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Mega scam of revenue loss of over Rs 60b by custom officers unearthed

Member Custom Operations FBR has issued an SRO abolishing Lahore and Karachi Directorates of Internal Audit

M Jahangir Hayat

LAHORE: In a bid to push under the carpet the revenue loss of over Rs 60 billion in gold and other such cases made by Internal Audit in 2015 Member has abolished the Directorate of Internal at Lahore to save the collectors from massive revenue loss detections including the detection of Rs 7300 million made by the Lahore Directorate of Internal Audit during the first quarters of the current financial year.

As per documents available with Daily Business, a unique SRO
1114(I)/2019 of its own kind has been issued on 20.09.2019 by Jawad
Awais Agha, Member Customs Operations, FBR whereby two Directorates of Internal Audit at Lahore and Karachi stand abolished.

The documents indicate that the country wide task of Customs’ Internal
Audit has deliberately been assigned to a single Directorate of
Internal Audit situated at Islamabad thus taking away from the Customs
Internal Audit its capacity to detect custom officers’ corruption and
resulting massive revenue losses.

The SRO is a device to liberate the custom officers’ corruption /
revenue losses from the fear of subsequent Internal Audit’s detections
and proceedings.

The documents show that FBR has abolished Internal Audit without
jurisdiction and lawful authority as Section 3(B), 3(DD), 3(E) and
section 4 of Customs Act and the corresponding sections of Sales Tax
Act under which FBR has purported to exercise powers to abolish two
Directorates of Internal Audit do not give FBR any such powers.
These provisions only empower FBR to appoint officers in field
formations and to define their powers and functions, the documents
pointed out.

Even provisions of FBR Act, 2007 do not confer on FBR any powers to
abolish field formations the documents stated, adding that Section
5(1)(b) of FBR Act empowers FBR to increase, decrease or re designate
any posts and section 4(1)(r) empowers FBR to create a field formation
for the purpose of greater efficiency in the implementation of tax
laws.

The documents stated that the major reason for abolishing Directorate
of Internal Audit Lahore includes avoidance of the Directorate’s
massive revenue loss detections which can give tough time to the
Customs officers.

The Directorate of Internal Audit Lahore has crossed a revenue
detection of Rs.7300 million in a short span of three months. This has
set the alarm bells ringing for the custom officers who were causing
this revenue loss.

Further the documents state that Directorate of Internal Audit Lahore
has begun to conduct performance audits of custom officers who have
never been held accountable for their performance.

The documents highlighted that the Directorate’s pursuance of
Al-Shamsher Engineering Case which involves a revenue loss of Rs.220
million and is presently sub judice before Collector Adjudication
Lahore is also one reason for the closure of Lahore directorate.

Several senior custom officers have high stakes in the outcome of this
case as they are all facing NAB enquiry on the same charge and the
Directorate of Internal Audit Lahore is vigorously pursuing this case,
the documents underscored.

The documents disclosed that the Directorate’s pursuance of gold cases involving a revenue loss to the tone of Rs.60 billion has also
prompted the closure of the directorate.

Earlier Honorable Federal Tax Ombudsman had recommended on 21.05.2019 disciplinary and criminal proceedings against custom officers involved in these cases. The Collectors of MCC Preventive Lahore, MCC
Preventive Karachi, MCC Port Qasim, Karachi, MCC Islamabad and MCC
Peshawar have filed appeals in these cases against FTO’s
recommendations before the President of Pakistan; the documents stated adding that the Directorate of Internal Lahore is vigorously pursuing these cases before the President of Pakistan.

The Directorate of Internal Audit at Karachi has been abolished to
remove from 90% corruption / revenue losses the threat of subsequent
internal audit detections, the documents said adding that the task of
Customs Internal Audit in whole of the country including Karachi has
been assigned to the single Directorate of Internal Audit situated in
Islamabad with a mala fide intent to make internal audit ineffective
and to reduce the threat of audit into insignificance.

The documents said that under section 4(1)(g) of FBR Act, 2007, FBR
has statutory obligation to take appropriate measures including
internal controls to combat corruption within its field formations and
the SRO is issued in breach of this statutory duty.

By throwing the responsibility of country wide Internal Audit on
Director Islamabad, the SRO seeks to loosen the internal controls to
facilitate corruption in FBR’s field formations and thus undermine
FBR’s statutory obligation to tighten internal controls against
corruption, the documents said.

The SRO is issued against FBR’s statutory obligation of accountability
for performance in field formation, the document concluded.

When contacted the member customs Jawad Awais Agha could not be
reached despite several attempts on his cell phone.

However, FBR Chairman Syed Shabbar Zaidi said that he has gone
through the news sent to him by this scribe but he declined to
comment.

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