Broader probe underway of GRA duty-free scam

Broader probe underway of GRA duty-free scam

 Stabroek staff On May 22, 2012 Comments

A scam at the Guyana Revenue Authority (GRA) now under wider investigation entailed the creation of bogus letters from government agencies requesting duty-free concessions on expensive vehicles and the subsequent forging of signatures of top GRA officials.

Sources say that one of the two junior officers implicated has admitted forging at least 20 duty-free letters for vehicles and the taxes lost run into tens of millions. Three other employees have since been identified as masterminds and the scam may have been running for two years now. 

The scam mirrors one in 2003, which ensnared senior officers of the Ministry of Finance and Ministry of Foreign Affairs. It ironically led to a tightening up of the duty-free system with the GRA playing a key role.

On May 10, 2012 the GRA had issued a statement saying that two of its officers were being probed for forging the signatures of senior officers.

GRA had said that the fake signatures were affixed to Remission of Duty Letters (commonly referred to as CG or Tax Exemption letters) used for issuing duty-free concessions for All Terrain Vehicles (ATVs) and other heavy-duty equipment employed in the mining industry, which under normal circumstances would have attracted concessions for eligible applicants.

“The detection was made as part of the routine system of checks and balances in place to prevent such occurrences. The officers found culpable, denied the allegations, but irrefutable evidence from the records of the Division which facilitates tax exemptions, has implicated them,” the statement had said.

Sources yesterday told Stabroek News that over the past two years, officers within the Remission and Risk Management Units have managed to forge the signatures of managers of the GRA, following which luxury vehicles, ATVs and excavators were imported into the country by businessmen and private citizens without the applicable duties being paid.

When contacted yesterday for an update on the probe, Commissioner General of the GRA, Khurshid Sattaur, told Stabroek News that the matter is engaging the police but he could not elaborate. “I don’t know anything more,” he said.

This newspaper was told by persons within the GRA that the scam involved the creation and issuing of dozens of duty-free letters which were purported to have originated from the Guyana Geology and Mines Commission (GGMC) as well as the Ministry of Agriculture.

Sources say that the scam was uncovered by customs officers who were recently seeking verification of information and who stumbled upon pieces of fictitious information within the systems of the revenue body.

It was discovered that the two junior officers had forged the signatures of Sattaur and his deputy Clement Sealey on the duty-free letters.

One of the officers admitted to forgery of the signatures on 20 letters while the other officer, who is a relative of an official at the GRA, has also admitted to making several unauthorized inputs into the TRIPS  automated system.

Following investigations, three other officers within their department have been identified as the masterminds of the fraud and this led to a wider probe. It was subsequently discovered that the corrupt practices have been ongoing for at least two years.

Another source told Stabroek News that the masterminds would persuade junior staff to create the fake duty-free letters in the name of the GGMC and the MoA in what he termed “a very organised scheme since only certain brokers are used to recruit clients and so few clients deal directly with these officers”.

The source said that bribes to the tune of $2 million were paid for each ATV, while a smaller sum was paid for the excavators. This newspaper was told that recently there was a cover-up of an incident in which a businessman visited the GRA offices with a duty-free letter through which he attempted to  clear a very expensive luxury vehicle, minus the $30 million in duties and charges.

It was noted that the letter was thoroughly examined by GRA staff and it was discovered that it was bogus but the matter was never prosecuted.

The source said staffers of the GRA are concerned about the current situation as it involves millions of dollars. He noted that the Remissions Unit was created following a similar scam at the Finance Ministry in 2003 in which duty-free letters were issued under the name of a current high ranking official at the time.

Reports are that the bribed officers would use their takings and create shell companies which are usually in the names of relatives and friends. While lamenting the situation yesterday, a source noted that recently a 22-year-old employee who had been working for two years with the GRA was asked to explain how he managed to purchase a $8 million BMW car on a salary which is less than $50,000 per month. It is unclear what the outcome of that matter was.

Meantime, this newspaper understands that the police have been looking for a former senior manager of the GRA who resigned earlier this year after a scam was uncovered at the body late last year. The staff member, who was last at the Intelligence, Risk Management and Special Investigation units of the GRA, discharged key functions within the body and reports are that he was colluding with members of the business community as regards the importation of containers and vehicles.

When the issue was uncovered earlier this year, the official resigned from his post and fled the country along with his family, a police source noted yesterday.

In his May 10, 2012 statement, Sattaur had said that the discovery of the duty-free scam was “once again a typical case of putting systems to safeguard the State’s revenues and these are being deliberately undermined by very junior ranks out of greed and reckless conduct on their part in collusion with the owners of businesses. The officers’ integrity has obviously being compromised because of the inducement offered and greed.”

He added that, “the agency’s Total Revenue Integrated Processing System (TRIPS) has once again proven how invaluable it is to have accountability and while we would never be able to avoid these occurrences in the future, we can however detect them, weed out the corrupt elements and take them to task swiftly.

Fortunately all of these irregular situations leave an audit trail that not only identifies the officers involved, but more importantly, the taxpayer who would have paid the inducement to corrupt the system.”

According to the GRA, such acts are typical of the practices engaged by some elements of the private sector, who seek to evade the payment of their fair share of taxes. It noted that this leads to the GRA being accused of being corrupt or harbouring corruption.

The agency also said that it is too early to precisely determine the level of revenues involved, if any.

“It would appear to be more a case of paying officers in order to avoid complying with the necessary documentary requirements, commonly referred to as ‘expedition’ inducement,” the GRA said.

“I hope and would expect that the guilty parties, both the officers and the businessmen, are charged and placed before the court,” said the Commissioner General.

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  • Cyril Balkaran  On 05/23/2012 at 2:49 am

    The GRA has now to deal with the SCAM that has no doubt will cost the state billions of dollars in uncollected revenues as the admittance of one so involved officer admitted to signing 20 forged letters for these exemptions of Tax and whatever Duty exemptions. The fact that one other officer could not explain the acquisition of a BMW while earning a monthly salary of $50,000.00! He has now fled the country. These are bad activities that will drain the treasury and the business community who encourage these activities should also be taken to the courts for their connivances and being an accomplice to the criminal conspiracy to defraud the GRA of billions.The police are investigating and the culprits will soon be before the Courts of Law. Detection of these kinds of white collar crimes will go a far way at securing the country’s accounts and the Finance Dept that grants these exemptions must be more vigilant in securing the verifications of signatures. There should be regular or periodic Forensic Audits in those high risk revenue earning departments of the Government so these kinds of crimes can be detected early enough to make corrective actions. It is left to be seen what criminal charges will be pursued against the perpetrators of such white collar crimes and what sentences they will recieve after the verdict is known. It will also be not too difficult for criminal extradiction procedures to commence for the one who fled the country with his family early in 2012.

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