ISAF containers case: No progress in recovery of lost billions irks SC

Summons Federal Board of Revenue chairman to explain his department’s laxity in recovering Rs55 billion.

ISLAMABAD:

Dissatisfied at the progress in recovering the billions embezzled in the International Security Assistance Force (Isaf) containers case, the Supreme Court has summoned the Federal Board of Revenue (FBR) chairman to explain his department’s laxity in the matter.

A three-member bench, comprising Chief Justice Iftikhar Muhammad Chaudhry, Justice Gulzar Ahmed and Justice Sheikh Azmat Saeed, issued a written order on Wednesday, seeking an explanation from the FBR chief and announced the case would be heard after two weeks.

The FBR has so far recovered Rs5.602 million out of approximately Rs55 billion that were reportedly embezzled.

During the proceedings, apart from expressing displeasure at the pace of recovery, the bench also observed that the FBR report did not provide any information on how far the bureau had implemented the recommendations made by the federal tax ombudsman (FTO) in his report.

The court had earlier on in the case tasked the FTO with compiling a detailed report on the matter. According to the FTO’s findings, the quality of data maintained by the revenue authorities was found to be highly unreliable, while the cross-checks available with the bureau were discovered to be vulnerable to fraud.

The report pointed towards massive abuse in the Afghan transit trade. While it was difficult to precisely ascertain the extent of the abuse, an estimated 7,922 transit containers were pilfered in Pakistan over a period of three and a half years. The FTO, however, observed in his report that the figure could possibly be just “the tip of the iceberg”. The estimated loss to the national exchequer between 2007 and June 2010, based on the 7,922 containers, was worked out to be Rs19 billion.

The report also noted that the customs procedural framework too was seriously vulnerable.

“One customs manual clearance system was found to be particularly prone to transit scams,” it observed, adding that the senior management of the customs department had failed to implement appropriate countermeasures against such vulnerabilities.

“The investigation of four mega container scams indicates a clear pattern. The phenomena of pilferage is not new, neither are the efforts of senior officers to provide cover up by hindering investigations, manipulating record and data and diverting focus by fact-finding committees,” the FTO’s report contended. It noted that in a certain case, a collector who had failed to prevent the wrongful clearance of 523 containers laden with liquor was made part of a fact-finding committee to frustrate the course of investigation.

The FTO maintained the operating procedure in the scams was unchanged. Culprits use fake documents and employ primitive manual clearance and processing systems to their advantage. They also rely on the wide discretion of unscrupulous customs officials, lack of transparency and effective accountability, and the involvement of seniors otherwise responsible for oversight to commit financial abuses.

Published in The Express Tribune, March 7^th, 2013.