Big Story! Panic As IGG Kicks Off Probe Into URA Tax Mess

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A wide-ranging investigation into allegations of unbridled corruption, gross abuse of office and tax evasion is underway at the Uganda Revenue Authority (URA), where it is feared the country may have lost hundreds of billions of shillings.

The Inspectorate of Government (IG) on Wednesday afternoon confirmed to Daily Monitor that it dispatched a high-level probe team to URA this week. Investigating officers are said to have started looking into what may yet turn out to be the worst case of mismanagement and graft in the troubled history of the tax body.

There is a litany of numbing points of inquiry, including reports of abetting tax evasion through connivance, extortion, and undue and reckless waivers of tax liabilities.
Ms Beti Kamya, the Inspector General of Government (IGG), yesterday hinted at damning whistleblower accounts, which triggered the investigations.
“We have started investigations but I am not at liberty to disclose [anything] because it may undermine the processes.  I can confirm we started investigations into the [mis]management of URA,” she said.

“We did receive a detailed whistleblower’s account of a number of things going on in URA and we started investigations, but I will not give details because it may undermine the integrity of the investigations,” she added.

It is not yet known just how deeply the alleged rot has eaten into the agency charged with the sensitive responsibility of collecting the country’s revenues.

What is clearly suggested though, by the whistleblower accounts and information from other sources, is that URA may have sunk to new and unmatched depths of graft.

Sources privy to the goings-on intimated that the ombudsman communicated the intended inquiry to the URA boss, Mr John Musinguzi, at the end of last month. That notice was contained in a March 31 letter.

Investigations are being led by senior Inspectorate staff to whom an, as yet, an unknown number of IGG officers will be reporting.
“I have, therefore, assigned Inspectorate of Government officers to conduct the investigations, namely; Mr Polly Muhairwe, director [of] special investigations; Mr Francis Ntale, manager [of] special investigations and other Inspectorate of Government officers under their supervision. Please accord them all the necessary cooperation,” Ms Kamya wrote to Mr Musinguzi, copying her letter to URA board members.

Ms Kamya’s letter highlights 10 broad concerns at the heart of her swoop on URA, including efforts to unearth the facts behind allegations of “blatant alteration and concealment of records by officials to facilitate tax evasion; non-collection of taxes worth hundreds of billions; undue and reckless waivers of tax liabilities; gross misappropriation of informer rewards scheme cash; and connivance in management of tax disputes leading to revenue loss.

Others are “flagrant insider dealings and illicit enrichment; inflated employee payroll and irregular human resource management which facilitates corruption; wasteful use of organisational resources, and negligent regulation of the taxation system”.

Mr Ibrahim Bbosa, a spokesperson at URA, yesterday confirmed they have received the IGG’s letter and the arrival of the IGG’s investigators.
“They are here. I got the information yesterday (Tuesday). I was informed that they have booked appointments with different departments. Each department has a day they will be meeting with them,” he said. “We will be having an inception meeting to tell us what they need and then we can prepare for them, and that is happening next week,” he said.

Mr Bbosa said the mood at URA head offices in Nakawa, Kampala, remains calm, with work going on uninterrupted. He was emphatic that despite the ongoing earth-shaking probe, URA has made tremendous gains in fighting graft over the last two years.
“If corruption is to be wiped out, it is a journey and we have to start somewhere. There are a few bad apples that give us a bad name … Problems are there but it is important to point out the progress made in the fight against corruption,” he said.

“Interventions like lifestyle audits, periodic transfers of staff, disciplinary action, and expulsions are in place to stamp out the vice”, the spokesperson said.

Shortly after his appointment in March 2020, Mr Musinguzi pledged to the Parliament Committee on National Economy that he would lead team efforts to root out corruption at URA.
“We will definitely do our job firmly and with integrity and accountability. I appeal to the public to always raise corruption incidents in which our staff are involved, so that we can deal with them firmly.

“We will not allow anybody to be victimised for doing their work just because some individuals are setting a wrong precedent [in] the Authority,” he said.

These allegations of crippling corruption come at a time when the government is struggling to fund the country’s Shs47 trillion National Budget, meaning there is a lot of pressure on the Authority to widen its collections.

In the last financial year, the URA fell short of its Shs22.8 trillion revenue collection target by more than Shs700 billion, according to the Auditor General’s (AG) 2021/2022 report.

This report highlights below-average compliance audits by the Authority and; the absence of documented step-wise processes on the importation and exportation of precious minerals, especially gold, where taxes of up to Shs340 billion were not collected. The AG’s audit also exposed losses due to delayed customs entry declarations.

Background

The tax body has over the years been derided for reportedly being a hotbed of corruption.

In 2003, President Museveni described it as a “den of thieves”.

President Museveni has repeatedly shuffled and reshuffled the leadership at URA, with each new team expected to clean up the corruption mess. His efforts, however, do not seem to have had the desired effect given what the IGG is now looking into.

In March 2020, the immediate former URA Commissioner General, Ms Doris Akol (Mr Musinguzi was her replacement) was unceremoniously removed from office, and later, during that year’s budget reading, Mr Museveni revealed the sacking of four senior commissioners because of corruption.
“There has been a lot of corruption in URA. That one I have cleaned it. That one I have cleaned that as we shall clean some other places. Wherever there is corruption, we shall get you like we cleared the URA crowd,” he said.

The four commissioners who were sacked included current Sheema Municipality MP Dickson Kateshumbwa, who was head of domestic taxes; Henry Saka, also from domestic taxes; Silajji Kanyesigye, commissioner of large taxpayer’s office and Samuel Kahima, a manager in charge of rulings and interpretations.

Again, in January this year, President Museveni listed the Authority and the Finance ministry as some of the major hubs of graft.
“Corruption is not an economic issue, it is corruption… The low tax-to-GDP ratio, of 13 percent or 14 percent, is really due to the corruption in the Ministry of Finance and in the URA.  Although we have changed [management], but there [is] still a problem there. I have told them many times, and I have quite enough evidence to show them that there is a lot of under-collection of tax and [an] International Monetary Fund (IMF) person [who raised this issue was correct],” the President said during a memorial lecture for the late former Central Bank governor Tumusiime Mutebile.

An upbeat Mr Jim Mugunga, spokesperson at Finance, the ministry which supervises URA, nonetheless, told Daily Monitor yesterday afternoon that they essentially should be taking the credit for measures put in place to stamp out graft, including the whistleblower policy.
“We put in place a whistleblowers policy, and we have encouraged them to come up with information. There is always someone out to do wrong and if it is a whistleblowers report, it means the purpose is functioning. As soon as we get access to the information, it will be handled in accordance with existing processes,” he said.

Early reactions

A shocked Mr Marlon Agaba, the executive director at the Anti-Corruption Coalition Uganda, observed what Uganda needs is a comprehensive clean-up as opposed to dealing with one entity at a time. He also pointed to a lack of political will and committed leadership as the main enabler for repeated scandals.

But even as the IGG digs into the latest scam at URA, the parliamentary Committee on Commissions, Statutory Authorities and State Enterprises also gave notice that it has the tax body lined up for parallel investigation.
“We have gotten several complaints from whistleblowers, even staff complaining about extortion, corruption and so on.  We have URA on our radar and soon we shall be calling them to come and explain these issue,” committee chairperson Joel Senyonyi told this newspaper last evening.

The Shadow Minister for Finance, Mr Muwanga Kivumbi (Butambala MP) called for central government reflection into why corruption persists at URA despite multiple interventions and management shake-ups.
“Whatever sector you investigate, you will unearth billions of shillings lost. Corruption is very lucrative. The government has made several attempts to address corruption in the URA. When they removed the commissioner, they said it was a cleanup. Then the President went on to recruit “saved” people (born again Christians) only in an attempt to find Godly people to man URA; then he included army men, it did not work. If it is too persistent then t is not about URA but the entire civil services and agencies in Uganda,” he said

“Even the supervisors, like the ministers, are conflicted. It is a question of the entire leadership in Uganda and I do not think we have the goodwill, the political strength, to combat corruption. We need a whole reform of government. Maybe if we revise the administrative mechanism in URA … but the whole environment is too corrupt,” he added.

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