Doing export fraud to get incentives

Unipex Trade Corporation Ltd, a Sylhet-based exporter, declared that it would export 8,098kg of frozen food to Fatima Brothers Inc in New York for $24,032.

Usually, export goods are exempted from physical inspection, but on suspicion, Chattogram Customs House checked the consignment on 7 January.

And they found only 4,320kg of frozen vegetables in the consignment instead of the declared amount. The cargo contained 3,438kg of undeclared sweets and molasses.

The company would have gotten an incentive of $4,806 or over Tk4 lakh at a rate of 20% had the consignment passed through.

The government provides cash incentives to export goods under 37 categories. Vegetable and fruit exports under the agricultural product category get a 20% cash incentive.

But, incidents of faking exports only to get cash incentives are on the rise.

Exporters are allegedly taking cash incentives through misdeclaration in export goods, capitalising on no scanning and a minimum physical inspection of consignments before loading them into ships.

In another incident on 18 December 2020, Bangla Food & Beverage Ltd, a Dhaka-based exporter, tried to export only 500kg of foodstuff against its declared amount of 22 tonnes.

The goods were being exported from Eastern Logistics, a private inland container depot (ICD). The Chattogram customs directed the customs' general bond division to take action against Eastern Logistics.

Customs officials are now looking into Bangla Food's 52 already-exported consignments amounting to around Tk23 crore to find out if there was any more misdeclaration committed by the company.

The customs authority has found evidence of fraud in two consignments of vegetables and food items during export through the Chattogram port.

They also think that there were attempts to launder money abroad and whiten black money.

The customs authority believes that exporters, C&F agents, and employees of private ICDs are involved in these incidents.

About 100% of export goods from the country's 19 private ICDs go directly to the Chattogram port for shipping. So, the customs authority thinks ICD employees are involved in these incidents.

Therefore, Chattogram customs has called a meeting with the leaders of the Bangladesh Inland Container Depots Association (BICDA), private ICD owners' organisation, on 13 January.

Rezaul Karim, assistant commissioner of the Audit Investigation and Research (AIR) Unit, Chattogram Customs House, told The Business Standard, "We think that an organised smuggling racket is trying to get cash incentive, whiten black money and launder money on the pretext of exports."

"In this regard, we have intensified our surveillance in the ICDs," he added.

Shah Alam, chairman of Eastern Logistics, told TBS that an unscrupulous quarter is using some corrupt officials from private ICDs to embezzle export incentives. My organisation's assistant manager (exports) Nayan Mia and supervisor Sujan have already been sacked for their alleged involvement in the fraud."

"I think exporters and owners of C&F agents are kingpins of the racket," he alleged.

SM Jahangir Hossain, managing director of Bangla Food & Beverage Ltd, said, "A quarter has committed the fraud to tarnish our organisation's reputation. We have no involvement in the fraud or embezzlement of export incentives."

Md Rafiqul Islam, C&F Agent and proprietor of Islam Agency, told TBS, "As per information provided by the exporter, we have submitted the bill of export to the customs authority. As a C&F agent, we have no involvement in this."

Ishtiaq Ahmed, general manager of Unipex Trade Corporation Ltd, said, "We have mentioned molasses, chilli powder and sweetmeats as frozen vegetables in the same HS code. It has nothing to do with embezzlement and money laundering."

BICDA's Secretary General Ruhul Amin Sikder said ICD authorities do not have the right to see what is in export containers. However, if there are fewer cartons than the announced ones, they must be responsible."

These incidents are happening with the connivance of some dishonest officials of the ICDs. The BICDA will soon hold a discussion to decide what to do about these issues, he added.