Smuggling cartels cost Zimbabwe one billion dollars

The Zimbabwe Revenue Authority (Zimra) is studying an explosive dossier compiled by a regional anti-corruption institution detailing how the tax collector could have been prejudiced an estimated US$1 billion since 2007 by a syndicate of firms through tax evasion and the illegal importation of haulage trucks, trailers and goods.

This comes in the wake of startling disclosures by the Zimbabwe Anti-Corruption Commission (ZACC) that the country is losing a staggering US$2 billion annually from sleaze, with much of the illegal proceeds spirited away to foreign jurisdictions that include South Africa, United Kingdom (UK) and the Virgin Islands.

For over a decade, a trustee of the Anti- Corruption Trust of Southern Africa (Act-SA) who worked for the Reserve Bank of Zimbabwe (RBZ) Financial Intelligence Unit (FIU), exposed how local transport companies orchestrated an intricate tax evasion scam through the smuggling of haulage trucks and goods, costing Zimra staggering sums of money.

Reports of the elaborate tax evasion scam, which have been furnished to Zimra commissioner-general Faith Mazani and seen by the Zimbabwe Independent this week show that a number of leading transport companies allegedly under declared their foreign currency earnings.

At the centre of the alleged illicit revenue leakages, the reports highlight that local freight and transport companies registered their haulage trucks in various jurisdictions including Botswana and South Africa as well as other countries in the region. They also allegedly manipulated customs foreign currency earnings documents and smuggled trucks into several jurisdictions, creaming off Zimra an estimated US$1 billion.

"In 2007 there were 2 600 registered transport companies in Zimbabwe. Many of these transporters crossed international borders in search of foreign currency payment. Many agencies in South Africa hired Zimbabwean transporters but could only pay by cheque in South Africa rand. Thus transporters had to open South African bank accounts which allowed transporters to illegally choose not to declare foreign currency earnings locally," an Act-SA report reads.

"When a Zimbabwe registered goods vehicle crosses any of the international borders, the foreign currency earned by the mechanical horse (goods vehicle) goes to the country of the registration of the mechanical horse, therefore when a Zimbabwean vehicle crosses the border the foreign currency is supposed to be returned to Zimbabwe and Zimra taxes those earnings and the balance remains in Zimbabwe under RBZ - CD1 regulations."

According to documents seen by the Independent this week, Zimra, through correspondence dated February 19, 2019, acknowledged receipt of the reports submitted by Act-SA in its bid to plug the revenue leakages. The acknowledgement of receipt was signed by G. Mavungidze.

The letter reads: "Zimra acknowledges receipt of your communication on above stated matter ref, JR 218. The revenue authority appreciates and values your contribution towards the fight against tax fraud and corruption."

Pursuant to that correspondence from Zimra, Mazani wrote to the Act-SA trustee, committing to alerting the Special Anti-Corruption Unit housed in President Emmerson Mnangagwa's office of the alleged illicit financial flows orchestrated by the trucking companies.

"Hello (name supplied). Let me read it (report) and forward it to the Special Anti - Corruption Unit. I am far from satisfied," Mazani wrote back to the Act SA trustee on March 9.

"I had a board meeting. I, however, met with the head of the Special Anti-Corruption Unit (Sacu) where we referred the original papers. My team will join with Sacu team next week to review the cases. Please give me a few days more to give you the name of the leader of the investigation to whom you can refer the information you have."

Mazani this week told to the Independent that the tax authority and other government arms had launched a probe, based on the information supplied by Act-SA.

She said: "That is the communication I am having (with a trustee of Act-SA. It is something that is under investigation by various arms of government.

"I cannot give specific dates as to when the probe will be concluded. It (the investigation) involves extra territorial authorities who also have to be engaged."

The reports into the graft allegations, which spill into neighbouring South Africa also allege that the South African Revenue Service (Sars) was also creamed off huge sums of money by freight companies which refurbished haulage trucks originating from Zimbabwe and altered their registration number to conceal their jurisdiction of origination. Through this manipulative way, the reports highlight, the transport companies illegally exported the haulage trucks and goods from Zimbabwe into the neighbouring country.

"In South Africa, Zimbabwean transporters bring their trailers to them (agents), they refurbish them and change the lights to round whereas in Zimbabwe they usually have square lights. They re-register the trailers as South African and engines of the mechanical horses are removed and erase the serial numbers. They then obtain a new serial number and re-register as South African," the reports state.

"But in many cases the vehicle engine numbers were not altered. Zimra officials at Beitbridge would dare not climb into the engine compartment to check the engine serial number. The loss to Zimbabwe is in terms of assets since all the earnings are credited to South Africa instead of Zimbabwe. Since 2005 the losses to Zimbabwe in foreign revenue and value of illegally removing trucks and trailers and re-registering into foreign registration has accumulated into over US$1 billion."

The reports underscore that through this alleged scandal, thousands of haulage trucks were illegally imported into South Africa and other neighbouring countries.