ZIMBABWE has lost billions of dollars since 2002 through serious fiscal leakages and violation of exchange controls, under-invoicing or transfer pricing, an expert has said.
Speaking at a public lecture organised by Transparency International Zimbabwe (TIZ) last week, Lupane State University senior lecturer Cornelias Ncube said exporters were violating the exchange control laws through transfer pricing thereby prejudicing the country of more than $2 billion in revenue.
“Fiscal leakages in the mining sector are still alarming. In 2007, illegal trading smuggling was prejudicing Treasury between $40 million and $50 million a week. In 20011 and 2012 Treasury claimed to have received $41 million, but Mbada Diamonds claimed to have remitted over $117 million in 2012 alone.”
“A Canadian company, Partnership Africa Group, at some time estimated these fiscal leakages at $2 billion worth of lost revenue (even though) there were denials by government and counter-accusations of sabotaging economic recovery programmes through the illegal sanctions.
“There is falsifying (of) foreign currency loan payments, hoarding and illegally dealing in foreign currency, colluding with external traders to over-invoice imports,” Ncube added.
He also said in 2003, out of a total shipment of $1,66 billion only $301 million inflows went through the Reserve Bank of Zimbabwe (RBZ). In 2004, out of $1,9 billion export earnings, RBZ accounted for $1,711 billion.
Speaking at the same event, Bulawayo-based lawyer Gugulethu Ndlovu said there was need for the government to train the police and judiciary officers in economic crimes in order to curb illicit financial flows in the country.
“Lack of adequate training hampers the investigations and prosecution of cases of illicit financial flows. (There are) very few prosecutors skilled in the analysis and presentation of evidence of such crimes before the courts,” Ndlovu said.
“As a result, it is possible that in very complex cases the accused persons might escape justice not because of lack of evidence but through poor prosecution.
“The same applies to magistrates and judges who hear such cases. Most are lawyers by profession, not auditors or accountants.
“A clever lawyer can use legal technicalities to get his client off the hook.
“There is an urgent need for the government to increase transparency and accountability in the public sector as s take-off point to address corruption in the country,” he added.
Ndlovu said there should be full implementation of the United Nations Convention against Corruption as well as automatic exchange of information agreement with destination countries where the proceeds of tax evasion are lodged.
A study undertaken by research firm, Global Financial Integrity, revealed that Zimbabwe could have lost $12 billion in the past three decades through illegal financial outflows that included secret financial deals, tax avoidance and illegal commercial activities.