Caught Napping! How Spies penetrated MTN Uganda servers in Mutundwe and uncovered a UGX3Tn tax evasion rip-off

Investigation Exclusive: It’s like a prize winning Hollywood script. Spies go inside, navigate the supposedly foolproof financial system of the telecom company and get away undetected. Mission? The secret agents breach the covert telecom system, seeking to probe numerous claims of tax evasion levelled against the firm.

The spies end up catching the firm pants as they uncover over Uganda Shillings Three Trillion which was pocketed without being taxed. The telecom company at pains is none other but MTN Uganda. It declared UGX1.4 Trillion in place of the UGX5Tn they had earned in 2017, hence paying only taxes for the declared figure, and URA showered them with praises over those peanuts!

The mission begins as we have explained at the start. Spies of the Ugandan counterintelligence agency, the Internal Security Organization (ISO), ‘kidnaps’ a one Moses Keefah Musasizi, a data manager for facilities at Huawei Uganda, also responsible for physical access to the MTN IT Data Centre. This is around 5PM, but he’s kept until its dark. 

At about 9PM, with Musasizi’s help, the ISO IT spies covertly go inside the telecom’s hi-tech system at Mutundwe, a city suburb laid in the South East of Capital Kampala. Whatever their mission was remained a mystery even to their ‘hosts’… “We are yet to determine the extent of interruption to our network activities and the financial impact. It is also possible that some data has been tempered with or illegally accessed and taken from the premise,” MTN’s statement states the following day.

To date, the spies’ motive and their findings remain anonymous before the public. But this is no longer the stance, for The Investigator comes with the details of what happened and how the raid was meant to uncover the galleys of differences in income earned, and what was finally declared to the country’s tax authorities.

Here is what happened. A company outsourced by MTN, Huawei, collects data from the towers (or masts) comprising of the total number of subscribers transacting on the platform of the telecom firm at a daily, monthly, as well as yearly basis. Huawei also collects data in regard to the total number of transactions including those of the mobile money agents, as well as the revenue earned.

Huawei posts the same onto a dashboard, an information visualization portal, exclusively used by the Chief Executive Officer of MTN Uganda. The system reflects all the revenue accruing to MTN from sales of various products. The portal being a good source of info, the secret agents concentrated their investigation around this system.

The spies discovered that upon receiving the data reported above, MTN tinkers with it. It does this by capturing figures that are far below the genuine ones collected by the masts. The figures adjusted downwards are then sent to the Uganda Revenue Authority for purposes of assessing and determining the taxes payable by MTN.

It is through this kind of self-assessment and unlawfully adjusted figures by MTN that URA ends up basing on, to determine the taxes, of course much lower, which the telecom giant is supposed to pay to the government of Uganda.

To help our dear readers understand the magnitude of this problem which led to a loss of a whopping three trillion shillings, we ought to inform you that the investigations at hand covered a period of just one year; 2017.

But MTN Uganda, according to the investigation report, appears not to be stealing from the government of Ugandan alone, but also from its parent company back in South Africa. What MTN reports to their bosses in South Africa in terms of income seems to be at variance with what the telecom company actually earns from the business it is doing in Uganda.

The report we are basing this article on is titled ‘Under-declaration of Revenues by MTN Uganda.’ It is a project that was undertaken by specifically the CTO Cyber and Tech Administration wing of the country’s intelligence agency.

The report quotes automated financial reports which Huawei submits to the CEO and Chief Financial Officer (CFO) on a daily basis. A Chinese firm, Huawei is outsourced by MTN Uganda to provide network infrastructure. The info is transmitted by Huawei through a covert and secure channel. “The data originates from the Telecom Base Stations or towers and is sent through a secure channel manned by Huawei, for the consumption of the CEO of MTN Uganda,” the report offers.

Through the same covert channel, the secret agents continue, “we have accessed a separate set of financial information that paints a contrasting picture from the raw tower that’s sent by Huawei to the CEO Dashboard.” For the detectives to obtain the true financial info, they simply clicked on the buttons on the portal in question and all the information they wanted would spring up.

“This is the most accurate portrayal of the financial revenues accruing to MTN Uganda from the sales of their various products in Uganda, and it’s the info attained therefrom that we compared to other submitted financials of MTN by MTN, to reach the conclusion that MTN is grossly misrepresenting their financial position to both the Uganda Government agencies (URA, UCC, UIA) and also to their shareholders in South Africa,” the spies partly educate. Watch this space…