Along with the growing evidence of under-invoicing, there are indications also that fuel importers have been colluding with Customs brokers and officers to record lower volumes.
In so doing, the Guyana Revenue Authority (GRA) was denied collecting additional millions of dollars in taxes.
The attention on the troublesome fuel trade has been making media headlines time and time again because of wrongdoings that have been surfacing.
It is in the news again and this time has dragged in a top government executive, Dr. Richard Van West Charles, who holds the powerful post as Chief of the state-owned Guyana Water Inc.
The GWI Chief is a Director on Atlantic Fuels Inc., a company that he operates from his Meadowbrook, Georgetown home. Also a Director with him is Lear Goring, who was the Debt Recovery Manager of GWI until he was let go because of an undisclosed criminal background.
Goring, according to Customs records, remained in business contract with his former GWI boss, as they both sat as Directors for Atlantic Fuels.
The fuel import, storage and wholesale licence was controversially approved in late 2015, around the same time that Van West Charles was hired as the new chief of GWI.
There has been intense scrutiny about the procedures.
It emerged that applicants for licences have to show evidence of storage capacity, safety arrangements, environmental permits and a host of other requirements.
At the time of approval, it was unclear whether Atlantic Fuels, a new company, had shown a track record in the fuel business.
What is known is that others were applying and are not getting through.
Atlantic Fuels received its licence in just over month, a rapid approval compared to the months that others have applied and had to wait.
According to officials, it is not unknown for the Guyana Energy Agency to grant licences and then these are rented out to importers by the holders of those licences.
According to insiders, GRA has been discovering incidents where fuel shipments, which came in gallons were recorded in the tax system as liters.
This plus the under-invoicing aspect has been helping to dent GRA’s collections.
GRA, to collect its outstanding taxes from the under-invoicing, which are evidenced from Customs records, is likely to examine past shipments of Atlantic Fuel, going back to 2015 or 2016, to determine whether there were other instances of under-invoicing.
GRA then has the option of using the market acquisition prices relative to those shipments and assess Atlantic Fuels with the correct taxes. GRA itself has reportedly pinpointed a number of its staffers and independent Customs brokers who were complicit in the fuel racket scheme.
It is unclear what actions will be taken or have been taken against them.
Last week, almost a dozen of GRA staffers, mainly from the Customs department, were sacked after a year-long number of investigations into different cases, including the illegal release of goods from the wharves without the paperwork completed and taxes paid.
What is known is that Van West Charles was summoned to a meeting with GRA’s Commissioner-General Godfrey Statia last Monday, after reports by Kaieteur News of a number of questionable transactions by Atlantic Fuels.
The fuel trade is a billion dollar trade in Guyana, accounting for one of the country’s biggest spending.
With regards to Atlantic Fuels, two transactions specifically brought it back into the limelight recently.
One of them was a shipment purchased in the free trade border area at Morawhanna, North West District, Region One.
Morawhanna is the gateway to Region One, with persons coming from Venezuela by water, expected to check in at the immigration operations there. Also there is a team of Guyana Revenue Authority officers.
For a number of years, fuel has been brought to that area and local operators would make purchases, taking it to mining locations in the hinterlands and to the coastlands.
The operators would pay taxes there.
It appears that Atlantic Fuels, like a number of other operators, have been capitalizing on the fuel there, which on average cost just US$0.50 per liter, a tad cheaper than Trinidad and other places.
However, according to Customs documents, Atlantic Fuel presented GRA with a Commercial Invoice dated September 25, 2018, which used a CIF (Cost, Insurance and Freight) price of US$0.25, half of the normal price.
The amount of fuel was about 270,000 liters (71,326 US gallons).
Atlantic Fuel declared that the cost was US$67,500, which caused GRA to collect only $14M in taxes.
On the Customs documents, the address was listed in Meadowbrook, the same address as Van West Charles.
The correct taxes should have been double that amount, which is almost $28M in taxes.
The other shipment was in September/October last year by the same company, which was brought on a fuel ship, named “Century”.
The shipment of 639,000 liters (170,000 US gallons) was supposed to cost US$379,100.
However, Atlantic Fuel’s Director, Lear Goring, filed documents, which pegged it at US$159,750.
The state reported losses of $32M in taxes because of that.
In Customs terms, the deliberate declaration of prices below what was actually the value or what was paid is known as under-invoicing.
Outspoken accountant and lawyer, Christopher Ram, was harsh about the issue.
“These are extremely serious and disturbing allegations and I would refrain from offering any comment other than to say that it requires an urgent and impartial investigation. The importation of fuel is the single largest Balance of Payment item with implication for tax revenues.”
According to Ram, it is never a healthy sign when a high party official with a full time job gets involved in a business activity which has for years been associated with corruption, tax evasion and other illegalities.
“It is for this reason that a multi-agency investigation should be commenced immediately.”
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