Sambrial Duty Free Shops scam: details of accounts sought from SECP

The Federal Board of Revenue (FBR) has approached the Securities and Exchange Commission of Pakistan (SECP) to obtain the details of accounts of Duty Free Shops Limited (DFSL), Sambrial, Sialkot, to complete the investigation against the DFSs for alleged evasion of duties and taxes to the tune of Rs 340 million, as passports of overseas Pakistanis have been grossly misused to sell the duty-free goods in domestic market.
During the meeting of Senate Standing Committee on Interior, Collector Model Customs Collectorate (MCC) Sambrial Zahid Khokar submitted an update on the DFS scam Sambrial before the committee. He said that the FBR has approached the SECP Karachi to obtain details of the accounts used for making business transactions. The FBR can obtain the details of the audited accounts of the DFCL from the SECP Karachi to know whether the foreign exchange has been deposited or not. The passengers can only make purchases from the DFSL in foreign exchange and the audited accounts would give the exact status of the case. Under the law, the Duty-Free Shops are only authorised to sell imported goods to the incoming international passengers as per baggage rules. Contrary to this, the Duty-Free Shops have not been allowed to sell these goods to the local businessmen in the open market.
The foreign exchange of over $10.69 million has been involved in the case. The FBR has informed the committee that it is being probed whether the foreign exchange has been deposited in the State Bank of Pakistan. Similarly, tax evasion to the tune of Rs 340 million has taken place during the last three years. A large quantity of goods has been sold in the local market involving duties and taxes to the tune of Rs 340 million.
The committee expressed concern over laxity on the part of FBR for vacating the stay order by one of the accused a year back and directed the FBR to submit report why the case was not pleaded effectively in the court of law.
Chairman of the Committee Senator Talha Mehmood asked the FBR to ensure update to the Committee on day to day progress on this matter. The Standing Committee constituted a two-member committee consisting of Director Custom Intelligence and Director Federal Investigation Agency (FIA) Lahore to investigate the matter thoroughly and Secretary Interior Qamar Zaman Chaudhry was directed to supervise the progress of the committee. The committee was also informed that random checking of tax record showed that out of 100 passports of passengers, 99 said that they have not made any purchases from the DFSs and their passport numbers have been misused.
The random checking of the passports has confirmed the scam where passports have been used to purchase duty-free goods and the same were sold in the open market. The fake signatures of the passengers were also made to fulfil formalities for completion of documents under the law. The DFSL have issued invoices of sales on the passport numbers of passengers who are not aware of the misuse of their passports. The invoices have shown fake signatures of the parsonages whose passports have been used. This trend clearly reflects that the goods in commercial quantity have been sold by the DFSL in the local market.
He further informed the committee that three inspectors have been suspended in the case and disciplinary proceedings has already been initiated against two high ranking officials of Grade-18 and Grade-21, who were also arrested in the scam. The FIRs have been registered against the concerned officials and interim challan covered period of last three years along with a para pertaining to foreign exchange. Presently, the case is pending before the Lahore High Court.
Nazim Saleem a senior customs official also informed the committee that the FBR is very quick in taking action against the involved officials as per inquiry report. Two involved inspectors were arrested in the case and disciplinary proceedings have already been initiated against the senior officials as per E&D Rules.
Talha Mahmood informed the committee that the overseas Pakistanis are not aware of the misuse of their passports and foreign exchange to the tune of Rs 10.69 million has not been deposited in the State Bank of Pakistan (SBP) for 2006-2007, 2007-2008 and 2008-2009.
Senator Sughra Imam said that the FBR had ample evidence to dismiss the involved tax officials, but they have not done it. The customs officials protect officials of their own group. In the presence of ample evidence, the tax department can dismiss the involved officials but they have deliberately avoided such disciplinary proceedings against them. From the time of launching of the FIRs, the FBR had ample time to take action against the involved officials, but the whole matter has been delayed.
Sharing legal background of the case, Ghulam Yazadani Director Customs Intelligence informed the committee that the FBR is strongly pursuing the case at the level of judicial fora for vacation of stay order. The FBR is following the laid down procedure under the Efficiency and Discipline Rules against the involved officers. The adjudication of the case is pending before the concerned officials and if the FBR dismiss the officials before the finalisation of the adjudication proceedings, it would not be appropriate. If the adjudication authorities give decision in favour of the DFSs, then it would be premature to dismiss the allegedly involved officials. Similarly, the customs special judge has also yet not decided the case due to stay by the court. The FBR is trying its level best to get vacated the stay order granted by the high court.