Launch MOCA probe into Customs violations – Robinson
A SPECIAL audit into the operations of the Jamaica Customs Agency (JCA) has found that 275.6 million litres of fuel with Customs value of more than $12 billion, representing sales by Petrojam to a major local petroleum operator, its subsidiary and bauxite companies, were classified as exports.
The export entry declarations covered the 16-month period May 2016 to September 2017.
Auditor General Pamela Monroe Ellis, in a special audit report tabled in Parliament on Tuesday, said that the classifications were contrary to the provisions of the Customs Act, which describes export as “means of take or cause to be taken out of the island or the waters thereof”.
The audit, which homed in on the JCA’s private bonded warehouses and bunkering operations, found violations that resulted in more than $2 billion of financial exposure and $664 million of uncollected revenues.
Opposition Spokesman on Finance Julian Robinson on Thursday called for the Major Organised Crime and Anti-Corruption Agency (MOCA) to immediately probe what he described as “deeply troubling issues” highlighted by the auditor general.
He said it was critically important to determine whether the loss to the Government’s coffers was as a result of negligence or deliberate criminal conduct.
Responding to the sales to the local bunkering companies, the Jamaica Customs Agency (JCA) said that the export declaration, in respect of bunker fuel, was incorrectly consigned to the local bunkering operator instead of the actual vessel to be bunkered.
The JCA indicated that the local bunkering operator was advised to discontinue the practice of treating sales to local companies as exports.
However, the auditor general said that the JCA did not provide her auditors with written proof of this instruction as it indicated that the advice to the local bunkering operator was given verbally.
Based on a review by the Auditor General’s Department (AuGD), it was revealed that 27 per cent (62 of 231) of the local sales by Petrojam were treated as exports to four local bauxite companies between May 2016 and September 2017.
The fuel amounted to a combined 65.4 million litres of automotive diesel oil, marine diesel oil, and heavy fuel oil, with a Customs valuation of $3.3 billion.
The JCA told auditors from the AuGD that the sale of fuel to the bauxite company was initiated by the bauxite company by way of a letter to Petrojam.
However, the AuGD highlighted that the JCA did not monitor the fuel after the export entry was finalised to ensure that fuel intended for export was not used in the domestic market, without the requisite duties and taxes being paid in accordance with the Customs Act.
The auditor general also discovered that 44.5 million litres, 68 per cent, of the fuel was sales of automotive diesel oil (ADO).
As it relates to the bauxite companies, the JCA, on September 25, 2020, indicated that prior to 2017, it found out that “export entries were being used erroneously for the sale of fuel to bauxite companies, which was immediately stopped”.
In response to a query from the AuGD, officials from the JCA on September 25, last year, said, “There has never been a case where the full duties and taxes were not paid for ADO.”
The JCA said that in 2017, an IM4, or import entry declaration, was done for all the ADO imported for Petrojam, and as such, the agency would not be in a position to explain why the state-owned refinery did an export entry for such sale.
Further, the JCA produced six IM4s, which they purported to be the import entries related to the fuel sold to the bauxite companies, which represented imports of finished products - ADO.
In response to a query from the AuGD regarding the treatment of ADO fuel as exports, Petrojam confirmed that in error, the sales were treated as exports and subsequently cancelled the export entries relating to local sales to the bauxite companies in conformity to the JCA’s directive.
However, Petrojam’s response contradicted JCA’s assertion that the state-owned oil refinery imported the items as finished products and the related duties were collected.
Furthermore, Petrojam told the AuGD that these “ADO fuel sales were related to oil produced at its oil refinery through the conversion of various types of crude oil into refined petroleum products to include ADO”.
The auditor general stated that these conflicting explanations underscored the need for an urgent review by JCA to ensure that liabilities to the Government are accurately settled.