Tax Crimes Prosecution Insights

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Tax Crimes Prosecution:
Principles, Procedure & Practical Insights
into Courtroom Successes
- Olumide, Bidemi Daniel
This project is funded by the European Union
Delivered at the United Nations Office on Drugs and Crime (UNODC)
Strategic Training on Corruption Crimes in Taxation on December 3, 2014

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Our Roadmap
1. Brief Overview of Tax Crimes:
Laws and Nature
2. A Run-through some Tax
Crimes
3. Essential Evidentiary Rules
4. Court room Successes -
Practical Insights
5. Case Study

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Laws and Nature of Tax Crimes
1.

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1. Laws and Nature of Tax Crimes:
Working Definition:
A crime or criminal offence is an act or
omission that a law defines or describes
as constituting a crime or offence and
provides a punishment for, and for which
the pronouncement/declaration of a
court of law is required.

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1. Laws and Nature of Tax
Crimes:
Relevant Principles:
1. Only the legislature, by way of a
law passed to that effect, can
legislate on how and what will
constitute a criminal offence. -
Section 36(12) of the 1999
Constitution.

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2. To constitute a crime, the prescribing
statute must expressly refer to the act
or omission as constituting an offence or
a crime or that it is punishable upon
conviction.

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3. A punishment must be statutorily
prescribed for the act or omission to
constitute an offence. The absence of a
punishment takes the act or omission
outside the scope of what we herein
refer to as criminal offences.

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4. Only a court of law can declare whether
an act or omission committed in a
particular circumstance constitutes a
crime and accordingly deserving of no
more than the statutorily provided
punishment.

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1. Laws and Nature of Tax
Crimes:
What is Tax Evasion:
Best described as a descriptive word
for acts that are calculated to evade or
get away from a lawful obligation to
subject oneself or ones economic
activities to the tax laws. It is at best a
collective noun for all the myriads of
tax crimes that feature in our tax laws.

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Some Tax Crimes under Nigerian Law
2.

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2. Some Tax Crimes under Nigerian Law:
Please refer to pages 4 to 23 of your text.

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Evidentiary Rules
3.

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3. Evidentiary Rules:
“It is essential for you to have a thorough knowledge of the law of evidence and
procedure, otherwise you will be handicapped at every turn by uncertainty as to
whether a piece of evidence is admissible, whether it has to be proved by oral
evidence, whether, if it is contained in a document, it is necessary to call the
maker of it and so forth. Much of this knowledge should and will become almost
instinctive, but it is, of course, necessary to have a thorough working knowledge of
even the more unusual points of evidence and procedure. The reason is that this is
the only branch of the law in which there is often no opportunity to research a
point, because it comes up unexpectedly and calls for an instant response. Take
as an obvious example, an issue as to whether a piece of evidence is or is not
hearsay; you have to object to it as it is about to be led. You must be able to
recognize it immediately as hearsay and to formulate your objection…” Judge
Michael Hyam: “Advocacy Skills” (1990; Blackstone Press Limited; Great Britain)
p. 10 to 11

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1. That a tax crime has been committed by the accused, must
be established by the prosecution, by proving all the acts,
omissions or intentions that constitute the crime (proof
beyond reasonable doubt) - Section 139(3)(b) of the
Evidence Act.
2. It is for the accused to prove the existence of any fact
which brings his case outside the ambit of the crime (as
legally defined) - Section 139(1) of the Evidence Act.

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3. Evidence shall only be given of relevant facts, provided they are not
remote in which case, a court can exclude such - Section 1 of the
Evidence Act.
4. Relevant facts are facts in issue, facts connected with the facts in issue, or
facts that cast doubt on the existence of facts in issue. It can be rightly
said that the central theme of the Evidence Act is an attempt at
providing as many instances of relevant facts as possible - Sections 4 to
13 of the Evidence Act.
5. “Facts in issue” refer to facts that need to be proved or disproved to
establish or defend a criminal allegation - Section 2 of the Evidence Act.

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6. Save for involuntary confessions, unlawfully obtained evidence are
generally admissible unless the court decides otherwise. The test for
such decision being whether the manner of obtaining the evidence
out-weighs the value of the evidence - Sections 14 and 15 of the
Evidence Act.
7. Confessions are generally admissible against the maker provided
they were made voluntarily. Involuntary confessions are confessions
made either on the threat or use of toture, inhuman or degrading
treatment or other forms of violence or by improper compulsion (in
a previous suit). Confessions obtained by deception on the accused
or otherwise given by the accused in an ignorant or drunken state
are not inadmissible involuntary confessions - Sections 28 to 32 of
the Evidence Act.

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8. A person who in a judicial proceeding gives account of
statements not made by him or of inadmissible documents
is said to be giving “hearsay” evidence. Hearsay
evidence is generally inadmissible except sanctioned by
the Evidence Act – See generally Sections 37 to 49 of the
Evidence Act on admissible hearsay evidence.
9. Though admissible, statements (including computer-
generated statements) that are largely inaccurate due to
time lag or the improper interests of the maker, will carry
little or no weight on the scale of justice - Section 34 of
the Evidence Act.

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10. Documentary evidence is at the heart of successful tax litigation.
The ability of the Prosecutor to successfully present the Court with all
the documentary evidence required to establish a tax crime is
arguably one of the highest hurdle to scale in successful tax litigation.
The rules on documentary evidence are a bit technical particularly for
the ‘proving’ party and have naturally become the stronghold for the
defence.
11. Documents are either public or private. Private documents are
documents which are not Public Documents. Public documents are
essentially documents that either proceed from or are in the custody
of any Government. Accordingly, private documents that are in the
custody of Government are Public Documents. - Sections 102 and 103
of the Evidence Act.

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11. All relevant documents (including computer-generated
documents) are admissible in their original (primary) or
other (secondary) form. While the first rule is that the
original document must be provided as proof of it and its
content, same documents or information contained therein
will only be admissible in other prescribed (secondary)
forms, if proper steps have been taken and reasonable
explanations provided on the reason for the unavailability
of the primary form of the document. One of such proper
steps is that a ‘notice to produce’ has been duly served on
a party (or his legal counsel) who is alleged to be in
possession or control of the primary version – Sections 83
to 97 of the Evidence Act

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12. Witnesses could also be key to the success of a case. All persons
are competent to testify unless the Court rules otherwise on grounds
of age, sickness or similar grounds. What is relevant is not the
number of witnesses but the quality of their testimony - Section 200
of the Evidence Act.
13. An accused can only, at his own election, testify in his case. He
cannot be compelled to do so - Sections 180(a) of the Evidence Act
and 36(11) of the 1999 Constitution.
14. Other than the accused who elects to testify, a Witness is not bound
to answer any question or produce any document which by so
doing, exposes his or herself or spouse to a criminal charge or
penalty (excluding civil liability).- Sections 183 and 184 of the
Evidence Act.

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15. Mastery of the skills of examination of Witnesses is a must for
Prosecutors. The Prosecutor should largely focus on establishing
his case through his Witnesses both by examination-in-chief and
re-examination. Cross-examination of the Defence Witnesses is
not a must. Do not cross-examine unless: (i) you consider that the
answers that you elicit from the Defence Witness will help your
case; or (ii) it is extremely important to discredit the Defence
Witness. The mother of all rules in cross-examination is never to
ask a question, the answer to which you are unsure of; you may
just be surprised! As much as possible use leading questions for
your entire cross-examination. Tame the Defence Witness to a
“yes” or “no” answer.

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Some Practical Insights into Courtroom
Successes
4.

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4. Some Practical Insights into
Courtroom Successes:
1. Always work as and in a team. The oft complexity of tax
crimes will require that each member of both the tax
investigation and prosecution sub-teams are looking at
different (yet complementing) aspects of the case. A team is
not a group of people; but rather a group of people with a
common objective and who for the sake of the common
objective perform different yet complementing activities. In a
team “activities” are always sacrificed on the altar of the
“common objective”.

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4. Some Practical Insights into Courtroom Successes:
2. It is highly recommended that the investigation and probable prosecution
functions of a tax case be “projectized”. For this purpose, I will refer to all the
work involved in the entire tax investigation and prosecution process as “Work”.
a. Properly initiate or consciously decide how Work should be initiated. Is a
formal report required, for example, from the Tax Audit Department or
other Government Agency?
b. Plan for how Work will be executed. Be SMART. Set out with the scope of
the Work firmly understood by the team.
c. Execute the Work according to the plan.
d. Be able to monitor and control the process for the execution of the work
such that, where appropriate, the Work plan can be revised and thereafter
the Work should be executed according to the revised Work plan

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e. Always close out each Work with a final Report. The final outcome will not
always be convictions; but even in the failure of a obtaining a conviction,
there are lessons to be learned. Document this and find a way of sharing
the knowledge with the organisation. Failure does not hurt as bad as
avoidable failures.
f. Money is also a scarce resource for Government. Work within a budget. Tax
investigation and prosecution comes with their financial costs (aside from the
free filing cost). Experts and other knowledgeable witnesses or advisers
may often have to be paid for their time. Trips have to be made,
g. Time is expensive. Set out realistic time to completion or schedule for each
and all functions.
h. Have a very efficient semi-formal process of communication between team
members. A more formal process of communication can be maintained with
other stakeholders, organizational bosses, the media etc.

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3. An excellent tax investigation process (from the commencement of
the process to the conclusion of the final investigation report) is the
foundation of desirable Courtroom outcomes. It is the tax
investigation report that determines whether or not a tax crime
should be prosecuted.
4. The Prosecutor should be a central part (if not the leader) of the
tax investigation team. He knows what the Court requires and it is
he who sees and knows what it is that he is looking for.
5. Even after the instruction/preferment of the tax crime case, the tax
investigation sub-team should still be on a standby mode to assist
with the review (or further investigation) of any new and un-
envisaged evidence provided by the defense.

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6. There is no substitute for hard (spelt “smart”) work in the ‘science’ of
litigation. Starting from the charge sheet or information to be
preferred and filed in Court to the final submissions (written and or
oral) to be filed and or made, the Prosecutor must be diligent
enough to pay attention to every detail of the case.
7. The “copy and paste” method of work (in the advent of most
professionals having to personally do their type-settings) should be
highly discouraged. Even if similar texts have to be copied and
pasted, the prosecution sub-team, prior to filing any process in
Court, should have the discipline to “all” read such process at least
two times over, to ensure against all of context, typographical or
syntax errors. Well prepared and presented paper work, to an
extent, demonstrates the tidiness of the mind(s) of its authors.

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8. “It is necessary to prepare your case by taking a general and
specific view of it so that you have clear in your mind not only what
you have to prove or disprove, but also the way in which you are
going to do it.” - Judge Hyam: “Advocacy Skills” (1990; Blackstone
Press Limited; Great Britain) p. 10.
9. That the Prosecutor must have the keen presence of mind in the
Courtroom is no understatement or gain-saying; it is vital for
success. Great attention must be paid to both the nuances or other
emotional out-plays of the Judge most importantly and the
Defence secondarily. The Prosecutor must be sensitive enough to
know when he is losing or about losing the interest of the judge; he
must be intelligent enough to quickly take hints provided by the
Bench and make amends where necessary. A Prosecutor with a
wandering mind cannot afford these luxuries.

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10. A successful Prosecutor must set out to win the war
(the conviction) and not every battle (the relatively
inconsequential technical arguments) in the Courtroom.
A good sense of logic and appreciation of the
relevant parts of the case are essential. It allows the
Prosecutor focus on and work at the big picture rather
than the oft time-consuming and relatively
inconsequential technical arguments the Defence will
always throw-up. The logic of the case lies in: (i) what
needs to be proved; (ii) any other law or facts of the
case that matters to the Judge.

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11. To the extent that tax cases often come with a large dose of
documentary evidence, the Prosecutor must devise a means of
presenting these evidence to the Court in a manner that is quite
easy to understand and follow. The due pagination of files and
their contents cannot be overstated. Using bookmarkers or page
dividers to appropriately segment an avalanche of papers will
prove a wise move.
12. The use of ‘well-tutored’ experts to tell the story of the
documents or other evidence is key. Most Judges require the
perspective of an expert in order to make up their minds on
complicated evidence. The Prosecutor must use this well in a well
ordered performance – the expert is the orchestra, the
Prosecutor - the conductor, and the Judge - the audience.

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13. Just as using an expert can build your case, so also can the
Defence’s expert crack the building. The first rule is to focus on
your expert and ensure that a good job has been done both at
examination-in-chief and re-examination. The second is to
seriously decide whether or not to cross-examine the Defence
expert. I agree with Judge Hyam to the extent that your
objective in cross-examining an expert are any of or both of (i)
discrediting him; and or (ii) cause him to admit the existence of
alternative credible interpretation (your expert’s opinion).

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Case Study
5.

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CASE STUDY

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