THE Zimbabwe Revenue Authority (ZIMRA) has swooped on the troubled Urban Councils Association of Zimbabwe (UCAZ) to recover close to half a million United States dollars lost through four years of sustained tax evasion.The Financial Gazette’s Companies & Markets (C&M) understands that UCAZ’s presidential committee, which has been unnerved by the massive amounts being garnished by ZIMRA, has directed it’s high spending secretariate to stop expensive foreign trips and concentrate on servicing the debt.
ZIMRA’s action has placed a serious strain on the beleaguered organisation’s cashflows.
The taxman has been garnishing US$7 000 per month from UCAZ, the once cash-rich donor funded organisation that has been severely run down by financial mismanagement, corruption and nepotism.
Secretary general, Francis Duri, was recently suspended from UCAZ but has bounced back on a technicality, triggering yet another damaging outcry, with many alleging that invisible powers were out to protect him. Duri declined a request for comment on the development.
C&M understands that UCAZ had accumulated over US$200 000 in tax arrears since 2009 before ZIMRA slapped it with 100 percent interest on all unpaid commitments.
The local authorities’ body, which has been battling a dire cashflow crisis highlighted by failure to pay salaries on time, has been negotiating for a downward review to 40 percent.
The outstanding taxes have alarmed UCAZ’s presidential committee, which has been making frantic efforts to find a solution.
However, their predicament has been worsened by a donor exodus.
Member councils have refused to pay subscriptions until corporate governance issues at UCAZ were resolved.
“Councillor Chiroto reported that UCAZ had negotiated for the reduction of the 100 percent penalty to 40 percent on the condition that UCAZ manages to pay US$7 000 per month,” reads minutes of a UCAZ executive committee meeting held in Bulawayo on April 25.
“He added that with the poor financial situation currently obtaining at UCAZ, there was a risk of the penalty being reverted to 100 percent. He proposed that a special meeting to look at how to deal with the issue be convened…in the meantime the secretariat will forgo foreign trips and UCAZ should continue to pay as per plan,” the minutes said.
In July, C&M reported that an audit into UCAZ’s books had exposed a scam in which over US$200 000 in Pay As You Earn had not been remitted to ZIMRA.
Other stator obligations to organisations like the National Social Security Authority had also been ignored.
UCAZ had diverted US$255 000 between 2009 and 2011 in grants from the Canadian International Development Association (CIDA), City Diplomacy, the Department for International Development (DFID) and Strengthening Transitional Partnerships and Networks for Enhancing Participatory Local Governance (STRAP) to fund unsanctioned costs.
So rampant has been the abuse that an audit had indicated that at one time, UCAZ had used US$5 000 to hire a minibus to transport two staff members to Bulawayo from Harare.
Thousands more were lost through salary payments to a ghost worker, while people related to Duri enjoyed return air tickets to China on expensive shopping sprees.
The fraudulent incidences have frustrated funders, who have been demanding action before releasing cash.
A US$8 million proposal to donors has been turned down, further paralysing UCAZ.
“Donors got wind of the shenanigans and have been carrying out audits on all the programmes that they have funded and the reports are so damning that UCAZ’s two major donors, the EU and the Swedish International Development Agency have decided to stop any new funding,” a detailed report about the goings on at UCAZ indicated this week.
UCAZ has been ceased with the matter.
Documents in our possession indicate that several charges had been preferred against Duri and other officials at the organisation.
“Mr Duri’s explanation was that they had worked on advice that some of the allowances were not taxable since they were coming from tax exempt organisations. The lawyers recommended that if necessary we may employ a firm of tax consultants to do review of our books and check to see if the taxes were truly due before engaging ZIMRA,” read part of the UCAZ executive committee report.