Thursday, May 23, 2013

COULD THIS BE ONLY THE TIP OF THE ICEBERG? By Eyesuswork Zafu




By Eyesuswork Zafu
There is no pleasure in seeing people go to goal. More so when you know the people well. The news of the arrest of top ranking bureaucrats and prominent businesspersons on Friday 10th May 2013 was an occurrence that shocked many in the nation. It was alleged that they had committed criminal corruption. Like many Ethiopians, I will wait for the time they will be officially charged before the court and proven guilty or innocent before I pass any judgment on any of them. And many would agree with me that this “benefit of doubt” is a great deal more than some of the accused officials gave to many business persons they contrived locked up.

The detainees are accused of different criminal offenses, some of soliciting for and taking/accepting bribes, some of giving bribes, some others of letting off the hook criminally corrupt businesspersons in exchange for one favour or another, and so on and so forth. I shall hope and pray for true justice to be served upon each and every one of them.

As many of my fast growing circle of friends know, I started posting my personal views through this medium partly because I was appalled by the so called "Dividend Income Tax Directive" on Retained/Un-appropriated Profits of 08 October 2013, issued by Ethiopian Revenue and Customs Authority (ERCA). I believed and continue to believe that there was no legal basis for the Directive, that it was indeedill-advised and above all, represented a gross abuse of authority/power.

Coming as it did amidst serious allegations by many that ERCA had assumed near- absolute power in the exercise of its authority to collect taxes and duties: arbitrary detention of persons, transfer of judges and change of courts (“chilots”) considered uncooperative in convicting defendants and exerting massive pressure to influence outcomes of cases being prosecuted by it, as well as my personal observations after attending certain hearings at the Federal High Court, I felt that if nothing else, I would do my level best to share my views with as many people as I can. In my view, the Directive levied a new tax that did not exist before! And, according to the Country's constitution, only Parliament has such power! Under the circumstances, would not the Directive constitute an act of usurpation of the role and power of Parliament? And if such is the case, would it not be a logical imperative for the Authority to be required to rescind the Directive and declare its effects "Null and Void"?

In the meantime, while several of the Authority’s officials are being investigated for alleged criminal corruptions of different descriptions, the harassment of enterprises and businesspersons continues unabated. We are told that some enterprises which threatened to take the Authority to court for harassing them with the illegal Dividend Income Taxhad been cowed to submission by threats of further reprisals.
The detention of the Authority’s officials would hardly reduce the damage done and continues to be done to the confidence and level of predictability that enterprises and prospective investors expect from the Country's legal process and environment. To many observers, the long-term harm such illegal measures would have on the Predictability of Ethiopia's business environment could be rudely substantial. Such observers would go further and suggest that Government itself must rise above such acts of zealotry of bureaucrats and forego the paltry short-term gains of cash expected to be collected through such means. Not to do so would be tantamount to unlawfully enriching itself or benefitting from the illegal acts of its Executive branch. Advocates of a return to sanity from the nightmarish quagmire of bureaucratic arrogance and abuse of power being exercised by the Authority suggest that Dividend Income Taxes collected so far (presumed to be less than Br250 million) be credited to the Payees and the Authority ceases any further collection of such illegal taxes.

In light of the recent events, many observers are becoming even more convinced that the notorious Directive was no less than a carefully devised mechanism/ruse to prepare the ground for facilitating more brazenly naked graft and bribery. And, they add, that when the business community started to cry "Foul", the Authority quickly retreated and offered: (a) not to apply the tax retroactively, and (b) to waive the interest it had initially demanded. Were the tax legal, the Authority would have committed yet another abuse of power by waiving the interest on delayed tax, authority which only Parliament may exercise.

The detention of several officers of the Authority may serve as, among others, a strong and determined notice to all concerned that the Government has no stomach for such excesses, but it would be naive not to recognize the contribution to the national malaise of certain obvious weaknesses in our system of bureaucracy: appointment of officers primarily based on loyalty rather than competence; serious neglect of lack of due process in the dispensation of justice; seeming neglect and abdication of responsibility by the Ministry of Justice; frightening level of incarceration of the courts; and the like. In short, while not considering it unimportant, the current drive to peruse the culprits may be no more than fighting the symptoms and not the root cause. There are many of us who believe that the management style of Government needs to change, from one that breeds bureaucratic arrogance and abuse of authority to one that encourages meritorious, humble and honest public service. There should be no room for bureaucrats to create problems where there exist none, only to seek gratification to solve them.

  • Eyesuswork Zafu has been the most dedicated leader of Ethiopia’s organized private sector.A banking and insurance professional, he has also been one of the pillars of the emerging Ethiopian banking and insurance industry with significant stakes at both United Bank S.C and United Insurance S.C., the latter of which he continues to serve as chief executive.