FTO summons top officials in corruption case

The Federal Tax Ombudsman has summoned top federal government officials in connection with the complaint of fraudulent exemption under SRO 575(I)/2006 of June 5, 2006 and allegation of certified corruption of Rs 109 million by Ssangyong Engineering & Construction Co Ltd, Korea/Usmani Associates.
Hearing has been fixed for September 17, 2011 and those asked to appear include Secretary, Revenue Division, Secretary, Board of Investment, Collector Customs (Appraisement), Custom House, Karachi, Chairman, Karachi Port Trust, Chairman, Advisory Committee, Transparency International Pakistan, Adil Gilani and Ssangyong/Usmani (JV).
The FTO had ordered Advisor (Customs) to conduct a through investigation into the said complaint. The above officials have been required to appear personally or through duly constituted attorney/advocate with all relevant record including, where applicable, record of contract, payment of taxes, if any, on import made by Karachi Port Trust (KPT) against bills by the contractor and record of releases under the same S No of the above-mentioned SRO to other importers with details of consignments and any witnesses they may wish to produce.
Chairman of Transparency International Pakistan Advisory Committee, Adil Gilani, had written a letter to the General Manager of P & D Division, KPT, on July 8, 2011, highlighting allegation of ''certified corruption'' of Rs 109 million against Ssangyong/Usmani (JV) in contract of KPT project "reconstruction of berths 10-14" and recovery of Rs 1.09 billion, ten times fine under Public Procurement Rules 2007, Rule No 7 of Integrity Pact.
The Transparency International Pakistan letter was based on a complaint received of customs duty evasion causing loss to the government of Pakistan of millions of rupees against the contractor in the import of steel toe rods for the KPT project of construction of berths. The precise allegation of corruption as determined by Director Intelligence, Federal Board of Revenue is Rs 109 million which was reported by him to Member Customs in his letter of October 27, 2010. He had, among other issues, recommended following punitive actions against the contractor for tax evasion:
--- Since Ssangyong-Usmani contractor is not an investor, the total amount of taxes evaded by the said business, amounting to Rs 109,393,414, may be recovered and the Collector Appraisement Karachi may be advised for swift recovery.
--- Ssangyong & Usmani who fraudulently declared themselves as investors when they are actually contractors should be black isted by KPT.
--- Transparency International Pakistan in its letter to the General Manager, P & D Division, KPT had suggested that the complaint, if proved to be correct, is a corrupt business practice under Public Procurement Rules 2004, Rule 2 (g), and may result in following actions by KPT.
--- Impose 10 times fine on Rs 109 million, ie 1.09 billion on contractors.
--- Terminate the contract.
--- Recover from the contractor any loss or damage to the employer as a result of such termination or of any other corrupt business practice of the contractor or any of his sub-contractors, agents or servants.
--- Proceed action on blacklisting the contractors under PP Rule No 19.
--- Report to NAB for criminal action against contractors under NAB Ordinance 1999 section 9.
Transparency International Pakistan had requested in the copy of its letter to FTO to take suo motu action to examine all cases of such fraudulent exemption with the approval of Board of Investment, Engineering Development Board, and Federal Board of Revenue given under SRO 575(l)2006 since 2006 to June 2011, in order to recover billions of rupees evasion in six years.