FIC report shows govt condones corruption – CSPR

The latest Financial Intelligence Report sends out a wrong signal that the PF government condones abuse of resources and corruption, says the Civil Society for Poverty Reduction (CSPR).

And the CSPR has challenged government to use the Public Finance Management Act (PFMA) to prosecute individuals cited in the latest Financial Intelligence Centre Report.

According to the Financial Intelligence Centre (FIC) 2017 Money Laundering/Terrorist Financing Trends Report, released last Thursday, Zambia incurred losses in 2017 linked to financial crimes such as corruption and tax evasion, among others, amounting to a record-breaking K4.5 billion.

Data availed in the comprehensive report reveals that among the financial crimes committed last year, tax evasion cases ranked the highest, with an estimated loss of K3.9 billion incurred.

Corruption, especially in public procurement, was second with estimated losses amounting to around K500 million, while money laundering and fraud were found in third and fourth place, with losses amounting to K90.5 million and K3.5 million, respectively.

In an interview with News Diggers! Monday, CSPR executive director Patrick Nshindano, said the revelations laid out in the report showed that the government condoned abuse of resources and corruption.

“Most of the time, we do hear on the part of government that they do take action, but they don’t just announce it. It’s not enough if we are going to fight these tax evasions but also corruption, we need to make this fight a public one so that the authorities are seen to be taking action, and those are found erring are able to deter those who would want to engage into these vices. But also, what is very unfortunate is that as much as this report does not cite individuals like me, there is also a very strong correlation that comes out from politically-aligned individuals in these cases. And on moral grounds, we hope that, especially the Head of State, will take action once they identify that these culprits are in government. It sends a very wrong signal, but it also demonstrates that government codons such acts. We hope to see that all those who have been mentioned are investigated accordingly,” Nshindano said.

And Nshindano asked government to use the Public Finance Management Act (PFMA) to prosecute individuals cited in the FIC Report said to have evaded tax or abused public resources

“Government recently enacted the Public Finance Management Act, which basically stipulates that there should be punitive measures on any public officer found wanting. And we hope that with this law will start seeing more officers mentioned in this report prosecuted. And we also hope that there will be a very strong political backing especially from the Head of State; there are some cases which can be clearly prosecuted. The Financial Intelligent Centre, we noted the key issue there of tax evasion. And tax evasion by law, clearly, it is a crime. It is not like corruption where you have to prove and investigate, but for tax evasion, it is very clear that once you have been cited, they should be penalized under the Finance Act in terms of penalties and failure to remit the tax. But beyond that, there are guidelines, which were set in terms of how much we should be able to be penalized if there is a prison sentence. It’s about time that we start making the sentences public,” Nshindano added.

“We have always indicated that there is need for enhance public financial management. Especially now where we have very tight fiscal space in our national budget. If you look at our national budget, currently, over 78 per cent is going towards emoluments and interest repayment in terms of our debts and we only have about 22 per cent to be able to spend on the economy and social sectors. It becomes imperative that every penny that we generate as a country is used prudently. And, therefore, when reports such as the one from the Financial Intelligent Centre (FIC) are availed and made public, the necessary action should be taken to ensure that those people mentioned are prosecuted.”

Nshindano asked government to invest in key ministries mandated to fight vices such as tax evasion in a bid to enhance tax efficiency.

“The highest chunk of the FIC report has to do with tax evasion. This is something that government needs to move in very quickly, and government had been swift in saying that they need to enhance domestic resource mobilization. But they are still not addressing the issue of tax administration. They need to close the loophole that we have in our system to ensure that they have tax efficiency; this is one area evidenced that there is tax evasion. The other component is tax avoidance. All these are areas which government should address if they are to enhance tax efficiency. And it is only important that government invest resources in ministries such the ministry of finance to ensure that they are able to fight such issues,” said Nshindano.

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