Another container scam in the making: FTO seeks report from FBR

Another container scam par excellence, replicating the multibillion-dollar Inter-national Security Assistance Force (Isaf) scam, appears to be in the making. Federal Tax Ombudsman (FTO) has taken serious exception to the "abnormal phenomenon in the movement of commercial cargo under Afghan Transit Trade," and asked for a detailed report on the subject from Federal Board of Revenue (FBR).
On January 5, 2009, Dr Muhammad Adnan Akram, Secretary (Law & Procedure), FBR, in a communication sent to Member, Information Management System (IMS), FBR, on the subject had enclosed a list of commercial Afghan transit trade containers. Analysis of the data had indicated that the containers returned to Karachi International Containers Terminal (KICT) and Qasim International Containers Terminal (QICT) within approximately less than seven days of their exit from the terminals.
"Prima Facie, it is apparently a physical impossibility which may have implication of pilferage, loss of revenue and smuggling." He informed the Member that FBR Chairman has directed that a detailed enquiry may be conducted, and further it has been decided that the enquiry will be conducted by Member, IMS.
On receipt of a copy of FBR''s letter on the subject, Muhammad Ramzan Bhatti, Advisor, Federal Tax Ombudsman Secretariat, in a letter sent to the FBR Chairman on February 2, 2011, said: " Prima facie, if due action had been taken then, the possibility of further scams would have been obviated." He further said: "In order to ascertain the role played by different levels, the original file, complete in all respects, is required along with one additional set (photocopy) to reach the secretariat by February 4, 2011".
Further, a detailed report regarding actions taken on the report submitted by the then Member (IMS) FBR with final outcome in terms of disciplinary/criminal proceedings, if any, against the "delinquent officials/officers and other relevant persons," along with any preventive measures put in place, was also required by February 7, 2011 by the FTO.
According to sources, to uncover the perpetrators, the FBR had initiated an inquiry against its officials for alleged involvement in the Isaf container scam, which had caused billions of dollars loss to the national exchequer. The FBR had formed a four-member committee in the last week of January to probe and conduct investigations to determine the criminal prosecutions, departmental action, and propose remedial measures. The committee comprised: Hafiz Muhammad Anees, Member, IMF, Abdul Rashid Sheikh, Project Director, Pakistan Automated Customs Computerised System (PaCCS), Saeed Akram, Secretary (Taxpayers Audit), FBR, as members, and Muhammad Irfan Wahid, Second Secretary (L&P), FBR as Secretary to the committee.
While the objective of the committee was to stall such scams in future, it looks it was a daunting task in view of the fact that the Member, IMS, who had been assigned the task, was given the same task in 2009 also but for reasons not known, he hasn''t probed and responded to that scam as yet.
In the beginning of 2009, also, the FBR had formed a committee under the supervision of Hafiz Muhammad Anees when containers had returned to KICT and QICT within approximately less than seven days of their exit from the terminal, according to Dr Muhammad Adnan Akram''s letter of January 5, 2009.
At that time, the FBR Chairman had directed a detailed enquiry to investigate and probe the scam. Hafiz Muhammad Anees, Member, IMS, was directed to conduct the enquiry but unfortunately the investigation was not properly carried out by him, causing losses to the national exchequer. He had failed to formulate strategy to obviate such international scams in the future. It is generally believed that, as in the past, Hafiz Muhammad Anees may not succeed in his effort.
Sources said that, in PaCCS, scams of this nature and value are not possible because customs server is directly connected to the shipping lines, the agents, the banks, and the terminals. Therefore, unless duties and taxes are paid in the bank, computers do not clear the consignments and do not send electronic release. Since, with PaCCS, no paper documents are involved, they cannot be forged and since no customs officials are involved in release of containers, they cannot collude.