By Gloria Dube-Chihama
A major setback in the push against corruption went largely unnoticed recently.
In his 2022 national budget, Finance Minister Mthuli Ncube made a key announcement; the government will no longer pay incentives to whistleblowers. Under existing laws, if someone provides information on a case of tax evasion, for example, they are given 10% of whatever money the Zimbabwe Revenue Authority (ZIMRA) recovers from the culprit.
This system was meant to encourage people to expose corruption. However, the whistleblower facility itself was now, ironically, a conduit for corruption.
ZIMRA officials would partner with tax agents, largely unregulated middlemen who have infested central Harare’s office buildings. The ZIMRA agents would, using inside information, feed their partners with all the information that they need to file whistleblower claims with ZIMRA. Under the scheme, whistleblowers are required to have specific, first-hand information, not hearsay.
Once ZIMRA recovered the missing tax, the cartels would collect the 10% reward and share it amongst themselves. The racket has seen some tax agents filing dozens of whistleblower claims, which raised the red flag with authorities.
Ncube has decided to get rid of the rewards system.
“Whereas the facility has resulted in some recoveries of revenue, its effectiveness has, however, been undermined by unethical informants who have made whistle blowing a profession. These informants use any means necessary to claim the monetary reward in pursuit of self-enrichment,” Ncube said in his budget speech.
“Due to the rampant abuse of the whistleblower facility, coupled with the administrative burden and pressure placed on ZIMRA for payment of the monetary reward, I propose withdrawal of the 10% monetary reward with effect from 1 January, 2022.”
That a facility meant to fight corruption has itself been corrupted shows the extent of the corruption crisis in Zimbabwe. The country is ranked among the worst countries in the world on Transparency International’s Corruption Perception Index.
But now that the reward facility is gone, what is there to replace it?
Ncube says the whistleblower hotline will remain open, only that there will no longer be any reward for exposing corruption. In his words, the whistleblower system will “continue to operate depending on the goodwill of virtuous citizens.”
This is not enough, according to experts.
“There is a reason why, globally, even in the most developed markets, there is incentive for whistleblowing,” according to tax expert Sarah Maboreke. “Whistleblower systems stand on two pillars; incentives and the protection of whistleblowers. In Zimbabwe, we don’t have these two pillars and that’s a problem.”
In the USA, to encourage whistleblowing after the 2008 financial crisis, the Dodd-Frank Act was enacted to equip stock market regulators to protect and reward whistleblowers. The SEC’s Office of the Whistleblower, established in 2011, gives financial rewards of 10-30% of sanctions over US$1 million to whistleblowers who come forward with original information that leads to successful enforcement.
In Zimbabwe, the reward system led to the recovery of some taxes, according to ZIMRA. From the Z$296 million recovered by the agency under its anti-corruption campaigns last year, US$3.8 million was paid out to whistleblowers, according to ZIMRA Acting Commissioner General Rameck Masaire. There were 98 cases reported by 67 whistleblowers.
But according to Ncube, this system itself is flawed and must be done away with. However, he did not provide an alternative that will have the impact that the now discarded system was supposed to have.
Proposals for legislation to protect whistleblowers have dragged on with little solid action so far.
In July 2020, government launched the National Anti-Corruption Strategy, which requires laws on whistle-blower protection. Government’s economic policy document, the National Development Strategy (NDS1), promises that “a system shall be put in place to protect whistleblowers who report corruption through enacting an Act of Parliament on the protection of whistleblowers.”
These promises have not yet been fulfilled.
Speaking at a workshop on whistleblower protection in September, UN Resident Coordinator for Zimbabwe, Maria Ribeiro, said: “We all need to acknowledge that information about acts of corruption comes to the fore when a whistleblowing system is designed to encourage more reports from citizens and officials in public and private sectors.”
The whistleblower system was indeed flawed. However, by ditching it abruptly without fixing it, or coming up with an alternative, and by not pushing ahead with laws to protect those who expose corruption, critics have more ammunition to use in their portrayal of President Emmerson Mnangagwa’s stance on graft; he is unwilling to put his anti-corruption rhetoric to action.