How Web Criminals Targeted the Taxman in Tanzania
Investigators from the Financial Intelligence Unit, have revealed that inordinate hours taken by Tanzania Revenue Authority personnel to clear tax payments made through electronic transfers, allowed a syndicate to siphon out billions of shillings remitted by state corporations.
The investigators have confirmed that it took four to six hours for tax payments made through TRA.Com to be authenticated by tax body's officials from the Information and Technology Department.
Sources close to the investigation into the disappearance of reportedly between $5 and $77 million (Sh6.5 billion and Sh100 billion), after it was paid through the new electronic money transfer system, and also confided to The Citizen that some TRA employees were not well versed with the new system.
Both the minister for Finance and Economic Affairs, Mustafa Mkulo, and the Bank of Tanzania governor, Prof Benno Ndulu, have been separately quoted in the media saying only $5 million has been lost to an international cyber syndicate.
But first media reports revealing the theft, however, quoting sources inside TRA, claimed up to $77 million may have been stolen. "We have also learnt that other officials were simply lazy or delayed to verify the payments and as a result allowed hackers to steal the funds," a source close to the team investigating the saga who requested for anonymity said.
The theft took advantage of the newly established Tanzania Interbank Settlement System (TISS). Our sources also revealed that the investigations have so far established that the same system was used to swindle Barclays Bank Tanzania Limited of Sh1.4 billion last November, is the same one that crooks used to hack into the TRA system. But collusion with TRA insiders had not been entirely ruled out.
A source said TRA had not adequately prepared its workers to use the Tanzania Interbank Settlement System which was introduced by BoT recently to hasten cheque clearance in excess of Sh10 million.
"We have established that the Government would be losing a lot of money if this system is not well managed, because in this global world, there are IT technician who are advanced than our own and pounce at any little loophole,"the source said in an exclusive interview last Friday.
The source said after interrogating officials from public entities that have been involved in the scandal, they have reason to believe insiders in the same parastatals played a apart as other companies that used TRA.Com, have not been affected.
The syndicate was suspected to have recruited senior and middle level staff at TRA, various banks, the Tanzania Telecommunication Company Limited (TTCL) and the Tanzania Electric Supply Company (Tanesco), and siphoned off the money between March and August when TISS was introduced.
"Our concern with TRA is for the fraudsters to log onto their system using a special code known to them and which would access billion of shillings through TRA.com," the source said. Efforts to reach TRA Commissioner General Harry Kitilya for comment were yesterday futile.
Finance and Economic Affairs minister Mustafa Mkulo, separately said he would not issue any statement as it could interfere with the ongoing invstigation. "The issue is now under investigation, I would not comment on it until the investigation is completed and findings brought to my table," he said.
According to the Bank of Tanzania, TISS is advantageous in that it offers same day settlement as opposed to the cheque system which can take up to seven days for cheques to be cleared.
In addition, TISS is supposed to be more secure due to the fact that authentication is done prior to a payment being issued, while cheques are authenticated after the payments have been effected.
According to the central bank, the introduction of TISS has also led to efficiency in the collection of tax by TRA, as all tax payments of a value of Sh5 million ($4,000) and above, are now remitted through TISS.