How revenue paymaster swindled millions of francs

A Rwanda Revenue Authority (RRA) human resources officer managed to swindle close to Rwf100 million in a scheme that went undetected by his bosses for at least 30 months until late last year when he fled the country to an unknown destination.
AG Biraro while presenting the audit report to Parliament last week. (Timothy Kisambira)
AG Biraro while presenting the audit report to Parliament last week. (Timothy Kisambira)

A Rwanda Revenue Authority (RRA) human resources officer managed to swindle close to Rwf100 million in a scheme that went undetected by his bosses for at least 30 months until late last year when he fled the country to an unknown destination.

He remains at large.

Seven months ago, in November 2014, a source tipped The New Times that a top official at RRA had fled the country to allegedly avoid arrest after embezzling government funds whose details were a mystery at the time.

This newspaper went to work to try and verify the tip and gather details on the case. Preliminary findings found that, indeed, a senior official had fled but RRA top managers denied any knowledge of it.

Independently, though, this newspaper gathered that the officer in question was a one Estarico Mazimpaka, a senior human resource officer in charge of RRA’s payroll.

Enter AG report

It has now emerged that Mazimpaka’s case is heavily featured in the latest Auditor-General’s report covering the period of June 2014 to April 30, 2015, which was presented to Parliament last week.

RRA was one of the 131 public entities and projects the AG scrutinised.

In a Monday interview with Auditor-General Obadiah Biraro, he said previously, they had trusted RRA to carry out independent audits on its activities with the AG’s office only providing them with technical assistance whenever needed.

However, reports from other stakeholders who are determined to run an accountable and transparent government raised disturbing suspicions about the tax body’s quality controls that required further investigations.

For example, AG Biraro, when asked about Mazimpaka’s payroll- fraud case, revealed that it was first brought to his attention sometime in January 2015 by an official of the Ministry of Finance and Economic Planning.

The ministry supervises RRA.

“Finally, we had to go there, so we set up a team of auditors and after about three months, what we found confirmed that we should have gone there much earlier,” Biraro told The New Times.

The AG’s report is currently being scrutinised by the parliamentary Public Accounts Committee (PAC) and top managers at the organisation are likely to be put on the spot to explain how they failed to detect Mazimpaka’s scam.

According to the AG, the findings on RRA indicate that his office was wrong to assume confidence in the tax body’s ability to self-assessment adding that while the revenue authority has performed really well over the years, the organisation still needs to get rid of non-performing officers.

Ghost workers

In a separate interview with the officer who headed the RRA audit team, yesterday, The New Times finally learned how Mazimpaka’s scheme worked.

In design, it wasn’t smart but he appeared to operate with the confidence that no one was watching.

By the time he fled, the audit findings show that he had embezzled a total of Rwf85 million in a space of 30 months between January 2012 and the time he fled.

RRA has over 900 salaried staff on its payroll paid off a special account that is set aside for staff salaries.

Apparently, Mazimpaka, who was the senior human resource officer in charge of the payroll, had exclusive operational knowledge of the Innovative Payroll and Personnel Solutions, a payroll management system popular among human resource managers of large organisations.

It’s on this hefty payroll that the official found space to get ‘ghost’ workers placed at various pay scales. He would pay normally, every month, including performance bonuses, just like any other hardworking staffers, but the money would end up on his accounts.

There were at least 12 ‘ghost’ workers that Mazimpaka had introduced on the RRA payroll, according to the audit findings seen by The New Times.

These ‘ghosts’ were promptly paid, including other statutory payments such as Pay As You Earn (PAYE) as well as social security.

“His fraud was in such a way that the embezzlement looked like normal salaries, because of the statutory obligations, the actual amount he pocketed was Rwf56 million, the rest made up for statutory deductions such as PAYE,” the audit report said.

But that wasn’t all. Mazimpaka also used names of genuine RRA staff in his payroll fraud game, but without their knowledge. Audit findings show that, on the payroll, names of RRA staff appeared against bank accounts that didn’t belong to them.

“The money would ultimately end up to his fraud accounts,” said the AG staffer who led the RRA audit team.

Multiple accounts

At the time of fleeing, Mazimpaka’s fraud was active in three local commercial banks where he had apparently opened accounts for his ‘ghost’ staffers drawing salaries as RRA officials.

According to audit findings seen by The New Times, one bank’s ‘ghost’ accounts had accumulated over Rwf24 million, another had Rwf28.3 million, while the third had Rwf4.4 million, totaling to about Rwf56.7 million.

The New Times could not by press time verify whether these accounts still had the money or the ‘owner’ withdrew it before he fled the country last year.

According to the AG’s office, RRA had all the quality checks in place that could have nabbed Mazimpaka and prevented the embezzlement but these were reportedly not applied. For example, he had four supervisors that looked at the prepared payrolls but these, apparently, never detected anything.

After preparing payrolls, Mazimpaka would forward it to the head of personnel division, who would, in turn, forward it to the head of expenses and accounts division, then to deputy commissioner in charge of human resource, and to commissioner for finance.

The RRA Commissioner-General would then be the final person to approve.

The AG is of the view that if all these people had done their jobs properly, there’s no way Mazimpaka’s schemes would have thrived.

It’s also being suspected that Mazimpaka could have stolen more than Rwf84 million that could have gone undetected in the years that RRA was not audited by the AG.

Another fear is that Mazimpaka might have had friendly officers in the three commercial banks that would help him transfer the money from ‘ghost’ accounts to his main account.

Efforts to reach RRA for a comment were futile by press time as several officials did not respond to our inquiries.