Rajesh rai

The Anti-Corruption Commission (ACC) interviewed 61 people and collected 87 statements as it investigates allegations of corruption at the Mini Dry Port (MDP) and Phuentsholing (temporary) truck parking port.

The ACC detained eight people but four were released. Of the other four, three are customs inspectors and a businessman. They are still in detention for further investigation. The businessman runs a hardware store, sources said.

A commission official said: “The ACC is fully aware that customs officials who have yet to be investigated are already fabricating stories to cover up their ill-gotten gains by using their relatives and friends.

The official said anyone attempting to interfere and derail the investigation would be subjected to rigorous scrutiny and would not be spared the legal consequences.

In July 2021, the ACC was alerted to the possible existence of bribes and extortion from customs officials and shippers in connection with the import and transshipment of goods via the Mini-Dry. Port (MDP) and other designated areas. The investigation was launched at a time when there were more concerns about the relentless upsurge in Covid-19 cases in Phuentsholing, despite strict containment.

The MPD

The operation of the mini dry port (MDP) started in November 2019 under the Phuentsholing regime and was transferred to the Ministry of Revenue and Customs in October 2020. The port was built in 2017 as the Economic Cooperation of the South Asian sub-region (SASEC) project at a cost of 166.019 million Nu.

Before 2020, imports from India and third countries entered through the main border gate, Phuentsholing.

After the international border closed in March 2020, shipments entering Phuentsholing went through Bow Bazaar.

The MDP has been designated as one of the self-containment zones. In each lot, 20 customs inspectors are placed at CDM and truck parking on a monthly basis. They work in shifts every two days.

Importers must register with customs prior to entry. The registration officer sends the vehicle list every night to the Shift-In-charge for customs clearance the next day. The importer is required to provide the vehicle number, customs clearance agent, and attached invoices. The Indian truck carrying the shipment is allowed to enter through gate 1 and is temporarily held in the waiting area. Shift-In-Charge forwards invoices to clearing agents to initiate the reporting process. Once the invoices have been entered in the BACS, the shipments are classified and the declaration form is printed, a provisional registration number is assigned to each declaration. The vehicle is then moved to the transshipment area where the goods are unloaded from Indian trucks and loaded into Bhutanese trucks. Customs inspectors who are on the physical inspection service may or may not inspect the goods. Some transhipments and physical inspections take place in the truck parking lot. No transhipment is required for vehicles carrying single or homogeneous goods heading to warehouses under escort.

At the end of the physical inspection stage, the importer is required to pay the assessed tax amount. The tax payment must be filed in SBA which will be verified by the revenue officer before issuing the cash receipt and assigning a permanent registration number. For imports from third countries, the assessment and payment of the tax is carried out at the regional customs office. For non-taxable items, the process ends with the assignment of the permanent registration number by a customs officer. Once the payment process is complete, the trucks are allowed to exit through gate 2. A form must be successively approved and signed by the official responsible for temporary registration, physical inspection and the revenue officer.

Rampant corruption

The commission’s investigation revealed the prevalence of corrupt and extortionate practices mainly involving CDM shippers and customs officials. The shippers demanded money from importers more than the prescribed official rates. Demand increased if they came across contraband or banned items like tobacco, narcotics, plastic, etc., a source said.

The source said that a group of shippers once discovered tobacco products hidden inside the shipment belonging to a businessman. The shippers asked for 100,000 Nu, but then negotiated 80,000 Nu. However, the man informally requested the help of a police officer to collect the money. For fear of being reported to the police, the chargers returned the money after the police intervened but, in retaliation, filed a complaint against the man for importing tobacco. He was then arrested by police in June 2021 and is indicted by the Phuentsholing Drungkhag court.

Earlier attempts to break into the corruption racketeering were not so successful as the exchange of bribes and bribes was done in cash. However, during the pandemic period, the situation changed. The entry of goods became regulated and the transshipment process made it difficult for importers to evade declarations. As the border was closed and under the strict application of Covid-19 protocols followed by intermittent lockdowns, cash transactions became difficult, forcing businessmen to use the mobile app and RTGS. Under the new standard, the person-to-person interface in a containment zone was hardly feasible and money transfers had to be routed through banks. Covering the traces of his misdeeds was becoming difficult.

The source said it was becoming clear that customs inspectors were involved in soliciting bribes from importers and suppliers in a more low-key way. They used the social messaging app for surreptitious communication and to pass bank details where the money is to be deposited. To cover up the origin, they resorted to acquaintances and businessmen’s bank accounts to mix their money with normal business-related financial activities. They held their illicit funds in other people’s accounts and moved from one account to another or invested in business activities or interest-bearing deposits held on behalf of their relatives.

“The connection is deep, complex and exists in various forms. In general, the parties paying bribes mostly come from across the border and are often facilitated by an intermediary (dalal) and clearing agents, ”the source said.

In most cases, the bribe payer and the receiver did not have direct contact. The bribe component is built into the cost of goods and charged to Bhutanese importers. In one shipment, the supplier calculated Nu 30,000 as a “customs adjustment” for smuggling 60 plastic bags, which is a prohibited item. Some customs inspectors had set up with some suppliers in India as well as with some importers in Bhutan. In such cases, suppliers only sent their shipments when the relevant customs inspector was on duty, information that would have already been relayed in advance. An importer specializing in supplying betel nuts and leaves, who reportedly made his fortune during the pandemic, sought to establish a link with customs officials as it was unpredictable and risky for him to bring dumped or illegal shipments with a framework established with customs, depending on the source.

Officials have found evidence showing that importers are making arrangements with suppliers across the border to understate their invoice by 50 percent for declaration at the customs checkpoint. Half of the tax evaded, sometimes even more, went to customs officials while the other half remained for the benefit of the importer.

The request for bribes was found to come mainly from customs inspectors whose day shift fell on physical inspection. The payments received from the parties are shared between them. However, whoever signs on the declaration forms takes a bigger part in taking the risk.

Other alleged grounds for corruption are declaration falsification, ie underestimation of the quantity of higher tax items and vice versa; smuggling contraband such as tobacco and drugs; organization and certification of false import documents for sending RTGS; facilitate the release of stranded shipments without imposing demurrage charges; facilitate the movement of physical cash across the border and withhold invoices from processing for reporting.

Corruption is getting worse during the pandemic

The preliminary investigation revealed that two individuals have joined together to embark on the supply of betel nuts. They imported vegetables and doma using four licenses. Between 2020 and mid-September 2021, the combined value of imported betel nuts or leaves was 176.419 million Nu, which is over 56% of the total import of betel nuts via Phuentsholing. However, they were also involved in the smuggling of tobacco products hidden in vegetable and betel nut shipments as well as other fraudulent financial scams. They are also suspected of sending money from tobacco sales to Jaigaon through certain carriers. One of them was arrested for contraband tobacco in June 2021 and is currently out on bail.

The duo established a link with some customs officials and paid bribes ranging from 11,000 to 80,000 NU per instance. They paid bribes to escape the 20 percent sales tax on half the value of the betel nut shipment. They also evaded tax by falsifying the proportion of the shipment between betel nuts and betel leaves due to large tax rate differences, meaning they reported a larger amount of ‘articles with lower tax rates or zero tax rate and vice versa when the reality was different. The diagram of their trip showed that they cleared their shipment late in the evening when the CDM was about to close its hours of operation.


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