Petty Corruption Stories from Sudan: The Electronic Financial Form (15): Corruption and the Efforts to Curb the Phenomenon
Introduction
The introduction of the federal government system in Sudan in 2005 established three levels of government in the country: federal, state and local. The country’s financial revenues system was also divided in the same manner.
Despite the restructuring of the country’s financial system, one financial instrument has remained unchanged at all levels: Financial Revenues Form number 15, widely known as Form 15. As the only government-approved instrument for revenue collection (taxes and other fees), Form 15’s use is mandated by financial agencies across all levels of government.
Form 15: What is it and how it is used
The Government of Sudan (GoS) used to print Form 15 at the GoS Printing House and distribute it to all government agencies through the Ministry of Finance’s (MoF) Department of Storage and Logistics. The forms, printed in carbon copy booklets, are individually numbered and lettered, and contain basic fields including the name of government agency collecting the revenues (ministry, state or locality); the name of the payee; type of service extended to the payee; the amount of money paid in figures and letters; the name and signature of the collecting official; and the date of the transaction.
With the advancement of printing technology in Sudan, Form 15 underwent several changes, including the addition of security features to protect the form against forgery, as well as the elimination of the carbon sheets. In addition, the Sudan Currency Printing Press took over the form’s printing, while the MoF became the sole holder and distributor of the form after the liquidation of the Department of Storage and Logistics. However, Form 15 retained its original content and standing as a bank note, which requires that it be handled with the utmost security. This means that at every point of distribution, the receiving revenue collection agency—whether at the federal, state or local level—must officially acknowledge receipt of the Form 15 booklets.
The distribution of Form 15 follows specific steps. Officials at the MoF use Form 12S to deliver consignments of Form 15 booklets to Federal Ministries and State governments. Form 12S contains information fields such as: the form’s serial number, the receiving entity, the name of the receiving official and date. The receiving entity acknowledges its custody of the forms by completing Form 46 which contains similar fields as Form 12S. The receiving entities would then follow the exact same procedures by using the same exact forms (Form 12S and 67) to disburse the form to lower government entities and localities, which in turn use Form 12S to deliver Form 15 to the revenue collectors.
Once in receipt of the Form 15 booklets, the revenue collection agencies must record any dues received for services rendered, with a copy of the transaction given to the payee. All of the transactions must then additionally be recorded in Financial Deposit Form 67, and all dues collected must be deposited in the department’s bank account or safe. Form 15, Form 67 and deposits vouchers are reviewed and approved by an internal auditor, who is further supervised by the relevant department’s financial manager, who retains final sign-off of the submitted documents. Once signed off, the booklets are archived at the relevant government department for an annual audit at the end of the financial year.
Corrupting Situations and Form 15 Usages
The rules, regulations and procedures enacted to protect and safeguard Form 15 against tampering through the years have largely failed to reach this objective. Corrupt officials have been able to influence the process of revenue collection by deliberately undermining the rules and regulations that govern Form 15’s function.
This is best illustrated by the 1995 case of Suba Toll Station. The investigation of that case revealed that each time a truck passed through the toll from Khartoum to Port Sudan, the toll collector, in agreement with field team personnel and the financial manager of the toll company, inserts a cardboard or a piece of cartoon paper between sheets of form 15 to prevent the creation of a copy of the Form. Unaware, the truck driver would continue on, while the toll collector would then complete the carbon copy by tracing written information from another Form 15, usually that of a small car for which the driver paid a lesser toll fee. This scheme allowed the toll collector and others to pocket the difference between the toll actually paid by the truck driver and that which was fraudulently recorded.
These types of situations can be hard to uncover, especially when executed by the officials responsible for upholding the rules and regulations. The Suba case was only discovered by chance when a truck driver who had misplaced three original copies of Form 15 he had obtained at the station—needed as proof of toll payment for his company’s records—returned to find that no records of his truck’s passing could be found at the Soba Toll Office. The driver took the case to the Ministry of Roads and Bridges and presented an original copy of Form 15 for another truck, owned by the same company that crossed the toll station at the same time and day. When no records for either truck were found in the database of the Ministry’s accounting department, Ministry officials inquired further. Ministry accountants found the discrepancy when they crosschecked the information on the original copies of Form 15 with their corresponding entries in Form 67, which turned out to be entries for a small car travelling a short distance. Further investigation revealed that this scheme had carried on for years. The toll collector and his collaborators were eventually indicted in front of a judge and sentenced to prison.
Other types of schemes have involved the stealing and/or selling of Form 15 booklets by officials who maintain custody of these documents. These officials report these booklets as lost or stolen to the police, while actually using them to collect unlawful revenues for personal benefit such a scheme was uncovered at an unofficial tax station that was collecting fees on cereal products on the road between Kosti and El-Obeid. Investigations revealed that a number of Form 15 booklets that had been reported stolen from an office in nearby Aljabaleen locality were those being used to collect these unlawful revenues.
Another example is the case of a former revenue collection official from AlSobagh locality in the State of AlGadarif. The official and his accomplices posed as an official revenue collection team and collected animal taxes and fees from herders at AlSobagh area, issuing Form 15 to payees. The scheme was uncovered when official revenue collection teams arrived in the area and attempted to collect due and other fees from the herders. The herders furiously protested the double taxation and presented Form 15 receipts as proof of their payments. After thorough investigation, it was revealed that the Form booklets used by the phony team were stolen from the Education Department of Khashem AlGirba. In court, though, the perpetrators categorically denied the accusation.
Further schemes involve collusion between collectors and their immediate superiors to hold and delay the depositing of collected revenue. In keeping the funds, those involved can use them in trading and other forms of illicit transactions. This practice mainly flourishes in remote areas, where funds are kept for long periods of time before they are reported. In some areas, officials wait for booklets to be fully used before going to the relevant government department to deposit the funds they have collected and replenish their stock of booklets.
In such a case, a highway traffic police officer responsible for collecting traffic fines in Al Gazera deliberately delayed the reporting and depositing of funds collected. Instead the money was used for trading cars and real estate schemes, the profits of which were divided between the police officer and his conspirators. This scam was uncovered during a regular audit of the department, and those involved, who had suffered major losses through their gambling, were not able to return the stolen money in time. All were eventually found guilty, and sentenced to prison, with their assets auctioned off to recoup the stolen funds.
Finally, another type of scheme is the collection of taxes and fees by government officials without the use of Form 15. The funds collected through this scheme are concealed from the MoF, in direct violation of the rules and regulations that govern the collection of government revenues. This practice is widely known as Tajneeb. The overreaching objectives for this type of corruption are to provide off-the-books resources for government agencies to spend on items not included in approved budgets; to avoid restrictions on expenditures imposed by the MoF; and to justify requests for additional federal funding, based on what appears to be insufficient local revenue.
Tajneeb funds are often used in extravagant expenditures such as staff incentives, public festivities, including for the ruling National Congress Party, and unnecessary travel for officials and their families. As these funds are not reported as revenue in the national budget, they are not subject to financial regulations. The former Minister of Finance, Abdel Raheem Hamdi estimated that, in 2012, the Tajneeb amounted to 5 – 7 billion Sudanese Pounds, while the estimated amount of expenditure saved by lifting fuel subsidies in the same year was 1.3 billion Sudanese Pounds. It is worth noting that the lifting of fuel subsidies in 2013 sparked antigovernment riots that led to the deaths of hundreds of young men and women. Yet, had the MoF been able to address corruption such as the Tajneeb, there would have been no need for the lifting of fuel subsidies.
The Tajneeb received wide media coverage and was referenced in the Auditor General’s Annual Report as one of the major obstacles for securing and allocating appropriate resources for the purposes of developing the country. A high-level committee, chaired by the then First Vice President Ali Osman Taha, was even established to combat the Tajneeb. Unfortunately, Taha himself soon undermined the committee and its purpose when he stated that “Tajneeb funds do not go to government official’s pockets, rather they are used in running government activities which fall outside the budget”. This statement encouraged agencies practicing this corrupt activity, including the Ministry of Interior, to continue this practice as well as to defy the Auditor General’s requests to audit their accounts.
All of the schemes above have resulted in negative economic and developmental impacts on the country. As the Minister of Finance, Baderelden Mahmoud announced during a press conference to launch the electronic version of Form 15, the paper version of the form caused losses of 30% of the government’s revenues. Such losses are sure to have had a negative impact on the services provided by the country, such as in education, health, security, especially as Sudan depends largely on funds collected through customs and taxes. After years of such abuse, in a decision that was greatly welcome, the MoF finally decided to cancel the paper version of Form 15, introducing an electronic version on 1st July 2015.
Introducing Electronic Form 15
The new electronic version of Form 15, designed by the MoF, remains largely the same as its paper predecessor. The major difference is that in the electronic version, the form’s serial number, as well as the government agency which receives the funds, are automatically generated. Further, instead of signing the form, the revenue collector enters his/her name and password in the online system in order to be able to access and fill the form. Similarly, the process by which government revenues are collected with the electronic version of Form 15 does not differ much from the previous process. Another major difference is that in cases where the revenue collector makes a mistake when filling in the form and saves it, the system allows him/her to delete it, only after he/she correctly answers a question generated about the mistakes made in the form. The revenue collector must also document this cancellation in electronic Form 67. The same approval system remains, though with internal auditors and financial managers now reviewing transactions online, in portals only they can access.
Since the introduction of the electronic form, the MoF’s IT department has set up collection offices nationwide and appointed collection officials and internal auditors, who receive personalized password given to them in a secure envelope, similar to the process for obtaining the pin number of an ATM card. The MoF’s IT department is the only authority that can generate and cancel these passwords. The department is now evaluating the progress of the new form to date, especially in the movements of the revenue collectors and the auditors.
Economists have identified many positive characteristics of electronic Form 15. It saves time and provides efficiency in revenue collection procedures. Furthermore, it has reduced the Tajneeb practice. Similarly, the electronic form also facilitates the establishment of a single channel that allows the MoF to access, review and monitor all government revenue collected in the country. Further, the Minister of Finance has stated that the electronic version of Form 15 is insured against fraud even when a computer has been illegally accessed through a valid user name and password, as all forms carry an encrypted and unique serial number.
In anticipation of abuse from officials, the MoF has implemented additional financial and administrative regulations, including the daily deposit of collected funds. Government agencies can no longer collect revenue without the use of electronic Form 15, and they must adhere to strict security guidelines regarding the handling of the form. Further, the Internal Auditor and the General Auditor now conduct surprise checks on government agencies to monitor their work, especially in relation to Form 15.
Unsurprisingly, these regulations were met with fierce resistance, not only by corrupt revenue collectors, but also by government agencies. The Minister of Finance himself, at the press conference introducing the electronic version, said “the abusers and those who are personally benefiting from the paper version are fighting this transition and are trying to sabotage its implementation”. This fierce resistance was clearly displayed on 1 July 2015, the first day of the rollout. The internet network crashed and the electronic collection was halted. As a result, health institutions offered free medical services; traffic police failed to collect fines and highway companies allowed travelling vehicles to transit without paying toll fees. Observers believe that this was due to some circles pushing for the premature introduction of the electronic form, before the finalization of technical and logistical arrangements and the training of staff, thereby sabotaging the electronic rollout and forcing the re-introduction of the paper version.
Despite the many advantages of the new electronic form, concerns remain. First, it does not provide a solution for the delay in depositing collected funds, during which those funds can be used for personal gain. Second, bearing in mind that all electronic programs are vulnerable to hacking, it is not clear how well the new system is protected. Further, according to the economist Mohammed Elnayer, another problem in its implementation is the technical capacity of revenue collectors, who are not adequately trained. He added that “some of them [revenue collectors] are unable to answer security questions related to the protection of the operating system (e.g. how to detect if someone has accessed their portal)”.
Among the major shortcomings of the use of From 15 is the weakness of the internet network in Sudan. Not only does it take a long time to load and save the form online, sometimes the whole system crashes and the collection process is halted, or invalidated. During these times, staff members can get confused as customers become ever more frustrated. Nevertheless, the use of electronic Form 15 for revenue collection provides a powerful antidote for resisting the corruption engendered by the use of the paper version. Time will tell whether this proves effective in the long-term but, for now, it signals a step in the right direction for a country that continues to be held back by rampant corruption.
