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$300M fraud uncovered at Customs

Apr 13, 2010 News

Details of massive internal fraud resulting in the loss of over $300M at the Customs and Trade Administration were uncovered by the Auditor General’s office in their Audit of the Public Accounts for the year 2008.
According to the report, the scheme was carried out by a cashier at the agency with assistance from a Database Administrator (DBA). The cashier would receive cash and issue receipts. However, to avoid suspicion at the close of business when the receipts were evaluated against the cash, the cashier would have the DBA backdate the receipts in the system thereby removing them from the daily listings.
This apparently went on for several months until the prime suspect took a leave of absence and fled the country shortly after the fraud was uncovered in late 2009.
In 2008, some $108.3M had gone missing and up to the time of the audit when the activities had been discovered this figure had risen to some $301.3M, a result of 212 backdated transactions. According to the report the matter is currently under investigation by the police.
In a related find by the Auditor General’s office it was seen that Cashiers would take their bags into the Cashiers’ booths and no security checks were conducted on these bags at any point in time. In addition, at the time of reporting in December 2009, there were no security cameras in the Cashiers’ booths.
The report indicated that there were differences year over year between the amounts actually deposited to the Consolidated Fund and the statement of Receipts and Disbursements as prepared by the Ministry of Finance.
In 2005 the difference was some $3M but the audit report stated that the sum of $10M which had been stolen that same year was also included in the report instead of written off as a loss. In 2007, some $8.150B was deposited against $8.159B being recorded, a difference of some $9M. In 2008 the sum of $7.485B was actually deposited to the account while the statements of the Ministry reflect a balance of $7.497B, a difference of $12M.
The Customs and Trade Administration which undertakes to seize goods, is required to keep a register of these seizures. However, each year a number of files are found to be missing.
In 2005 seven files were missing and the following year, 22 files were outstanding; in 2007 there were 43 missing files and 15 files were missing in 2008.
Ship files for the years 2008, 2007, and 2006 are still to be completed and submitted to the Quality Review Section for examination and closure.
The Ships’ Rotation Book kept at Customs House showed that of the 1,050 vessels that docked in Georgetown during 2007, only 676 files were submitted to the Quality Review section for examination and closure, as such 374 files are incomplete or missing. In 2008, of the 1,103 vessels that docked in Georgetown, only 375 files were submitted to the Quality Review Section for examination and closure.
Merchants are also required to pay overtime fees to Customs, it was seen that for the audit period the sum of $97M was supposedly collected in fees however an examination of the Demand Register held at the Customs Boat House and returns submitted by Outstations revealed that only $53.4M had actually been collected indicating that $43.6M was missing

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