Econet Response To The Tax Scandal

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Press Release:

The Financial Gazette (24/7/2014) published an article that carried false and defamatory allegations against Econet Wireless concerning the importation of base stations. The person referred to in the article as the whistle blower was indeed a clearing agent for Econet. Econet paid him duties and taxes that he failed to transmit to the Zimbabwe Revenue Authority (ZIMRA), but instead converted to his own use.

When we demanded payment of the money, he alleged that he was involved in malpractices in collusion with some Econet employees, and threatened to expose the malpractices if Econet did not pay him. Because the allegations he made were serious, we immediately reported the matter to ZIMRA and law enforcement agents through meetings our Chief Executive Officer, Mr. Douglas Mboweni, held with the authorities. We confirmed our report to ZIMRA in writing and invited them to conduct their own investigations while we also instituted our own investigations into the allegations.

Our investigations revealed that since 1998, our base stations were cleared by ZIMRA officials at different ports of entry under a duty free tariff. The classification of the base station components we imported under a duty free tariff was communicated to Econet in writing, and the classification was followed over a 10 year period from the time when the Department of Customs and Excise fell under a separate Director of Customs and Excise, who is not the current Commissioner General of ZIMRA.

Base stations can never be imported as whole goods, as is the case with vehicles and such other imports. Base stations comprise components manufactured by different manufacturers in different countries. A base station is only complete when installed in situ. A difference has now arisen between ZIMRA and Econet regarding the classification of base station components imported in knocked down form. Garnishee orders that had been placed on Econet’s bank accounts over this matter for a capital amount of $15,884,943.46 plus a 300% penalty were lifted by an order of the High Court.

Econet has maintained the position that ZIMRA is bound by the practice it followed for over 10 years, and that this position is correct and cannot be altered retrospectively. The dispute is before two courts of competent jurisdiction, the High Court and the Fiscal Appeal Court. Consequently, we are limited on what we can say about the matter. However, our lawyers are confident about our prospects of success.

The garnishee orders that were placed on our accounts last year were lifted by the High Court. The allegations made against Econet or ZIMRA officials by the so-called whistle blower are false and have no substance. The allegations are extortionate and calculated to demonise Econet and cause friction between Econet and officials of ZIMRA, who will now be scared of treating Econet properly as a major client for fear of being accused of colluding with Econet. Econet has instituted proceedings for the recovery of its money from the so-called whistle blower.

For the record, we wish to state that Econet is a good corporate citizen that does not avoid its tax obligations. Since dollarisation, Econet has paid the following Income Tax, Value Added Tax, Import Duties and License Fees respectively, a fact that contradicts the false allegations published against it:
Econet Financial Year Ending 28 February
Econet tax

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