LIRS to Launch Whistleblower Initiative

LIRS to Launch Whistleblower Initiative

Introduction:

By a Press Release dated 2 August 2022, the Lagos Internal Revenue Service (LIRS) notified the public of a state-wide whistleblower initiative (the Initiative) set to be launched on 5 August 2022 at Protea Select Hotel, Ikeja. The Initiative is intended to serve as a medium through which stakeholders and the public at large may call the attention of revenue authorities to illicit actions and financial crimes for proper action to be taken to remedy them.

It was stated in the Press Release that the Initiative would be floated on a platform, independently run by Deloitte, which would allow information to be provided anonymously and kept confidential. The Initiative is designed to ‘protect whistle-blowers from victimization and to encourage them to freely report without fear’.

Our Comments:

The Whistleblowing Initiative is a mechanism introduced by the LIRS, commissioning an independent body (Deloitte) to receive and process leads relating to non-compliance with the tax legislation. The overall purpose of the Initiative is to promote transparency and accountability to stakeholders and the public at large. To fully actualize this objective, the factors indicated below must be taken into consideration.

Protection of Whistleblowers

We note that a major challenge to fighting tax-related crimes is detecting and exposing bribery, fraud, and other wrongdoings and an effective way to shine the light on these ills is whistleblowing. However, whistleblowers often fear retaliation and avoid disclosures. To ensure that whistleblowers are adequately protected from retaliation it is necessary to make whistleblower protection laws and ensure their enforcement.

In addition to protection against retaliation, it is essential to provide a safe and effective avenue to receive and address whistleblower reports in order to foster a culture of trust and responsiveness from persons who may have tipoffs.

Investigative Process

It would be easy to ignore allegations made by whistleblowers and sweep them under the carpet in the absence of a laid down procedure for carrying out investigations upon the making of substantial allegations by whistleblowers. Although the suitability of an investigative process may vary from case to case, it is necessary to have a laid down procedure to enable whistleblowers to track the progress of their reports.

Legislation on whistleblower protection

Data obtained from whistleblowerprotection.eu reveals that due to corruption, the EU loses 120 billion euros of public tax money each year, which could be saved by installing proper horizontal EU legislation on whistleblower protection. Although no such data is available for Nigeria, enacting whistleblower protection may achieve a significant stoppage of revenue leakages in the tax administration system.

Raising Awareness

Educating the public will promote an informed understanding of the importance of whistleblowing and its benefits to society especially as it relates to protecting public revenue.

Conclusion:

The whistleblowing Initiative if properly implemented would awaken the stakeholders’ awareness to comply with tax legislation and report tax irregularities which would in turn increase equitable treatment of businesses that do not comply with tax legislation through the imposition of penalties.

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