…Fidelity Boss must repay lost revenue
-Task Force report
Several loopholes exist allowing one importer to defraud the Government of hundreds of millions of dollars by means of importing Polar beer into the country and not paying the requisite taxes. Auditor-General Deodat Sharma is now questioning how many other importers may have managed to elude paying the requisite tax to the state.
According to Sharma, there still exists the possibility that it could happen again, but he hinted that the recommendations in the now completed and publicised report could stop it from happening.
According to the completed report into allegations, the Task Force recommends that the Guyana Revenue Authority (GRA) takes the necessary disciplinary action against 15 of its senior staffers, who have all been found guilty of various offences.
The Task Force also recommended that the officers, namely Michelle Matthias-Smartt, Rhonda Gladd, Karen Bobb-Semple, Ausya Greenidge, Satesh Basdeo, Anthony Girdhari, Rabindra Ramsuran, Sadesh Pitamber, Vickie Sooknanan, Radha Singh, Ann Noel, Simone Herod, Jasoda Mohamed, Georgeanna Pryce-Roberts and Roopnarine Ramkishun, be charged criminally for the relevant offences they committed.
As it relates to acting Director, Valuation and Classification, Paul Prescod; Level II Customs Officer John Tularam; Entry Processing Unit Supervisor Nityanand Narootandeo; and VAT and Excise Tax Deputy Commissioner Rohan Beekhoo, it was recommended that the GRA reinstates them, but with warning letters to be more vigilant in the execution of their duties.
Royan Sattaur, a level II Clerk, and acting Director, Enforcement Section, Ramnarine Makardajh, were all recommended to be fully reinstated in their jobs.
As it relates to Fidelity Investment/Kong Incorporated, the Task Force recommended that the relevant charges be instituted against the broker involved in the scam, Rajendra Rajcoomar, and his representative, Samantha Sam, for declaring false documents to the Customs and Trade Administration with the intention to defraud the state of substantial amounts of revenue.
Fidelity boss Joshua Safeek was not spared, as he was also found culpable.
The Task Force recommended that the relevant charges also be instituted against Safeek, who is the importer involved in the scam, for producing false documents to the Task Force with the intention of misleading the said body.
It was further recommended that the relevant charges be instituted against Safeek for declaring false documents to the Customs and Trade Administration with the intention to defraud the state of substantial amounts of revenue.
It was further pointed out that Customs duties and taxes calculated on the Polar beer were discovered to be illegal at FOB (Freight on Board) US$4.50 per case, and Safeek must be made to pay same and any other fine as prescribed by the Customs Act and any other relevant legislation.
This amount is totalled at some US$60M that has to be paid to GRA by Safeek.
The scam uncovered
As it relates to the falsification of documents by Safeek and Rajcoomar in order to pay reduced duties and taxes, the Task Force found that invoices attached to the 17 Customs Declarations produced by GRA were falsified through collusion between Rajcoomar and Customs officers to declare that assorted aerated beverages and soda water were imported instead of Polar beer; and as a result, Customs duties and taxes were evaded.
The invoices produced by Safeek to the Task Force were falsified to declare that Polar beer was imported at C&F (Customs and Freight) US$2.15 per case, when in fact the Polar beer was purchased at FOB US$4.50 per case, hence duties and taxes would have been evaded.
The Task Force also discovered that Safeek was “part and parcel” of the process of defrauding GRA of millions of dollars in tax revenue, since cash (in the quantity he said he gave the Broker) was used to pay the Customs duties and taxes on the 17 Customs Declarations for imports by Kong Inc. during the period July to December 2007, when cheques were used for Fidelity transactions.
In addition, reconciliation of the importer’s records was not done, even though large sums of monies were at stake.
Also, cheque payments were done for the importation of other goods.
TRIPS compromised by senior personnel
It was also found by the Task Force that the compromising of the Total Revenue Integrated Processing System was compromised by senior GRA officials to facilitate the undetection of the now infamous ‘Polar Beer Scam.’
According to the now public report, it may be gleaned that TRIPS may have been compromised, in that all the senior personnel comprising the Risk Profiling Committee were the same persons placed in authority to ‘police’ the system and ensure its smooth running.
It was found that Matthias-Smartt, who is one of the few persons fully trained and au fait with the entire system of TRIPS, in that she had been trained by Crown Agents, the company which implemented the system, was given certain access to the system which she did not require to execute her duties.
As such, Matthias-Smartt capitalized on her knowledge, and manipulated the system using her superior access.
The report found, also, that it was clear that she obtained the password of Rhonda Gladd and used it to bypass the Valuation Section when she submitted the entries from the Entry Processing Unit, where the system flagged them for valuation.
“In these instances, she clearly acted in a manner that would infer her criminal intent.”
The Task Force therefore concluded that TRIPS was manipulated so that certain categories of goods and importers were not correctly flagged for examination; and when flagged for examination by the Valuation Unit, they were not examined by this Unit.
It was also discovered by the Task Force that the security cameras installed at the Customs and Trade Administration were not working during the period when seventeen Customs Declarations for importations by Kong Inc. were made (July to December 2007).
It was found that, had these cameras been working, it may have been possible that the person who paid the Customs duties and taxes on behalf of Kong Inc. in relation to the seventeen Customs Declarations would have been identified.
“At the time of this report, the cameras were still NOT operational…It was explained that when the cameras are in operation, they interfere with TRIPS, as a result, they had to be turned off.”
Among some of the recommendations to GRA from the Task Force was to ensure that the security cameras at the C&TA are in operation at all times, for the safety and security of both the Customs officers and the collection of revenue.
It was posited that this is essential in view of the fact that the non-operation of the cameras made it impossible to determine who paid Customs duties and taxes on behalf of Kong Inc;
The President has since ordered a comprehensive investigation into the assets of the implicated personnel.
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