Over-invoicing worth Rs69.5b unearthed

Companies import solar panels duty-free from China, make payments to other countries

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ISLAMABAD:

A massive money laundering scandal has been unearthed in the import of solar panels that has shown over-invoicing of Rs69.5 billion between 2017 and 2022.

Officials of the Federal Board of Revenue (FBR) disclosed this while giving a briefing to the sub-committee of the Senate Standing Committee on Finance in a meeting held under the chairmanship of Senator Mohsin Aziz.

The solar panels were imported from China, but payments were made to companies in other countries. The committee was informed that a total of Rs117 billion was transferred abroad through the scam, with payments going to companies in 10 countries including the UAE, Singapore, Switzerland, the US, Australia, Germany, Canada, South Korea, Sri Lanka and the UK.

Importing solar panels from China and making payments to companies in other countries is a violation of Pakistani laws.

According to the FBR, 63 solar panel importing companies have been shortlisted for investigation and 13 FIRs have been registered.

A company named Beith Star imported solar panels worth Rs47 billion and sold them for Rs42 billion abroad. Other companies illegally transferred over Rs18 billion to different countries on account of payment for solar panels imported duty-free from China.

Sub-committee Convener Senator Mohsin Aziz emphasised that there was clear evidence of money laundering and there was no doubt about it. He asked how a company with a paid-up capital of Rs2 million could do business worth Rs50 billion while another company with a paid-up capital of Rs10 million engaged in deals worth Rs40 billion.

He also questioned as to how banks opened accounts for those companies without proper verification, saying banks showed negligence in that regard.

State Bank of Pakistan's deputy governor told the meeting that banks had been fined over Rs200 million for their involvement in the scam. However, he clarified that banks were not aware of the quality and price of the imported goods as the FBR was required to determine the price of such goods.

Mohsin Aziz directed the FBR to submit a report on the entire matter after investigation. Separately, the State Bank is also supposed to submit its report.