Ghana’s import revenue leakage

-CEPS operations questioned

Ghana has being losing a larger chunk of its import revenue through numerous leakage points along the import processing chain, Financial Intelligence (FI) investigations have revealed.

These loses are attributable to systemic failure linked directly to the human element and deliberate or genuine administrative lapses, more than mechanical inefficiencies in the import processing system.

While stakeholders were locked up in a protracted meeting at the Osu Castle last Friday to trash out knotty points regarding import processing in the country, the presidency might not have come to full grips of the realities on the ground yet, as numerous theories had been propounded both in and outside media circles as to the causes and quantum of these leakages. FI investigations have suggested that there are potential leakage points at every given spot on the import processing chain. From the point of entry, through storage to the point of exit, there are identifiable problem areas which need plugging.

Areas identified as key sources of revenue loss and fraud include inefficient management of transit declaration that do not exit Ghana, lack of container tallying, valuation fraud and smuggling of goods in Customs custody. Others include duplicate and unused Final Classification and Valuation Reports (FCVRS). In the first place, the reason containers and cargo get missing from the port has been linked to the absence of Container Tallying system at the ports. “Government does not know the actual number of containers that enter Ghana every day,” a source revealed, explaining that this has made room for smuggling at the ports.

Another area of leakage has to do with alleged collusion between CEPS officials, Destination Inspection Companies (DICs) and importers. Interestingly, CEPS has its strong presence at all the points of leakage identified along the import processing chain.

Reports produced by both independent and government agencies indicate that there are problems with the usage of (FCVRs) by CEPS officials.

According to them the problems have to do with goods clearance on permit, warehousing, trade disputes, short landing, customs auctions, re-exporting, consignments awaiting customs clearance just to mention a few. According to them, some CEPS officials strike deals with importers after FCVRs have been submitted by the DICs and so refuse to submit the documents for processing.

“They release these goods to importers in such cases without any import duties being paid” a source disclosed.

It is also reported that in some cases, more than one FCVR exist for the same consignment, and the suspicion is that government still pays for all those FCVRs, instead of paying for only the used one.

One major source of revenue leakage through CEPS is their inefficient use and deliberate tinkering with the system that was put in place for CEPS by government through a Public Private Partnership (PPP).

In its periodic report for various stakeholders issued this month to ministers the Finance Minister and his deputies, Trade Ministers as well as the Commissioner-General of Ghana Revenue Authority one of which has been intercepted by the FI, GCNet had pointed out 43 cases of discrepancies identified in CEPS operations between January and April 2010, with potential revenue loss of several hundred millions of Ghana cedis to the country. Some of these cases had to do with transit cargoes that had overstayed thier stipulated period in the country, undervaluation of goods, swapping of FCVRs with probable connivance from Compliance and Examination officers, re-exportation of goods and internal smuggling.

The report remarked that “A review of Internal remarks made by some Compliance officers/Supervisors also indicate that such officers had sought to circumvent the rules to facilitate minimal or no duty payment, when short collections are identified.” (Declaration numbers were also provided in the said report for identification of officers involved.)

Another report which dates as far back as 2006 and 2007 at Aflao frontier stated that over US$107.645 million worth of revenue had been lost to the state if an average Fob value of $0.67 (based on some transactional value) were to be applied for some “General Goods by so-called “As Below.”

“At land borders of Aflao and Elubo goods in large commercial quantities (eg. rice and sugar) are consistently being cleared as HeadLoads at very low values. Also 2 vehicles were cleared as Head Loads At Aflao (ie. 42006248861 ( Benz 208) for S. Blay & 42006249631 (Toyota Corolla) for A. Santara,” it added Between January and March 2006 alone, over ¢10 billion were lost as a result of under-valuing of vehicles at he Aflao border alone. However, the truth of the matter is that with the Customs Management System available, CEPS, Minister and Deputies of Finance, Trade, Ghana Revenue Authority, National Security all have an unhindered access to the monitoring system which indicates these discrepancies to whoever is interested to know what has been happening. This leaves one wondering if authorities in charge of government revenue are taking steps to ensure that all these human meddling are removed to save tax revenue for development. Public Affairs Director of CEPS, Annie Anipa told the FI that CEPS found the system very efficient since its deployment had brought jumps in revenue. She said there is a coordination committee for the system, comprising officials of CEPS, GCNet and the trade ministry.

“They meet from time to time to review operations, and when difficulties arise, they are discussed and resolved,” she stated.

All attempts to reach the Commissioner-General for Ghana Revenue Authority (GRA), George Blankson, however did not yield any positive results.

Source: Financial Intelligence (www.fighana.com) Justice Lee Adoboe