Importer loses warehouse licences after vehicles, equipment disappear

Nov 03, 2017 News

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There appeared to be major breaches with the operations of private warehouses where vehicles and heavy equipment were supposed to be held pending a sale.
The issue, which is indicating that over time the country lost millions of dollars in taxes due to wrongdoing, has caused the Audit Office to call on the Guyana Revenue Authority (GRA) to be tougher in their monitoring.
Private warehouses are supposed to be strictly monitored by the Customs arm of GRA. Vehicles and equipment coming off the wharves for which no taxes and duties are paid, are supposed to be held under strict conditions until permission is granted for it to be released.
However, state auditors examining the registers of five warehouses of one importer, and later carrying out physical inspections at the different locations, discovered that several had disappeared.
In fact, according to the Auditor General report for 2016, which was publicly released yesterday, a staggering 36 pieces of equipment as well as 17 vehicles valued at $370.859M were not found in the warehouses. Auditors could find no evidence that the units were properly released by GRA or that the payment of duties and taxes estimated at $89.691M happened.
It appeared that the importer, who was not named in the report, took it upon himself to release the vehicles and equipment.
The report indicated that on February 1, 2017, the Commissioner-General had written the owner of the five warehouses, indicating that if the duties and taxes of $35.308M were paid in full immediately, penalties amounting to $29.166M would be waivered and the licences to operate the five warehouses revoked.
At the time of reporting, the auditors said, taxes in respect to the 36 pieces of equipment valued at $343.227M were verified as being paid to the authority. However, evidence to support the payment of duties and taxes estimated at $33.214M in respect of the 17 vehicles valued at $17.879M, was not presented for audit.
Auditors said that 16 vehicles were found to be already registered to various individuals during the years 2002-2007 with no traces for one vehicle.
GRA’s explained in the report that permission to operate the warehouses was revoked and approvals to cancel the related warehouse bonds were issued to the commercial bank via letter dated 21 June 2017. GRA was also investigating the missing vehicle.
The Audit Office recommended that GRA present the documents verifying that the payment of duties and taxes, estimated at $33.214 for 17 vehicles, were made.
There were other problems at the private warehouses, auditors said.
For example, physical inspection conducted on the April 11, 2016 at one warehouse revealed that the approved area for warehousing was converted to a storefront and the warehouse stock of 15 vehicles valued at $28.996M were re-located to the compound.
There was no written permission was granted by the Commissioner-General of GRA to remove the stock and to alter the warehouse as required by the Customs Act.
In a follow-up response to the finding, management indicated that the warehouse owner paid a fine in settlement of the issue and was granted permission for the temporary storage of the stock pending completion of the modifications of the warehouse.
Last year, there were 38 private warehouses in operation of which four were subsequently closed and six were temporarily restricted from warehousing units due to ongoing matters with the authority.
The audit report said that an examination of the warehouse registers and physical inspections conducted in April 2017 of 13 warehouses revealed that at one warehouse, body repairs and spray painting works were currently ongoing on one vehicle with a value of $0.951M, and estimated duties and taxes of $1.745M.
However, checks with the Customs Warehouse Unit revealed that the importer was not given approval to access the warehouse and undertake the repairs as required, a clear breach of the Customs Act.
That matter is being handled by GRA’s Legal Division. GRA earlier this year had issued a Notice of Seizure.
Meanwhile on the issue of bonds, the Audit Office report explained that bonds are required to be established in accordance with the Customs Act, by the owners of private warehouses for the purpose of warehousing of goods without the payment of duty and taxes on their first entry. However, even this seemed to have problems.
Auditors saw evidence where a total of 96 bonds valued at $3.289 billion were established with five commercial banks, three insurance companies and the Trust Corporation, by the owners of the warehouses. However, four banks and two insurance companies confirmed the existence of only 86 bonds valued at $2.462 billion.
Auditors said that in the absence of the other confirmations, the existence of the remaining ten bonds valued at $827M could not be ascertained.
GRA later explained that letters requesting confirmation to be sent directly to the Auditor General were dispatched to the financial institutions holding the bonds.
Two of the warehouses on the list, with bonds valuing $37M, were closed during the year 2016.
The Audit Office recommended that GRA take the necessary steps to verify that all warehouse owners have valid bonds in place and a report of same should be submitted to the Audit Office. “Follow-up action should also be taken with the commercial bank, insurance company and the trust corporation to have the confirmations submitted promptly.”

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