eBusiness Weekly
Zimbabwe is now truly open for business. The era of total condemnation of corrupt activities is now upon us. This has been made possible by the further amendment of the Money Laundering Legislation Statutory Instrument 246 of 2018 Presidential Powers (Temporary Measures) (Amendment of Money Laundering and Proceeds of Crime Act and Exchange Control Act) Regulations, 2018 has come just in time.In addition to facilitating the establishment of a dedicated Asset Management Unit (AMU) at the Reserve Bank, additional powers and tools have been granted to organisations like Zimra to fight abuse of national resources.
The AMU has been entrusted to act as receiver or trustee for all property frozen or declared to be tainted after application of the money laundering law.
Zimra, Zacc and all other law enforcement arms of the Government are now well-equipped and can open their canons against the culprits who have been distorting the allocation of the nation’s resources and slowing down its development.
They can now, through the High Court, apply for Unexplained Wealth Orders (UWOs) compelling the respondents to provide a statement setting out the nature and extent of the interest in the property in respect of which the order is made in addition to explaining how the respondent obtained the property (including, in particular, how any costs incurred in obtaining it were met).
Even where the property is held in trust, the suspected person is also required to disclose it. The UWO will also give the respondent ample room to share any other relevant information related to the Order.
In order to finalise on any suspicion of theft, abuse or any inappropriate use and appropriation of public property, the process may also require production of certain documents and attending of court by the suspected person.
The UWOs can be issued where the value of the property is US$10 000 or its equivalent. With types of assets that are continuously being traded, any trades with a total of $50 000 within a year or less will also attract the scrutiny of the law enforcement agents.
In my opinion this means that for example if a Zimra Accounting Officer were to temporarily steal public funds amounting to $50 000 in order to engage in say Stock Market trades and make a profit of $10 000, their real crime will be of the abuse of the $50 000.
If the officer or former officer fails to comply and does not respond to the UWO in full, the property will be labelled as tainted property and dealt with in the manner tainted property is dealt with in Zimbabwe. On the other hand, if the person does respond, the Enforcement Authority will still have 60 days within which to pursue the case. Inadvertently, the suspected person will also have time to refine their compliance response or cover their tracks until the Enforcement Authority has responded to the original response.
There is room for the Enforcement authority to have a freezing order against the property if they believe it necessary to do so. This request can be made at the same time the UWO is applied for. This will enable them to secure the property from being diverted somehow and evading justice for the country.
Zimra now have a strong tool to effectively manage corruption from the root. Though not substantiated by studies, I strongly believe most of the financial loses that occur to the economy through Zimra are as a result of corrupt Zimra officers.
Zimra Loss Control should be busy now preparing UWO applications for these undesirable members of society who taint the tax collection profession. SI 246 of 2018 is a fair and just law that will acknowledge all known sources of income which means for the majority of Zimra officials, it is easy to appropriate the expected lifestyle.
For example, it would be suspicious to see a Zimra Grade 13 employee with a residential property unless if they inherited it, won it or it was donated to them or if their spouse acquired it for the family. Again this also needs to be confirmed if it was above board.
If Zimra correctly implements this excellent legislation some of the following corruption inclined activities will be a thing of the past soon. This is because Zimra officers will not find it lucrative to make additional income as their Zimra income is already sufficient for their needs.
For example, the bad and slow service they give is an incentive to offer a bribe. Some of the officers engage in opportunistic tendencies where importers are subtly threatened with difficult (high) duty payments, fines and penalties. Requesting for unnecessary Physical Examinations is also another activity which from my interactions with fellow customs broking practitioners is now rife at Forbes Border Post.
It appears there are a few release officers there who are bent on extracting bribes from clients. These officers, take advantage of the Zimra procedures which also need refining to subtly ask for bribes.
As a result, it is impossible to take them up as their PE requests will be well within procedure. In the end the Importer suffers by paying unnecessary storage and demurrage charges as the decision making is also bureaucratic.
At most times, important information such as the availability of the SI 97 of 2013 Penalty loading model is withheld from the public.
Where a penalty is reduced, officers make it appear as if they have done a favour to the taxpayer and yet there is legislation allowing this. Taxpayers end up paying bribes in order to get these reductions.
Finally, the issue to be clearly clarified now is how the assets that are confiscated or recovered from these exercises are going to be re-channelled into the mainstream economy.
The enforcement agencies should also take advantage of the audit trail facilitated by this law. They are now able to easily collaborate; they only need not be hasty, but meticulous in building their cases. This is another great feat for Fiscal Compliance.
Disclaimer: This article is not meant to create a consultant/client relationship. Readers are advised to consult their Consultants for specific advisory services.
About the author: Gertrude Mawire is a Fiscal Compliance and Investment Advisor based in Harare. She writes in her personal capacity. Gertrude, a member of ZNCEE ( customs & excise experts) holds an MSc in Finance & Investments (NUST) Bachelor of Business Studies (UZ), IOBZ Diploma various other Certificates. She can be contacted on [email protected], and 0712 437 256, 0772 336936.
