Mis-declaration, fraud render Rs2.6bln tax losses to national exchequer

KARACHI: Mis-declaration of imported betel leaves and frauds during customs clearance at the Air Freight Unit (AFU) Lahore have rendered around Rs2.6 billion of tax losses to national exchequer during the five years since July 2007, an official report revealed on Monday.
The report, presented by a five-member committee comprised of senior customs officials to probe into the embezzlement to the Federal Board of Revenue (FBR), nominated collectors posted at AFU Lahore in different time durations and concluded that due to serious flaws the customs could not be able to collect the duty and deposit it to national exchequer.
The report, after undertaking the scrutiny of import data and subsequent clearance, said mis-declaration and embezzlement on clearance of betel leaves between July 1, 2007 and July 18, 2012 from AFU Lahore cost national exchequer to the tune of Rs2.6 billion and the fraud remained unabated.
The committee, constituted in 2013 by the FBR, found both customs officials and importers involved in the scam. It put the onus on the then deputy collectors and assistant collectors at AFU Lahore. The list of culprits also contained the name of the present Director General of I&I Customs during whose tenure the mis-declaration and fraud caused Rs336.5 million losses.
“The phenomenon of fraudulent clearances and embezzlement of due government revenue has existed at AFU Lahore since long, to say at least, clearly reflect apathy and gross inefficiency on the part of the whole hierarchy of officers ranging from the assistant collectors to the collectors in whose administrative control AFU Lahore remained from time to time,” said the report.
It further said the period (between July 1, 2007 and June 30, 2009) was only indicative as the record of 50 percent of the goods declarations (GDs) of the consignments was not available.
“However, during the period of three years (July 1, 2009 to June 30, 2012) for which instant investigation has been mandated the extent of defrauded amount works out to be Rs1.958 billion,” it added.
The probing team unearthed the defrauded amount through the scrutiny of Pakistan Revenue Automation (Pvt) Ltd data, which were verified by Shaheen Airport Service manual record maintained at AFU Lahore.
The report said the manual records of clearance of betel leaves from the unit had been removed to save the fraudsters, including the customs officers, from criminal liability
It noted that when the fraud surfaced in February 2012 the senior management of the collectorate could have taken the entire record into custody.
“Even the record relating to the post-detection period was allowed to be misappropriated/stolen,” it said.
The committee included Muhammad Asif, Deputy Collector Model Customs Collectorate (MCC) Islamabad, Asad Raza Rizvi, Deputy Director Intelligence and Investigation (Customs), FBR Lahore, Junaid Jalil Khan, Additional Director I&I Customs, Islamabad, Manzoor Hussain Memon, Director I&I Customs, Gwadar, and Mohammad Riaz, Director General I&I Customs FBR Islamabad.
The probe committee observed that concerned customs authorities had shown no interest in recovery of amount despite that the then collector initiated the investigation.
“It is failure on the part of successive senior managements of MCC (Model Custom Collectorate) Lahore and MCC Preventive Lahore that no concrete action could be taken either for recovery of the defrauded government revenue or bringing the culprits to book,” said the body.
The report said that despite written and specific information on the fraud received by the then collector Ali Salman Abbasi and the additional collector Dr Asif Mehmood Jah, the crime continued unabated.
It said Ali Salman Abbasi was transferred in July 2012; however the collectors posted after him, have to date, failed to recover the missing record.
It further said the FIRs on account of missing record were filed in June 2013, while Abbasi had left MCC Lahore in July 2012.
“Why his successor sat on the record for nearly one year needs some explaining,” the report questioned.
Sources in the Pakistan Customs said the National Accountability Bureau had taken up the matter and started questioning the officials related to the scam.