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Scenario 14 :

MALASI(150201014)

ANKUR

A tax inspector asks for a kickback in exchange for granting a


discharge or accepting a settlement in a tax dispute.
It was a long and tiresome day for Mr. A. He had just completed work that he had
been given in office and was just waiting for the tax inspector, MR. T, to come
and talk with him regarding the recent tax dispute that the company had with
the government of the country. Mr. A had been working for IMF for the past ten
years, and had been transferred to a new office to take care of the companys
branch operations in a foreign country two years ago. He had been sent to this
new office in order to handle the operations of the company in the country. He
had a small staff of 25 members which included the finance, the procurement,
the liaison and other such departments necessary for the day to day operations
of the company.
One of the first things done by Mr. A after coming to the office was to sit down
and have a talk with his finance officer inside his office. Mr. F was a resident of
the country and had been recruited because he had very good knowledge of the
financial information of the country. One the very first day Mr. A asked Mr. F to
come to his office when he was free and asked Mr. F to give him a brief overview
of the tax structure of the country so that he would know what to look out for
when making necessary decisions regarding the operation of the office. He also
asked Mr. F if there were any books that would help him in this regard further.
By learning from Mr. F, and by reading the book/s recommended by Mr. F, Mr. A
gained a good understanding on the various tax laws in the country including
any reduction in taxes for corporate for conducting CSR activities beneficial to
the country or the society in which the CSR activity is conducted. The amount of
reduction in taxes was stated by the government for better understanding of
companies but the definition of beneficial was not explicitly defined in the
constitutional and as such Mr. A was a bit apprehensive on the implication such
an open definition, even when it was said that you could appeal to the
government if they rejected or ignored few of the CSR activity that the company
had done when considering the total tax amount of the company.
It was with the above doubts that were going through the mind of Mr. A as the
tax inspector continued with the auditing of the financials of the company. Mr. A
was sure that he along with Mr. F had done everything they could to make sure
that the CSR activity that they had considered when filing their taxes could
without a doubt be considered as beneficial to the country/ society. They even
took help from Financial Consultants within the country to make sure that they
did not commit any mistakes. They had paid the amount that they had come up
with and they were sure that there would not be any problem with the net tax
that they had paid to the government this year.
After another hour Mr. T came into the office and brought along with him the
results of auditing that he had done for the company previously.

Mr. A: Good Evening Mr. T.


Mr. T:Good evening, Mr. A. I hope that you have had a nice day today.
Mr. A: My day will be better after we clear up this misunderstanding regarding
the tax dispute with your government.
Mr. T: I would like this matter to finish quickly as well Mr. A and I hope I will have
your cooperation in clearing this dispute quickly
Mr. A: Ofcourse Mr. T.
Mr. T: Well, lets start with the financials of the company. While all the revenue,
expenses and cost of materials check out, there was a small problem with the
amount of deduction that was done in the net tax with respect to the CSR
activities done by your company.
Mr. A: What was the problem Mr. T?
Mr. T: Well some of the activities done by the company would not be considered
as beneficial to the society and would instead be considered as much more
beneficial to the company and as such would not be liable for tax rebate as your
company had done Mr. A.
Mr. A: I am sure there has been a mistake Mr. T, I have had intense discussion
with many people and they assured me that all the activities that we considered
under CSR were applicable for tax rebate within the country.
Mr. T: Well I can assure you that I am not mistaken and this may lead to extra
penalties from the government for trying to run from paying your taxes.
Mr. A: We assure you that our company had no such intention.
Mr. T: Of course, I am sure that you did not mean for this to happen, but at the
same time it cannot be argued that it has happened. But you need not worry, I
am sure that I can take of this.
This started alarms bells ringing in Mr. As mind but he continued his discussion
with Mr. T none the less.
Mr. A: We would be glad for any help from you, Mr. T. Please clarify how you may
be of help to us?
Mr. T: Well, it would easy for me to cover this up as a mistake by the
government, but that would put at a major risk so
Mr. A immediately understood what Mr. T was talking about and he had no plans
to give any bribe or compensation to Mr. A. Especially when Mr. A was sure that
they had followed all the correct procedures and they could challenge the tax
dispute and win it. Mr. A immediately started thinking up a plan in his mind.

Mr. A: I understand, let me bring Mr. F into my office as he is the finance head of
the office and he will be better able to help you.
Mr. T: Of course.
Mr. A quickly went to Mr. Fs office and told him the entire story. Mr. F once again
assured him that there was no mistake in the tax rebate and that it would not be
wise to pay Mr. T any compensation as that would allow him to take extra cash
from the company every year.
Mr. A and Mr. F quickly came up with a plan. They went to Mr. As office and
asked Mr. T that he would be required to bring an official slip from his
department as they would have to show the same to their superiors as justifiable
amount that they had to pay for work in the country and asked Mr. T to bring the
Official slip next week as he would be busy this week. Mr. T was unable to comply
with the request and said that such things would not be necessary. Despite Mr.
Ts protests regarding the matter Mr. A and Mr. F were steadfast on their demand
and banter between the three continued for quite some time. Soon Mr. T left the
office frustrated, saying that the office had made a really bad decision regarding
the matter.
Once Mr. T had left the office, Mr. A and Mr. F quickly decided on the next plan of
action. They started making calls in order to find information regarding the
government department that Mr. T was part of and quickly found out that Mr. T
was not a rogue employee and that it was a systematic corruption of the entire
department. As such exposing his actions to his superiors would hurt the
company. Therefore they decided to report to the government directly as such
they quickly called up a financial consultant and asked him to come the very
next day in order to discuss matters related to their taxes. They also quickly
called up the secretary of an upper member of the financial department in order
to set up an appointment. Luckily they got an appointment the next week itself.
Thus they spent the rest of the week setting up their case against the tax dispute
that their company had been burdened with.
By next week they had all the proof that they would ever need in order to
combat the tax dispute so they quickly got all their documents ready and left for
their appointment with the government official. The reached his office and asked
to be allowed to meet him earlier than their appointment. Luckily the official was
free that day and they quickly went into his office. They quickly showed
everything to him and asked him to look into their tax dispute.
Once the entire debacle was over with, with them coming out on top and having
their tax dispute overturned as it found out that the government had made a
mistake and the company was applicable to receive the amount of tax rebate
that they had asked for, Mr. A started thinking about the corruption in the
country they were in. He started wondering if the other employees within the
office were paying bribes in order to complete the companys work quicker. As
such he decided that certain guidelines had to be issued to the employees in
order to make sure no bribes were paid by the company in order to process their

work quicker in the government offices. As such he set about looking up the
guidelines set about by International Chambers of Commerce, United
Nations Global Impact, Transparency International and World Economic
Forums, and took them as a guide to set up rules for anti- corruption within his
own office.
At the next meeting with the headquarter, Mr. A laid out the rules that he had
come up with to combat corruption in his office and asked permission from the
headquarters to employ the same in other offices so that his office would not feel
mistreated. The headquarters were impressed with the work that he had done in
this regard and agreed with his suggestions with some minute changes to the
rules and regulations. Thus Mr. A was able to handle the scenario efficiently and
was able to set up proper rules and regulations so that other members in the
organisation would be able to handle such situations properly as well.