Bodyguards Flank Burundi Taxman as AK-47s Back Revenue Doubling

The instant Kieran Holmes looks like he’s about to go anywhere in Burundi, four security guards clad in blue camouflage and aviator sunglasses and brandishing AK-47 assault rifles spring into action.

They jump onto a flatbed truck that veers into the street as a police officer’s whistle signals pedestrians and vehicles to clear the path. Holmes follows behind in a bulletproof SUV.

The 59-year-old Irishman says the protection is necessary because he’s learned of several “credible threats” on his life since his appointment two years ago as commissioner-general of the country’s first tax-collection authority. He’s been involved in similar projects in Rwanda, Lesotho, Swaziland and Yemen.

Holmes’s overhaul of the East African nation’s revenue- collection system included dismissing almost all the more than 400 tax administrators and recruiting qualified replacements. He clamped down on tax evaders, simplified procedures for filing and seized assets for non-compliant individuals and businesses. He even had the tax office’s cement walls taken down with sledgehammers and installed glass doors.

“When I followed through with my promise to break every wall, people knew I was serious,” Holmes said with an Irish lilt in his office in Bujumbura, the capital. “They suddenly didn’t have the protection of going into their office, closing the door and dealing with taxpayers in secrecy.”

‘Resounding Success’

His efforts have helped revenue double since 2009 in the world’s fifth-poorest country, providing funds for projects including developing one of the world’s 10 largest untapped nickel deposits. Holmes’s program could serve as a model for other sub-Saharan African nations and compares with overhauls in Vietnam, El Salvador, and Tanzania, according to Oral Williams, the International Monetary Fund’s chief of mission for Burundi.

“The population can tangibly see the fruits of this reform through greater accountability and increased provision of social services,” Williams said.

Burundian President Pierre Nkurunziza, in power since 2005, touts the revenue authority’s achievements in combatting corruption, and the World Bank ranked Burundi the fifth most- improved business reformer in its 2013 Doing Business Report. It cited improvement in trading across borders and the combination of multiple tax authorities into one.

Holmes, the eldest of eight children, grew up in a working class family in Sligo, in the northwest of Ireland, where as a teenager he hauled cargo on the docks of the port.

500-Calorie Diet

He graduated from Trinity College in Dublin with an economics degree. The father of three has shed 19 kilograms (42 pounds) since January through a diet that included eating 500 calories daily for seven weeks, cutting out alcohol and exercising at his home gym.

Holmes’s entry into revising tax systems started small. In 1984, he became the tax inspector of Kiribati, a 33-island archipelago in the Pacific Ocean inhabited by 100,000 people, after answering a newspaper job advertisement for the position. From 2002 until 2010, he was an adviser to the Rwandan Revenue Authority, where his measures helped earn the country the title of best business reformer in 2010 by the World Bank. He went to Burundi after responding to an advertisement by TradeMark East Africa, a non-profit group that promotes regional integration.

“Kieran brings international best practices, having worked all over the world,” said Frank Matsaert, chief executive officer of TradeMark, which pays his salary. “His experience in Rwanda has put him in good stead to understand the challenges of a landlocked country.”

Unsanctioned Killings

Burundi, about the size of Maryland with 8 million people, has been rebuilding its economy since the 2008 end of a 15-year civil war that cost at least 300,000 lives. Its biggest foreign- exchange earner is coffee and nine out of every 10 residents are subsistence farmers. Activist groups including Human Rights Watch say the country’s transition to peace has been slowed by unsanctioned killings by the military and police.

In 2010, the country’s revenue services were ranked as the most corrupt institution in East Africa, according to an annual bribery index compiled by Transparency International, the Berlin-based anti-graft watchdog. Accounting at the tax authority was done in handwritten ledgers and two-thirds of the 6,000 accounts registered in a database were defunct.

“It was like something you would have seen 50 years ago in developed countries,” said Gilles Brault, a technical adviser to the tax office.

Smugglers’ Kickbacks

Even with corruption reduced, taxpayers can find ways to beat the system. Popular methods include companies and workers arranging to pay taxes at below the official rates by bribing assessors, while smugglers give a kickback to slip their goods across borders undeclared or at reduced volumes and values.

“Many businesspeople have been against the reforms, smugglers of course who have been accumulating illicit wealth and some politicians,” Leonidas Havyarimana, coordinator of Burundi’s national anti-graft strategy, said in an interview. “But the honest ones have eventually supported them and for that, we’re benefiting. Things are definitely changing.”

Holmes’s task is encumbered by politicians who’ve tried to persuade him to reverse decisions to shut bank accounts, he said. While Holmes has never been threatened personally, a worker at his office was confronted by a gunman outside her gate, he said.

“One of the drivers for corruption reported to me from my staff is people asking to give money to political candidates,” Holmes said, as he fiddled with silver bulldog cuff links he bought in South Africa because they symbolize strength. “They want to corrupt some of my staff so a bribe can be facilitated at the agency and then passed on to a political party.”

Higher Rank

Burundi’s tax services have risen 10 places in two years and now rank 11th-worst out of 51 East African institutions, according to the 2012 Transparency International index.

Tax revenue is projected to climb to 545 billion Burundi francs ($364 million) this year, from 300 billion francs in 2009. The tax office plans to double collections again, to 1.2 trillion francs by 2017.

Holmes said he’s also building trust with the country’s 300 biggest taxpayers, which provide 80 percent of state income, including Brarudi SA, the country’s main brewer majority owned by Heineken NV (HEIA), and U-com, the largest mobile-phone operator. And he has no plans to retire.

“I enjoy my work and so long as I remain healthy enough, I shall continue working,” said Holmes, who said that in 1992 he was kidnapped during a visit to Lesotho, though the incident was criminal and not job-related. “Bad stuff happens and retirement is no protection against that.”

To contact the reporter on this story: Sarah McGregor in Nairobi at smcgregor5@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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