Consider tax payer loss when deciding on bail in white-collar crime appeals – Uganda Supreme Court

4 March 2022 · Carmel Rickard

Employees of a country’s tax collector represent a potential weak point for any revenue authority. South African police announced at the end of February that two staffers of the SA Revenue Service had been arrested after they allegedly demanded R150 000 from a tax payer. The money was to cancel an outstanding tax bill. It’s a problem repeated almost every year, with SA officials arrested over similar allegations, often having taken bribes to make a taxpayer’s problems ‘go away’. And with most countries in the region reporting cases of alleged involvement by revenue collection staff, it’s clearly not a problem peculiar to SA. One of the most recent judgments dealing with such an issue comes from Uganda where the Supreme Court was asked to authorise the grant of bail to two Uganda Revenue Authority (URA) staffers, convicted of causing financial loss to the fiscus, and of other offences under the Anti-Corruption Act.

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The two arrested Uganda Revenue Authority officials, Dominic Mugerwa and Abias Muhwezi, were working in the domestic taxes department of the URA, one as a supervisor and the other as revenue officer. They were charged with falsely and fraudulently auditing, verifying and approving a claim for the VAT refund of a tax payer. In all, the actions led to a loss to the fiscus of UGX 6.5 billion.

According to the prosecution, M/S Rising Star Commodities had falsely claimed that it had exported brown sugar, from Kakira Sugar Works Ltd to a Kenyan company. On the basis of that ‘export’, Rising Star, as an ‘exporter’, claimed VAT refunds.

The two accused had the responsibility, as URA staffers, to verify and audit Rising Star’s claim, and, on the basis of their audit, VAT refunds were duly paid to Rising Star. Then, however, it emerged that the exports had not taken place as claimed by the company, and the two URA staffers were suspected of having committed criminal offences because they had not verified the exports before approving the VAT refund payments.

Innocence

The two were jointly charged with various offences, all of which they denied. Despite their pleas of innocence, however, they were found guilty and sentenced to a series of concurrent sentences, the longest being 10 years.

Mugerwa and Muhwezi then challenged the outcome in the Court of Appeal, without success, with both conviction and sentence being upheld. They have appealed further, this time to the Supreme Court where the matter is pending. Meanwhile, until their final appeal is heard and decided, they want bail.

Violence

The Supreme Court’s Lillian Tibatemwa-Ekirikubinza, who had to decide the application, heard submissions by counsel for the two: they had no previous criminal record; the offences of which they were convicted did not involve ‘personal violence; they were breadwinners for their families and they had complied with their bail conditions during the trial and first appeal.

They had fixed places of residence and established sureties who would ensure they complied with bail conditions. In addition, the grounds of appeal, lodged on their behalf, were ‘not frivolous’.

Further, the schedule of the Supreme Court was such that they could have finished serving their sentences by the time the matter was ultimately heard in that court.

Colossal

The prosecution was strongly opposed, saying that the offence involved ‘colossal sums of money’ that had adversely affected the country’s revenue. Yes, they had honoured their bail conditions up to now, but circumstances had changed and there was a greater temptation for them to abscond at this stage.

The judge said that each case for bail had to be decided on its own merit. As she had held in a previous case, after conviction the legal status of an offender changed and ‘the consideration for release hinges on whether there are exceptional and unusual circumstances warranting release pending appeal.’

This change came about ‘because the applicant is no longer wholly shielded by the presumption of innocence’. As a judicial colleague had held, an appellant under sentence of imprisonment seeking bail lacked ‘one of the strongest elements normally available to an accused person seeking bail before trial, namely that of presumption of innocence.

Stringent

As a result, the principles that apply to applications for bail pending appeal were different ‘and certainly more stringent’ than in cases pending trial. It would be even more so in relation to application for bail pending a second appeal.

She said the presumption of innocence in relation to the two URA staffers had already been rebutted by their conviction in two lower courts and, in her view, ‘release pending a second appeal should be the exception rather than the norm.’

Unlike the usual test, in this case the applicants had to prove ‘exceptional and unusual circumstances to warrant their release’. Two important factors would guide a court making the bail decision – the gravity of the offence and the likelihood of success on appeal.

Over-emphasised

Should the fact that personal violence was not involved be considered as a favourable factor? Tibatemwa-Ekirikubinza thought not. Her comments on this issue, which could be crucial in the future when cases of white-collar crime are involved, were that, by their very nature, the offences of which the two had been convicted did not involve violence, and that that difference – between violent and non-violent crimes – had been ‘over-emphasised’ by counsel.

‘In matters of causing financial loss, making false claims to a government entity such as the URA, regard should be made to the extent of loss caused to the tax payer and the potential implication for the country’s development rather than asserting that the case is of a non-violent nature.’

As to the question of whether the appeal was, on the face of it, ‘arguable’, she said the applicants did not include the record of the proceedings with the papers they had filed for their bail application. That meant that the prospects for success ‘cannot exhaustively be evaluated.’

Substantial

Given the documents before her, she said, she could not determine whether on the face of it, the Court of Appeal had failed in its duty of re-evaluating the evidence of various prosecution witnesses during the trial.

True, the sureties were all substantial, and she assumed they would appreciate their legal duties as sureties in an application for bail. It was also so that the two had complied with earlier bail conditions.

‘Be that as it may, in consideration of all the circumstances of this case, I find that the applicants have not proved existence of unusual and exceptional circumstances to warrant their release.’

Bail pending appeal was thus disallowed.

‘A matter of justice’, Legalbrief, 1 March 2022

Carmel Rickard

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