Malawi Revenue Authority (MRA) has pounced on Mapeto David Whitehead and Sons (DWS) and arrested five senior officials for multiple cases of alleged tax evasion estimated at K10.8 billion.
Mapeto DWS Limited director Faizal Gaffar Latif handed himself to MRA officials at Msonkho House yesterday morning in the company of his lawyer Jai Banda while the company’s managing
director Mohammed Gaffar, financial controller Abdul Rashid Bakali, procurement manager Yaseen Muhammad and general manager Martin Mpata were arrested on Friday.
In an interview yesterday, MRA head of corporate affairs Steve Kapoloma said the arrests follow investigations the public tax collector carried out at the company for six weeks.
He said MRA established three cases of alleged tax evasion during the investigations.
Said Kapoloma: “The first one relates to under-declaration of sales. They were selling their products, but not fully declaring the sales to MRA which had a direct and negative impact on the revenues they were remitting to MRA with regards to VAT [value-added tax] as well as income tax.
“We have also made the arrests as regards to customs duty evasion. They were technically smuggling goods which are finished products into the country and declaring them as raw materials. This cost us [MRA] substantial amounts of revenue because with the mis-description, we were collecting less than what was supposed to be fully declared.”
He said the investigations also established that Mapeto DWS was employing expatriates and paying them appropriately, but was declaring less to MRA in terms of income tax or pay as you earn (Paye).
Kapoloma said the investigations involved examination of documents seized from the company and that the senior officials will appear before court at an appropriate time.
In a WhatsApp text response later yesterday, Banda, who accompanied Faizal to Msonkho House earlier yesterday, said he was hopeful his clients will be taken to court today for bail hearing.
Faizal was questioned by MRA officials before being taken to
Blantyre Police Station where his four colleagues were also being held since Friday.
With the authority of a search warrant issued by the Blantyre Magistrate’s Court, MRA embarked on investigations into alleged importation of assorted goods, including fabric and accessories, various types of motor vehicle tyres and other goods at the company.
In an earlier interview, Kapoloma said the investigations were being carried out in respect of tax evasion offences and tax fraud suspected to have been committed contrary to provisions of the Customs and Excise Act, Taxation Act and VAT.
Last month, Minister of Foreign Affairs Eisenhower Mkaka sued two women over Facebook posts alleging that he had received K300 million from Faizal to shield him from the duty evasion scam they estimated at K22 billion.
Court documents show that the two women alleged in their Facebook posts that Mapeto DWS Limited was smuggling containers of truck tyres disguised as textiles for Malawi Congress Party; hence, purportedly bribed Mkaka to have the illegal activities go unreported.
In an earlier interview, Mkaka, who is demanding damages for libel including aggravated compensatory damages, a retraction of the publication, a public apology and costs of the action, distanced himself from the matter.
This is not the first time MRA and Mapeto DWS have been embroiled in a fight over tax issues.
In August 2019, MRA obtained a search warrant from Blantyre Magistrate’s Court to investigate t h e firm’s alleged undervaluation of imports from China purportedly to evade tax.
But in a telephone interview at the time, Faizal—the addressee of the court-ordered search warrant—said there was no issue with MRA regarding the alleged undervaluation of tyres.