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Herat customs office riven by graft, tax evasion

Herat customs office riven by graft, tax evasion

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Jul 08, 2020 - 19:01

HERAT CITY (Pajhwok): Tens of millions of afghanis in state revenue, payable to Herat’s customs office, end up daily in pockets of customs staff, importers and government officials.

Pajhwok Afghan News found evidence of massive tax evasion by accessing relevant documents and interviewing local sources, Provincial Council members, former customs officials, importers and transporters.

Available information and documents show the Herat customs office is riven by that institutionalised corruption. Government officials and entrepreneurs are among the beneficiaries of organised tax evasion.

Local officials admit at least 200 trucks loaded with commercial goods do not pay the customs duty or are not charged due to the insignificance of the items they carry.

Tax evasion is coordinated between commission agents and customs officials only after they receive bribes. Consequently, trucks are allowed to enter Herat City -- the provincial capital.

The duty payable by each truck ranges between one and three million afghanis. However, vehicles are allowed to exit the customs office without paying duty. In some cases, each vehicle is required to pay up to 80,000 afghanis in the name of insignificant and inexpensive goods.

Pajhwok’s findings show that customs duty was not paid on expensive imported items such as television sets, laptops, freezers, armored and latest vehicles, perfumes, cigarettes, carpets, energy drinks (Red Bull, Monster, Big Bear). In some instances, these items were taxed as inexpensive imported items such as flour, corn, cement, marble and puff pastry.

Over the past several years, expensive imported items are not registered in the customs office due to the fact that most of them entered Herat City in the name of ordinary goods. The objective is to avoid paying full duty.

Under the Customs Law, a truck loaded with expensive imported items such as cigarette, energy drinks or televisions sets should be charged one million to three million afghanis. But documents show trucks loaded with such items are charged 80,000 to 250,000 afghanis by the customs office.

The governor, Provincial Council members and civil societyinfo-icon activists acknowledge massive corruption and embezzlement of the government revenue, evasion of the custom duty by some truckers and under-invoicing.

5,500 trucks evade tax in 18 months

Herat Governor Syed Wahid Qatali, in an exclusive interview with Pajhwok Afghan News, acknowledged massive corruption in the Islam Qala customs office.

During the last solar yearinfo-icon, he reckoned, over 4,000 trucks evaded the customs duty and since the beginning of the current solar year, nearly 1,500 trucks have committed the same offence.

He confirmed goods that should be taxed three million afghanis by the customs office were actually cleared for a paltry 50,000 afghanis and allowed to enter the city.

Qatali claimed last year and this year a total of 5,500 trucks evaded custom tariff payable, adding he, if proven wrong, was ready to be referred to the Attorney General Office.

He insisted no truck loaded with commercial goods was taxed in line with the law in the customs office. The governor said corrupt elements in the customs office had supporters within the system, including politicians and mafia groups.

.President Ashraf Ghani tasked him with cracking down on mafia groups and eradicating corruption from the Herat customs office. Efforts in this regard were underway, he said.

Qatali claimed 64 loaded trucks that evaded duty or were involved in under-invoicing were intercepted in only one hour.

He admitted deep-rooted corruption in the Islam Qala customs office had resulted in strengthening the hands of mafia groups and barring outsiders from serving there.

Qatali continued: “Corruption has sunk deep roots in the customs office. In the first phase, senior officials and in the second government servants provided opportunities for corruption in the customs office. In the third phase, he maintained, commission agents decided the direction of corruption and officials allowed them to operate openly. Businessmen and people also play a small part in the sordid saga.”

A few months back, the governor recalled, he monitored the customs office on the direction of President Ghani. He found that daily customs revenue should jump from 100 million afghanis to 500 million afghanis.

The govenor’s disclosure comes after the release of a Pajhwok report that over 100 commission agents are active in the Islam Qala. Of them, 10 are linked with mafia groups and they influcence the remaining commission agents. Each of the commission agents possessed over 100 weapons and have direct connnections with customs officials.

In cooordinatiion with customs officials, they paved the way for corruption, irregualties and changing the names of expensive items to inexpansive onses for the dake of lowering the tax rate and letting trucks leave the customs office.

Commission agents have links with militants and provide financial support to them. They continue their activities on the basis of phony licenses. Most of trucks loaded with commercial goods are illegally processed through these commission agents.

Governor Qatali also acknowledged the illegal activities of commission agents and said: “On the direction of President Ghani, I will decide the future of thousands of trucks that evaded tariff or else I will not serve as governor.”

Verification by Provincial Council

Toryalai Tahiri, deputy head of the Provincial Council, called corruption in the customs office a shock and said according to their findings over 100 trucks loaded with commercial goods escape taxes.

He added 15 to 20 trucks evaded customs duty and proceeded daily under one or two valid vehicle registration plate (VRP).

He said whenever a delegation visited the Islam Qala Port for investigations, mafia groups got informed and the customs clearance process was stopped to hide the average flow of imports and corruption.

Tahiri said Provincial Council findings showed most of trucks that should pay custom duty between 800,000 afs to one million afs were charged 100,000 to 180,000 afghanis thanks to forgery of documents and changing the name of expensive items.

He claimed possessing authentic documents that showed a truck loaded with 50 tonnes of goods was charged for only 30 tonnes. If duty on imported items was charged according to the law, the customs revenue could reach 120 million afghanis a day from the current level of 30 to 40 million afghanis, he believed.

Tahiri said all corruption-related documents had been provided to the Attorney General Office but no investigation had been launched yet.

Modus operandi of tax evasion

Pajhwok has learnt that a businessman imported two different products, flour and energy drinks, in two separate vehicles. Near Dogharoon, a place close to the Iranian border, the trucks are unloaded inside a depot.

The businessman reloads one truck with two different products in a way that the inexpensive item, such as flour, provides cover for the expensive good, such as energy drinks, in cargo space of the truck.

In line with the Customs Law, tariff on a truck loaded with energy drinks ranges between one million afs to one and half million afs. But the tariff on a truck loaded with flour or corn is around 50,000 afghanis.

However, a source disclosed that trucks laden with four, energy drinks and corn entered the port in the name of vehicles carrying assorted products on the basis of fake documents prepared by commission agents. The process involves close coordination among businessmen, commission agents and customs employees.

Businessman Zmarai (not a real name)

He told Pajhwok Afghan News that he paid 110,000 afghanis in tax on his merchandise to the customs office -- instead of the 550,000 which was to be paid legally.

He recently managed to import 1,010 cartons of marble weighting 15 tonnes and 15,000 cartons of biscuit weighting 15 tonnes.

The question is how the commission agent carried out the irregularities. Tax documents Zmarai had showed commission agents reduced the biscuit weight from 15 to two tonnes. Thus the duty on imported biscuits was cut to 55.000 afghanis and 15 tonnes of imported marbles also accounted 55,000 afghanis.

 How commission agents bribe custom staff

Syed Ahmad, not a real name, is a former Customs employee and currently he imports commercial goods from Iran. He said businessmen load five tonnes of corn flour into a truck already full of television and mobile-phone sets or other expensive items near the Iranian border. Commission agents prepare for importers documents showing that 40 tonnes of corn flour are loaded into the truck.

He said commission agents refer to the reception of the customs office in Islam Qala for registering the truck into the system and processing the documents.

Syed Ahmad said corruption started from the Reception Department and offering bribes here is linked with the value of goods loaded into the truck.

Reception staff knows well what is actually loaded into the truck. Bribes offered at the reception range between 2,000afs and 10,000afs.

The former custom employee said: “Two employees from the reception office observe the loaded vehicle closely to check what is loaded in the truck. They know during observation that the document and what is loaded in the truck differ, the weight of loaded goods differ so they get their own amount of bribe which starts from 10,000 till 50,000 to allow the truck go ahead.”

After the observation the loaded truck reach to the Reception Department director where the tariff slip is received and given to the commission agent so that the amount could be credited in the bank.

Pajhwok Afghan News learned that head of the Reception Department get his part and sign the documents.

He said the process continues and bribes offered in two or three more points in the Custom Office to employees and officials.

Smuggled goods’ entry into city

Pajhwok’s findings indicate that smuggled goods enter Herat through cargo trucks without the customs duty being paid. These cargo vehicles pass through Islam Qala without paying or paying lower duties. The goods are then loaded into small vehicles (Mazda-type) at night and transferred to Herat City.

Well-placed sources reveal the small vehicles leave Islam Qala at 30-minute intervals. One person is tasked with checking the highway and informing drivers whether or not they could proceed safely. If a security agency has placed roadblocks on the highway, drivers are informed the route is not safe and they should avoid traveling toward the city.

The source alleged police usually paid little attention to Mazda-type vehicles on the highway and thus the transportation of goods took place without much trouble.

The provincial government also verified the transportation of “smuggled” goods on Mazda vehicles. Most of these goods are unloaded in the Islam Qala bazaar from cargo trucks and transported to the city via small vehicles at an appropriate time.

Concerns at rising corruption

Ashraf Sadat, a civil society activist, called corruption in customs offices a shock. He claimed high-ranking government officials, members of the Provincial Council, parliamentarians, police chiefs and elders were behind the loot and plunder of state resources.

He stressed corruption in customs offices was so complicated that even the local administration could not jeep mafia groups in check.

With the shifting of the custom department from Herat City to Islam Qala, he said, the mafia groups were having as field day. Reports indicate this year’s customs revenue has fallen by 40 percent compared to the previous year. Herat’s customs revenue was so high that it could meet the needs of mafia circles, he remarked.

The activist said mafia groups in the Islam Qala customs office and their abettors within the government were strong. Despite all-out efforts by local officials over the past five years, scanners could not be installed in the customs office, he regretted.

Faqir Ahmad, an inhabitant of Herat City, told Pajhwok: “Unfortunately, everyone you ask knows how corruption happens in the customs office and if the government wants to stop it, I’m sure, there will be no need for international cooperation.”

Qader Shah, another resident of Herat, said: “Customs means corruption; it means a place awash with money. The level of corruption happening in our customs offices cannot be seen anywhere in the worldinfo-icon.”

Basic reforms underway

Governor Syed Wahid Qatali said 64 vehicles carrying illegal goods were captured and two senior officials, along with another individual, detained in a single night in compliance with President Ashraf Ghani’s directive for preventing corruption.

The governor added the two detained officials were supposed to combat corruption. But they were arrested along with a commission agent at midnight while guarding stolen goods.

He accused the two officials, along with the commission agent, of submitting fake documents and other papers regarding customs clearance to the authorities concerned.

The governor warned all cases of corruption in the customs office would be investigated.

Qatali has sent a detailed report on widespread corruption in the customs office to President Ashraf Ghani, who has directed the Ministry of Finance to address the challenge as soon as possible.

Ghani recently announced putting 68 customs officials at the Ministry of Finance (MoF), including directors of custom and revenue for Herat, on the exit-control list (ECL).

He asked MoF to take serious steps regarding the concerns of the provincial government about embezzlement and corruption in the customs department in Islam Qala.

He also added that in near future, the government would build a custom complex at a cost of $20 million in Islam Qala. The step is expected to significantly reduce tax evasion.

Abdul Haq Ahmadi, the appellate court chief prosecutor, said a thoroughgoing investigation was underway into corruption cases in revenue-generating departments.

He said at least 40 cases of corruption were filed with the Herat Attorney Office last year. Of them, 10 cases pertained to the customs and revenue department. “We have received 10 cases of corruption in the customs office since last year and we are working on them seriously.”

Confirmation of tax evasion

Hamdullah Hamdard, head of the customs and revenue department, confirmed the existence of mafia groups and conversion of goods by customs staff. For lack of scanners, he explained, commission agents and traders converted expensive goods into cheap items to lower the custom duty on them.

The official insisted since he worked honestly, the provincial revenue increased in recent years. “Based on the facilities available to us, we are doing our best and have been able to boost customs revenue in accordance with the law. That’s why we face threats every day.”

Hamdard added: “Highways are becoming insecure. Mafia groups are stronger than us. Security organs must the gangs.” He also stressed the need for scanners’ installment in all customs offices to prevent corruption.

He informed the MoF recently purchased a scanner for the Islam Qala customs office, The machine’s installation would help check the customs clearance of goods without the payment of duty.

Like the Islam Qala, all customs departments across the country are hubs of graft and malfeasance. People have been asking the government to move fast o stem corruption and embezzlement of state revenue.

This report has been produced by Pajhwok and financially supported by UNDP and Denmark.

nh/sa/mud

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