Multan traders accused of illegally importing HSD, used oil
By Umar Cheema
ISLAMABAD: In a dramatic move, the Federal Board of Revenue (FBR) has removed the Customs Intelligence DG, the man who unearthed a mega oil scam implicating the importers from Multan for illegally importing over 1,650 containers of High Speed Diesel (HSD) and used lubricating oil in just six months with the connivance of the Customs authorities, causing massive revenue loss.
The oil scam has so far been kept out of the public eye and it is a unique scandal of its nature where the revenue officials were accused of facilitating the illegal import and Arshad Saeed, the Multan collector, removed under same charges. Nevertheless, the Customs Collectorate was authorised to investigate the scam by the FBR, putting the Customs Intelligence which unearthed it at the backseat.
As the containers were seized from Multan and Karachi ports, the then Chief Collector in Karachi, Munir Qureshi, has now been appointed the Member Customs in the FBR.
On the other hand, Rai Sikandar, Customs Intelligence DG, who dug out this robbery that occurred under the close watch of the Customs Department, has not only been removed but also replaced with Lutfullah Virk, an officer from the Customs group, an appointment that is illegal according to the FBR reforms dictated by the IMF and the World Bank in 2006.
According to the reform programme, the Customs Intelligence DG must belong from a department other than the Revenue Establishment as induction from the same department to examine the performance of his workmates was considered tantamount to setting a thief to catch a thief. Unlike Virk, his predecessor, Rai Sikandar was from the Secretariat Group.
The Multan importers found involved in this illegal business were M/s Yasir Enterprises; Mian Rasheed, the owner of M/s Kamran Oil and M/s The Pioneers. Neither any strict action has been taken against the Customs staff involved in clearance of misdeclared goods nor Customs Intelligence DG, Rai Sikandar, was allowed audit inspection of sales tax and income tax returns of the accused parties.
Background discussions and reading of voluminous documents disclose how the Customs authorities first facilitated this illegal import and when caught red-handed by the Customs Intelligence, the FBR joined hands with the accused Customs officials and cold-shouldered Customs Intelligence DG. The matter is now pending with the Public Accounts Committee that has yet to take it up.
The FBR didn’t offer any comment on a list of questions sent for its version.
The Customs Intelligence seized 14 containers on Multan Dry Port in April 2009, carrying imported HSD but was misdeclared as residue of petroleum and initially had been cleared by the Customs Multan.
According to rules, HSD can only be imported by Oil Marketing Companies (OMCs) and the rest of them are unauthorised. On further information, the Customs Intelligence detained as many as 363 containers at Karachi ports under the same suspicion and it was discovered the containers belonged to the same importers.
In both cases, relevant Customs authorities were accused by the Intelligence Directorate of conniving with the importers and the FIR was also registered against some staffers.
Rai Sikandar, the then DG Customs, who was shocked to notice how colossal loss being incurred to public exchequer, wrote to the FBR chairman that ‘over 1600 containers of the same product have been cleared by the MCC (Model Custom Collectorate in Karachi) during last six months and not a single case was detected through physical examination or the lab test’.
Besides customs officials, government labs were also found involved in facilitating this racket. For example, the petroleum products discovered from containers in Multan were sent for test in Hydrocarbon Development Institute of Pakistan (HDIP) in Lahore and Multan and produced different results. Multan Lab declared the product as High Speed Diesel and Lahore lab reported otherwise: “Test result of the sample is comparable to HSD but contains water and sediment and is not suitable for use in diesel engine”.
As the issue of FIR emerged, Customs Intelligence and Customs Collectorates in Multan registered parallel FIRs. The accused importers went to court, challenging the jurisdiction of Customs Intelligence that was rejected by the Lahore High Court. Nevertheless, the FBR through a letter dated April 15, 2009, gave precedence of Customs Collectorate’s FIR, drawing protest from the Intelligence Directorate. Separately, a joint investigation team was formed for Multan episode but Dr Arsalan, an official recommended by Customs Intelligence, was not made part of the team and instead inducted another Customs officer, Mukarram Jah.
Likewise, the suspected containers in Karachi ports were also seized on the information of the Customs Intelligence DG that also discovered collusion of the customs staff. A joint examination committee was formed under the leadership of Customs Collectorate Karachi. The Customs Intelligence was first made part of investigation but later excluded from the process, said a letter written by Rai Sikandar, DG Intelligence to chairman FBR.
The questions sent to FBR for version, are being reproduced below:
1) Is it true that Directorate General Customs Intelligence seized containers in Multan and Karachi for mis-declaration of HSD/ Used Oil as Residue Oil/ Bitumen?
2) Is it true that 14 containers seized in Multan were initially cleared by the Customs Collectorate but later detained by DG I&I and found that Diesel being imported in unauthorised manner under the pretext of residue oil/bitumen?
3) Is it true that DG I&I and Customs Collectorate registered FIRs under different offences?
4) Is it true that Collectorate’s FIR was given precedence over Customs Intelligence DG’s FIR?
5) Is it true that FBR gave precedence to the Collectorate’s over Customs Intelligence DG’s FIR through a letter on April 15, 2009 when the Lahore High Court had already rejected objections on April 10, 2009 of the accused parties that had objected the Customs Intelligence DG ‘s investigation into the matter?
6) Is it true that Collector Multan was removed on the Containers’ issue?
7) If yes, it means the FBR admitted Collectorate’s involvement in clearance of such mis-declared consignments, nevertheless the investigation into the scandal was assigned to the Collectorate?
8) Is it true that Mukarram Jah, a Custom Officer serving with DG Custom Intelligence, was made member of investigation team notwithstanding the opposition of DG Rai Sikandar who had recommended Dr Arsalan’s name for the purpose?
9) What’s the status of Hafiz Anis-led inquiry into the matter and what were the findings of his report?
10) Is it true that Arshad Saeed, Collector Multan, was removed from the position after Hafiz Saeed’s inquiry report but no action has so far been taken against Arshad Saeed?
11) There were 363 containers seized in Karachi. How many have been cleared and under what pretext? How much duty tax was received from the importers? How many are still parked there, unclaimed? In how many containers, diesel was detected by HEJ, a testing lab in Karachi.
12) Is it true that DG Customs Intelligence disclosed in a letter that over 1,600 such containers have been cleared by Customs Authorities in six-year period?
13) What were the findings of the HDIP (Lahore) and HDIP (Multan) on samples sent from the containers seized in Multan?
14) I understand the importers moved the court and succeeded in securing stay. What departmental action has been taken against the accused held responsible in Karachi and Multan?
15) Is it true that Chief Collector Southern Zone, Munir Qureshi, under whose administration comes Port Qasim and PICT where containers seized, has been appointed as Member (Customs) in FBR?
16) Is it true the seizure in Karachi took place on intelligence of DG Customs Intelligence?
17) Is it true that investigation in Karachi was led by the Collectorate staff, giving DG Customs Intelligence a subordinated role?
18) Is it true that parties brought shipment in Multan, had also their stuff seized in Karachi?
19) Is it true that DG Customs Intelligence was not allowed an audit of sales tax and income tax of the accused parties?
20) Is it true that Customs Intelligence Director General Rai Sikandar was removed from his position after he unearthed this scam?
21) Is it true he has been replaced by a customs group officer?
22) Isn’t it the violation of restructuring plan of the FBR that said a customs officer cannot be DG Customs Intelligence?