are you on top of it now?
FM: We are, it’s a project that we started in September like I said. We identified over just six months January to June 2019, about 433 cars that we put in the papers. We have now expanded that and the good thing is we then checked our system after the project started and we are seeing there are signs that the modus operandi that was used is not showing as much, but we intend to go back.
TN: Any values related?
FM: We have values in terms of the number of cars. We are still recovering but in terms of prejudice it’s millions of dollars. I know we gave a figure of about US$12 million, but it’s gone up, this is because car duty is paid in US$. So it is big and it’s showing the weaknesses and the level of corruption internally and outside. So internally like I said we have officers that we are dismissing, but they are also being prosecuted. We are also doing lifestyle audits to identify the properties that they acquired and it’s good that we have the law on our side which allows us to confiscate proceeds of crime. But that has to be done through the National Prosecuting Authority (NPA) and we have submitted that for recovery.
TN: Is the whistleblower project working, is it helping you in this regard?
FM: The whistleblower project is working and we have identified quite a lot of revenue. I would not be able to give the figures. It started quite some time ago. We have had so many people coming up and we have processed those cases and it’s because of the 10% that the informer gets. Yes, we are getting quite a lot of information. We also have our normal hotline numbers where anonymously you say I know of this happening. It is being managed outside through an accounting firm who give information to the Ministry of Finance as well as the Zimra board chair. They analyse the information and they give us to audit or to investigate and then we give the results back. The whistleblower is giving us quite some information and we have recovered some revenues, but the challenge is our procedures were not that developed, they were very manual and as a result we found ourselves sitting with cases where maybe because first of all audits were taking long because we have to verify this information, we are going to give somebody 10% so we can’t just say we have recovered so much. We not only give the 10% of the amount relating to the recovered money that is actually paid but relating to the specific information that you have supplied because you might have suppled information to us on a case that we are working on. But if you give us specific information that is not in our custody, then we give back. That audit takes quite some time and we are receiving quite a number of cases, but we also want to protect the whistleblower.
TN: You are owed by the public huge amounts of money, $4,4 billion in taxes, and you are in the courts both sides. You are being sued by the taxpayers, but you are also suing the taxpayers to recover money that is owed, are you making any progress in terms of recovering what is owed to the fiscus?
FM: I think our debt position needs for us to understand what is happening. Yes, we do have the debts of $4,6 billion actually. What we did is to analyse that debt. Who owes us and for how long have we urged that debt? Some of it is owed by companies that have been liquidated so we have to write off. But we do not have the powers to write off. We have to submit to the Ministry of Finance and in terms of the Public Finance Management Act, we have to follow specific procedures. We have identified what we call uncollectable debt which is an amount of about $1,6 billion of the $4 billion. Some of it is still owed, but the ministry has changed the law. So it is no longer collectable because it is no longer due.
TN: As we sit here, how much is collectable of the $4.6 billion?
FM: Collectable debt is around $2.6 billion but like I said yes we can say Trevor owes us but Trevor is saying I am struggling I do not have capacity to pay it because I need to meet the current obligations. So what we are doing is try and keep your obligations current and work on terms with the terms for the legacy debt and it involves interest, it involves penalties and we then agree on how that will be paid.
TN: Did the tax amnesty help in terms of compliance issues, in terms of changing the culture, in terms of you being able to receive what is owed to the fiscus? FM: Tax amnesty is in terms of revenue administrations. Yes, there are strategies that are used but you have to ask yourself what you want to achieve with the tax amnesty. We had a tax amnesty in 2015 and it was that time when things were hard. Like you said, the relationship between taxpayer and Zimra was very strained and not many came forward because some were saying if I then go, then I am exposing myself and Zimra will come after me, so they did not come that much. The 2019 amnesty there was an improvement, people came forward, but we need to be very cautious to say let us not then penalise those that are complying in giving amnesties, people were still hesitant, some did come and we have written off. What I like about last year’s amnesty is that we then rode on it to encourage taxpayers to come forward and engage with us and so a number engaged, some were saying I know I owe you but I cannot afford, yes we wrote off the penalties, but the actual principle debt has not been written off. But what we like about it is we have it in our information; we are in contact with taxpayers we are negotiating with them on terms. It has helped us to that extent, but in terms of recovery it was very little. What we are actually hoping for is that the taxpayers have these debts sitting on their book which was 1 to 1 and it is 1 to 1. Now there is clarity with the recent judgement. So it is a much reduced figure and we are hoping that taxpayers can take advantage of this and come forward and pay because it is a much less figure than they owed.
l “In Conversation With Trevor” is a weekly show broadcast on YouTube.com//InConversationWithTrevor. Please get your free YouTube subscription to this channel.
