CUSTOMS LEAKS MILLIONS

The Jamaica Customs Agency (JCA) has come in for increased scrutiny in the wake of a special audit detailing weaknesses in its procedures and accountability that resulted in three importers that operated private bonded warehouses owing more than $600 million dating back 11 years ago.

In a special audit report by the Pamela Monroe Ellis-led Auditor General’s Department (AuGD), the JCA was found wanting as the probe unveiled significant delays in the processing of import and export declarations, resulting in potential revenue losses to the Government.

The auditor general urged the JCA to take immediate steps to collect outstanding revenues to the Government.

Three importers that ran private bonded warehouses owed more than $664.2 million in taxes as at September 30 this yea, after bond drawdowns and recoveries in relation to the warehouse operations.

The duties were in relation to goods that were imported between 2010 and 2015.

According to the auditor general, items were removed from the warehouses without the payment of the required duties in most cases.

In other instances, overtime goods were not auctioned as set out in the Customs Act.

“This adverse condition can lead to significant losses and delays in the collection of revenue,” the report said.

The JCA indicated that these arrears were incurred prior to the inception of ASYCUDA, logistical system, as the processes then were completely manual, with the various inventories recorded in ledgers. That reportedly made the process of monitoring bonds in relation to duties on warehoused items extremely difficult or impossible.

ASYCUDA is the Automated System for Customs Data, a web-based integrated customs management application system for international trade and transport operations. It allows clients of the JCA, including customs brokers and shipping agents, to undertake e-transactions such as the submission of manifests, declarations, payments, and documents.

The auditor general’s report has signalled that the JCA could lose more than $200 million in uncollected duties for vehicle parts imported into the country up to 10 years ago by an importer.

The audit highlighted that 80 entries totalling $142 million representing goods imported between 2011 and 2012 were only brought before the courts on May 5 and August 26 this year after repeated enquiries by the AuGD.

She pointed out that Section 241 of the Customs Act states: “Proceedings under the customs laws may be commenced at any time within seven years after the date of the offence.”

The auditor general noted that the seven-year deadline had passed.

“JCA’s delay in taking legal action to recover these debts could result in the loss of $142.30 million from duties owed by this importer,” the auditor general said.

Monroe Ellis reported that the supplier designated Vehicle Supplies Importer 1, owed the Government at least $598 million as at September 30, 2021.

The audit found that in October 2015, Vehicle Supplies Importer 1 was liable for $460 million in duties for overtime goods, which included items not found during a stock count. These goods were imported into the island between 2011 and 2015.

In March 2016, the JCA drew down on Vehicle Supplies Importer 1 bond of $12 million after failing to recover the outstanding liability. However, the bond could not cover the outstanding liability and the JCA took the importer to court on August 17, 2016, to recover duties relating to 30 entries totalling $54 million.

A further 138 entries with related duties of $308.4 million were brought before the courts in 2020 in the wake of further queries made by the AuGD.

Other actions of the JCA resulted in the collection of $25.7 million of the duties owed, in three payments, with $25 million being paid in January 2021.

In its response dated October 29, 2021, the JCA indicated that the court handed down a judgment amounting to $367 million in June 2021 in favour of the commissioner of Jamaica Customs.

“We noted, however, that this judgment did not include the entries submitted in May 2021 totalling $142.30 million, revalued to $224.56 million as at September 30, 2021,” the auditor general observed.

And JCA has taken legal action to recover duties owed by two importers of spirit products.

As at March 16, 2017, Spirits Importer 1 owed $136.59 million in overtime duties for goods imported in the island between 2012 and 2015.

After unsuccessful attempts to recover the amounts owed, the JCA’s legal department intervened. The agency drew down on the bond of $80 million in December 2016 and September 2017. However, the amounts were insufficient to cover the liability.

After failing to recover the full sum, on November 24, 2020, the JCA instructed the attorney general to commence court proceedings against the importer. As at September 30, 2021, the importer owed the Government $47.07 million.

The auditor general also reported that as at December 12, 2010, another importer, Spirits Importer 2, owed $116.17 million in duties for overtime goods.

No evidence was presented by the JCA to show that it attempted to draw down on the bond of $3.5 million for the importer.

The JCA issued a demand notice for $74 million, on January 12, 2012, which was unsuccessful and therefore, a payment plan was negotiated in 2013.

Spirits Importer 2 has since paid $97.21 million over the period January 2013 to July 2020, and owed the Government $18.96 million as at September 30, 2021.

The JCA has threatened legal action to recover the balance.

edmond.campbell@gleanerjm.com