BACKGROUND

The Whistle Blowing Policy was created by the Federal Ministry of Finance and approved by the Federal Executive Council in December 2016. The policy is targeted at encouraging patriotic citizens to report criminal acts such as mismanagement or misappropriation of public funds and assets, like properties and vehicles; diversion of revenues, financial malpractice or fraud; collecting /soliciting bribes; procurement fraud; corruption; unapproved payments; kickbacks and over-invoicing. It also includes: violation of law regulation, company’s policy, or a threat to life, public interest and national security. The Senate passed the Whistle Blowers Bill to Law in July 2017.

HIGHLIGHTS OF THE WHISTLE BLOWING POLICY

  • A whistle blower is defined by the Whistle Blowing Policy as “a person who voluntarily discloses to the Federal Government of Nigeria, through the Federal Ministry of Finance, a possible misconduct or violation that has occurred, is ongoing, or is about to occur with specific concerns which are in the public interest”
  • Information provided by the whistle-blower must be that which the Government doesn’t already have and that which the Government couldn’t have obtained from any other publicly available source. The information provided must also lead to the actual recovery of the monies reported.
  • The policy provides that a whistle-blower may be entitled to between 2.5%-5% of amount recovered if the information provided led to the recovery of concealed assets.
  • The policy does not avail whistle-blowers any immunity from civil or criminal prosecution. In essence, a whistle blower might end up being charged for an offence he/she helped blow the whistle on if during investigations the whistle blower is linked to the offence. The policy is therefore not beneficial to conspirators or accomplices but informants.
  • A whistle-blower that intentionally supplies false or misleading information stands the chance of being prosecuted after the investigation is conducted. However, if the whistle-blower provided the information in good faith believing it to be true at the time of the disclosure, he/she will not be subjected to any disciplinary action.

 

WHISTLEBLOWING AND TAX EVASION

On Friday, 11th May 2018 the Minister of Finance announced the payment of about $1,351,506USD to 14 whistleblowers. The reward is connected to the tip-off by the whistleblowers that led to the recovery of huge amount of money from corporate tax evaders. According to the honourable Minister, “about $41,144,000.00USD consisting N7.8 billion, $378 million and £27,800 were recovered.” The companies had consistently evaded and avoided paying tax for years.

According to the minister about 8,373 communications have so far been received from various persons willing to volunteer information on tax evaders. About 1,231 tips triggered about 534 investigations and ten accused persons are currently under prosecution, with four already convicted of the offence.

“Common violations by non-compliant tax payers include deliberate under-declaration or non-declaration of income earned, including income from government contracts and overseas trading, and collection of Value Added Tax (VAT) and refusing to duly remit to FIRS.”

“Others included charging of non-allowable personal expenses to company accounts, particularly with reference to overseas school fees; inconsistency between income declared for tax purposes and the value of assets owned”

In June, 2017 the Federal Government had  “released about $1,044,724 USD for payment of 20 whistleblowers who provided information that led to the recovery of over N11.6 billion”.

In June 2017, the Federal Government issued Executive Order No. 004 of 2017 on the Voluntary Assets and Income Declaration Scheme (VAIDS). The Executive Order authorizes the federal and state governments to allow defaulting taxpayers to voluntarily declare their assets and income, pay due taxes and enjoy immunity from punishment.

The government recently extended the deadline for the Voluntary Assets and Income Declaration Scheme (VAIDS) to June 30, 2018. The extension period is believed to witness more tips from whistleblowers on tax evasion.

 

CONCLUSION

Flowing from this recently publicized reward of whistle-blowers, it is expected that more tips will be received by the Federal Ministry of Finance; both genuine and frivolous. It is important that the Federal Ministry of Finance put measures in place to thoroughly investigate claims. Undoubtedly, the whistleblowing policy within the context of tax evasion and default will drive increased revenue for the government; bring more people within the tax net and ultimately go a long way in tackling one of the major white collar crimes in Nigeria; Tax Evasion