Sri Lanka: Evidence of Embezzlement of govt revenue overwhelming

Nagananda Kodituwakku
Attorney at Law, Solicitor and the former head of the frauds investigations [RTF] of Customs administration

Customs investigators have uncovered another massive revenue fraud committed by organised fraudster mafia with the corroboration of certain unscrupulous elements in the Customs administration.

According to the discovery, the fraudster elements in the Customs have accumulated ill-gotten wealth of Rs. 17 million in bribes to release a shipload of 2690 metric tonnes of palm oil consignment, grossly undervalued for customs duty purposes. First hand information obtained within reveals that both Customs Chief and his deputy are allegedly involved in the fraud.

It is revealed that, whereas the normal market value of Palm oil was $ 325 to 350 per metric ton, the importer had made a deliberate false declaration understating the value for customs purposes and thereby defrauded massive sum of government revenue. Although the volume of revenue misappropriated by the corrupt officials had come to light, the scale of the fraud committed by the fraudster importer is yet to be confirmed.

Questioned by the media the Customs Chief has admitted the revenue fraud but said that he was not sure about the amount defrauded by his officers. As customary he has said that that "severe disciplinary action would be taken" against the wrongdoers.

Shipment release on personal guarantee

Information obtained within further reveals that the palm oil shipment in issue had been released on a "personal guarantee" recommended by Director Valuation, and approved by the Customs chief, himself. Officers claim that release of goods on "personal guarantee" is against the customs law and such guarantees are not worth the paper it is given as in most cases such guarantees have found missing after release of the goods.

Regarding release of "general cargo", customs law or regulations made there under provide - except for goods released under special circumstances i.e. bonded goods - no provision whatsoever to the customs authorities to compromise with suspected revenue fraudsters and defer the collection of government revenue.

When the settle law governing customs business is such, the law-abiding officers in the customs administration now demand Customs Chief for a plausible explanation as to what induced him to release the shipment in issue on "personal guarantee" which is against the statute. Particularly in the light of the apparent evidence of attempted revenue fraud ran into several million rupees, the officers condemn wrongdoing, pointed out that it is impossible to give any plausible explanation.

Malpractices are common in customs

It is also reported that this is not the first time that this kind of major fraud exposed, where those who hold high posts in the customs were found involved. In 2001 then Valuation chief was allegedly involved in a similar revenue fraud, "Wacachiku steel scam", where a shipload of steel had been released in similar fashion.

At the investigations conducted after the exposure of the said fraud, the importer Wacachiku Company has admitted that he deliberately under stated the value for customs purposes with intent to defraud the revenue. Then a heavy penalty was imposed on the importer in addition to recovery of several millions government revenue defrauded by the importer.

It is further revealed that, subsequent to uncovering of the said fraud, Director was removed from the post of head of the Valuation Division and the public services commission ordered a disciplinary inquiry against him. However with no apparent reasons the said disciplinary inquiry was indefinitely delayed with no inquiry officer appointed to hear the case.

Now it is learned that the original case record has been removed by the "interested parties concern" and they demand suspension of the inquiry in the absence of the original case record. In this sort of scenario officers say that it is very hard to believe, an accused in another revenue fraud [action of which is still pending], as to how he was appointed to be the head of valuation division again.

In this kind of set-up Customs officers are very suspicious about the integrity of the Customs Chief when he want them to believe that "severe disciplinary action would be taken" against the wrongdoers. In an environment where inaction against the organised wrongdoing is apparent, the right thinking officers who condemn embezzlement of government revenue believe that DGC's utterance is an insult to the intelligence of the officers.



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