Enemies of the Nation: The dark secrets of Tema Harbour

By Anas Aremeyaw Anas A veritable commercial beehive; the economic nerve centre of Ghana, sits on the shores of the Atlantic and overlooks the bubbling big blue sea. The sea breeze seems to have been directed purposely to produce a calming effect on the crammed and torrid atmosphere and on the bristling pace of business. The national flag, the Customs flag, and that of the Ports and Harbours go fluttering and flying at full mast. Gallant men and women resplendent in their uniform, complete with their berets embossed with the sacred Coat of Arms, walk around in high morale. Businessmen in their tuxedoes and clearing agents crisscross, moving from office to office with an air of tenacious dedication. Do not be deceived, some of these men in Ghana’s iconic harbour city are busily stealing from the most fertile vineyards of the motherland. The nation’s trusted farmhands at the Harbour have appropriated the farmland and its produce and denied their landlord (Ghana) the benefits due him. The Tema Harbour has been turned into a goldmine for some greedy security officials who are threatening to strip the mine facility to satisfy their selfish ends. Many officers from CEPS, the Ghana Police Service, National Security and the Ghana Ports and Habours Authority would do all it takes in the scramble to possess a piece of the prize. It is a dark and murky world at the Tema Harbour, as these security officials collaborate with some clearing agents to steal money belonging to the state through tax evasion, bribery and personal greed, thereby defeating the nation’s revenue mobilization efforts. Invariably, potential investors, importers and ordinary Ghanaians are made to bear the brunt of the selfishness and greed exhibited by these officers and agents because prices are passed over. These discoveries follow over three months of investigation by The New Crusading GUIDE into the operations of the Tema Harbour. Posing as a clearing agent under the name “Oblitey Sowah”, alias “Koose” from “Tiger Shipping agency”, Anas Aremeyaw Anas, together with a team of agents, obtained secret video footage on the daily cases of bribery and corruption that greet any importer or businessperson who calls at the port. Most importers are made to face the harsh realities of delays, payment of illegal fees, destruction and stealing of their goods as well as the sheer greed displayed by some security officers. The investigations also brought to light multiple cases of bribery, corruption, stealing, several cases of collusion between security officials and clearing agents as well as loss of goods belonging to importers as a result of inadequate security measures at the facility. The investigation uncovered some of the worst forms of bribery and corruption, lack of professionalism and glaring examples of stealing by these security officials at the port. Amidst all these corrupt activities, many agents have devised ways of adding the cost of bribe charges to the fees they usually charge importers. As a result, people who import goods into the country through the harbour go through unspeakable frustrations, not least the payment of huge sums of illegal charges which end up in the pockets of private individuals. In the process, it takes months to clear goods from the harbour. Sometimes, the nightmares of these importers are climaxed by the loss of their goods through theft or damages through mishandling. Over the years, there have been many reports of how unattractive the Harbour has become, with many importers channeling their frustrations through diverse ways. It is striking how very little has changed in the system. The New Crusading GUIDE also got access into the Customs Electronic system – a repository of all transactions that go on at the port – where we found very worrying cases of tax exemptions and unrecovered debts owed to the state worth billions of cedis. It brought to the fore many cases of tax exemption offered in the name of the Office of the President over the years. Many other exemptions were given out to individuals and companies on condition of “Awaiting Parliamentary Approval”. Here, we discovered that monies lost in bribery, corruption and some tax exemptions could help usher Ghana into an era of freedom from foreign donors. DODGY “AWAITING PARLIAMENTARY APPROVAL”, THAT NEVER WENT TO PARLIAMENT Many Businessmen and friends of politicians have over the years used their association to parliamentarians to evade taxes whenever they clear goods from the Tema Harbour. These individuals sometimes import goods in their names for family members and their companies. Undoubtedly, the use of the name of parliament has resulted in the state losing millions Cedis, as some government officials over the years deliberately abuse the system to clear goods for their business cronies. Our checks also revealed that even when the code is used to clear genuine goods, the much-awaited parliamentary approval never comes to validate it. It was horrifying to realize that some of these people never went to parliament for approval. Between March 2007 and December 2009, over GH¢ 900 million worth of tax exemptions was granted to some individuals and institutions in the name of “Parliament”. These tax exemptions were given out for goods ranging from medical equipment, household items, educational items and vehicles; with beneficiaries across public and private entities. Further figures obtained between January and November 2010 indicate that approximately GH¢ 17.9 million was lost by the state as a result of these special permits in the name of Parliament. Parliament is constitutionally mandated to handle all tax issues that border on finances. Part of Article 174(1) of the constitution under chapter 13, sub-headed “finance” states that “no taxation shall be imposed otherwise than by under the authority of an act of parliament”. In this light, no taxes can be levied on anybody unless it is done under an act of parliament. Although exemptions are given for special reasons based on parliamentary approval, The New Crusading GUIDE found out that the system was being abused by some individuals and organizations who always use the name of parliament to evade taxes. For the past six years, Parliament does not have any record of some of these exemptions. In an interview with The New Crusading GUIDE, Chairman of the Finance Committee in parliament, Hon James Avedzi said although parliament has conferred the power of granting exemptions on the Ministry of Finance, it does not have an idea which individuals or organizations have been granted exemptions over these years. “l have not seen anything like that as a deputy ranking member of the committee in 2007-2008 and as chairman from 2009 to 2010. l have not seen anything”, he admitted. Although he conceded that “the Ministry of Finance [is supposed] to do that on daily basis and report back to parliament after a period of time”. He was unable to state what period of time parliament is supposed to revise such exemptions. When presented with the evidence of exemptions to institutions and individuals as we discovered on the Electronic system, Hon James Avedzi simply said, “l will not talk about the value that we have seen because l do not know what goes into that 18 million Ghana Cedis you are talking about but it is possible that there is something like that you can see from the system”. THE WIDENING JAWS OF DEATH AND HOW OUR BROTHERS IN THE DIASPORA ARE TREATED Many Ghanaians leave the shores of the land to go and work in foreign lands in order to return someday to build a better life for their kith and kin. These men and women toil in sweatshops and endure harsh conditions in foreign lands just to provide for themselves and their families. They return to Ghana, their homeland, only to have their hopes dashed at the Tema Harbour. Long held dreams are blown apart, as they are not able to get hold of their valuable possessions. It usually is a tale of toil defeated by treachery, as Ghanaians who return from the Diaspora are always greeted with the grim reality of seeing their hard-earned properties stolen and destroyed by men at the Tema Harbour. When this happens, they are treated by port officials with so much disrespect and heartlessness. It is assumed that these Ghanaians have a lot to spend, little time to stay and fight for their goods. They [goods] are never found, although they spend sums of money in wearisome clearing process. Many are distressed in the process; those who endure usually leave the shores of Ghana with sad songs about their beloved country. It is a disturbing cycle of evil trumping goodwill. Becky Mensah is a Ghanaian-born philanthropist based in Canada. In January last year, Becky, with the help of some friends and benevolent institutions in Canada, collected some materials to help students of an educational institution in Cape Coast. They shipped a 40-foot container loaded with educational materials, computers, sewing machines, food items and a boxful of household effects to help support Ghanaian school children. Although the container, which was addressed in the name of the Paramount chief of Cape Coast, was originally destined for the Takoradi Harbour, it never arrived. Becky eventually had to travel from Canada to Ghana to locate it. After a long search, the container records were finally found at the Tema Harbour in June 2010. She was asked by Port authorities to pay the necessary duties in order to have her container released. With the help of her agents, she paid the required fees, totaling about GHc 5000. Yet, it took another five months and a trip back to Ghana to see her container. When she finally got access to it in November 2010, it had been broken into, with almost half the humanitarian items stolen. “When we got there, the customs officer checked without tag on our papers, the tag number and check the thing that closes the container, the seal that seals the container and the numbers did not match but the thing that was to my surprise was one of the carrier there just got closer to it and he just wiggled the thing and the whole thing opened”, she told The New Crusading GUIDE in an interview. Among other things, three laptops, 800 stuffed backpacks for students, 68 bedspreads, 4 sewing machines, a boxful of household items and several bottles of water were stolen. Nobody gave her any answers and she had to make do with a half-empty container which she took to Cape Coast to support needy students. Becky has finally returned to Canada after this trouble with port authorities. In all, she lost goods worth over one 120,000 dollars. When she approached security officials at the port, they refused to pay any attention to her. “I was actually shocked, but the customs guy never said a word. l started to complain to him and he just walked away”, she said with tearful eyes. “There was a group of them sitting under a tree and l said to them ‘will you guys help us’, they just stared at our face and didn’t say one word. It was so humiliating and painful, these people in uniform at the Harbour, we their customers were standing there and saying ‘can you see what has happened to us’; our container is almost empty. But all four of them sat there and just stared at us as l looked on helplessly”. Like Becky, countless individuals have harrowing tales of abuse they endure when they ship goods from various destinations to Ghana through the Tema port. Emmanuel Ahulu, a Ghanaian who recently returned from Virginia in the United States of America also had a similar story. After shipping a brand new car, together with goods through the Tema Harbour, Emmanuel got to Ghana only to realize that all his goods were stolen and his car badly dented. This was after he had engaged the services of a clearing agent, done the necessary documentations and got assured that “things were under control”. “Everything in the car actually was stolen. l couldn’t find anything, items that were bought and packed in the car actually in their brand new state – in boxes and in bags – everything was gone, nothing had been left”, he told The New Crusading GUIDE. “The car trunk was broken and they entered it and took every item that l brought”, he added. When he approached port officials, Emmanuel was greeted with the same fate as Becky: he could not get anyone to listen to his plight. He has since threatened legal action. “l believe that the next line of action is that the authority be held responsible, whoever is in charge of those terminals, whoever is in charge of those containers or all the cars that come in. l think he should be held responsible and he should be accountable for if that is done, l believe very well we are going to get somewhere; we are going to get to the bottom of this”, he said. It appears security officers who are mandated to take care of the port have failed woefully in the performance of their duties. Apart from the numerous cases of bribe-taking we witnessed, little can be said about the role these officials play at the port. Sometimes, they look on as agents and some people break into and sell goods in containers belonging to some importers in the full glare of the public. Johnson Clarkson, an investor from the United Kingdom also faced a similar ordeal at the port. In an interview with The New Crusading GUIDE, he narrated how over hundred bicycles which he shipped from the United Kingdom to support Ghanaian farmers in the Brong Ahafo Region got missing. “After going through hell to pay all those duties, I was bewildered when I found more than half of my goods missing”, he told the paper. He has since returned to his country, after he could not get any response from the Harbour Police and port authorities. Nii Lantey Okunka Bannerman, a Ghanaian living in the Diaspora, once posted an article on Ghanaweb titled “Belly of the Beast”. It was a recount of his experiences in clearing a car at the Tema Harbour sometime in 2005. Nii Lantey, in an apparent state of exasperation, wrote about how his car got “trapped” in the “jaws of death” [the Tema Harbour], citing an unending web of bribe taking, bureaucratic bottlenecks and acts of collusion which hamper the smooth clearing of goods from the port. More than five years on, it appears little has been done to turn the toxic-breathing jaws of the harbour into a friendly environment for importers. The cases of Becky Mensah, Emmanuel Ahulu are the recurring features in the unchanging script of the Harbour story. THE CANADIAN SAGA Following the experiences of Becky Mensah, The New Crusading GUIDE made a trip to Canada to assess the Canadian situation. True to Becky’s accounts, the ports in Canada – including Port Calgary, where she shipped the container from – are orderly and well managed. There is an absence of corruption and most of the systems are automated. It is difficult to find port officials demanding bribes from importers and exporters. Also, goods shipped to meet Humanitarian needs are exempted from all taxes or duties. There were also no reports of stealing as exists in the Ghanaian setting. Undoubtedly, Canada provides an example for Ghanaian officials in-charge of the ports to emulate. Like other developed countries, the Canadian ports have very efficient systems which make shipping less stressful. In an interview with Prof Atsu Amegashie, an Associate Proffessor in the Department of Economics at the University of Guelph in Canada, he stated that the problem of revenue leakages can only be solved if the authorities take serious actions. “There’s the need for a committed leadership, that is willing to incentivize and induce agents to go after corrupt officials who are in charge of tax administration”, he opined. The Professor, who is also a Ghanaian, maintained that the Canadian situation offers a shining example for Ghanaians to follow. OFFICE OF THE PRESIDENT AND THE TYCOONS Beyond the disturbing spate of corruption between security officials and clearing agents, the abuse of the name of Parliament and the fate of those from the Diaspora who clear goods through the Harbour, The New Crusading GUIDE also uncovered a tide of sleazy deals which stretch even higher. The “Office of the President” has also been used over the years as a rubber stamp by certain individuals and organizations to rob the state of its needed revenue. Section 44 of the Customs, Excise & Preventive Service (Management) Law provides the legal basis for CEPS to grant exemption from the payment of import duty to privileged persons, like THE PRESIDENT. This position is exemplified as Tariff No. 3AF.1 of PART A of the THIRD SCHEDULE of the CEPS Tariff at page 653. Thus, “OFFICE OF THE PRESIDENT”, which is under the Ministry of Presidential Affairs, is different from "THE PRESIDENT”. Office of the President does not enjoy any duty and tax exemption under the laws of Ghana. The exemption covers items imported or purchased locally by the President for his personal use, not items imported or purchased locally by the state. These exempted items are the personal property of the President. For the present purposes, these are items imported or purchased by the person who, for the time being is the President of Ghana. These are items that he will continue to own, even when he is no longer President of the Republic of Ghana. For instance, an official who works in the office of the President cannot clear his goods for free simply because he works in the office of the President. The New Crusading GUIDE however, discovered that the rights given to the President were abused by senior officials of various governments. Goods, which had nothing to do with the President’s person, had found themselves being cleared in the name of the office of the President by various government officials. This is done usually without the President’s knowledge. Discoveries on the system total exemptions under the code, indicated that the office of the president comes to GHC14, 190, 336 (an equivalent of 9, 511, 000 dollars). An examination of the entries as sighted had questionable declarations, including luxury vehicles imported under the name of a member of parliament, assorted used vehicles, used clothing, fish meal, second hand air conditioners, second hand sewing machines and rather non-presidential materials. “I am shocked at this list because I know our Presidents do not use used cars. I also do not know any of our Presidents who has a poultry farm. So why these second hand cars and imported fishmeal by the Office of the President?” asked an official at the Finance Ministry when he saw the list of special permits in the name of the President. We found out that, the Ministry of Finance had also had its fair share of granting exemptions. It had granted permit for the clearance of goods without permit to the tune of about 5million Ghana Cedis (an equivalent of over 3 million two hundred dollars). GHANA’S GOLDFIELD STRIP-MINED BY MEN IN UNIFORM PAID TO SECURE IT The police, Customs Excise and Preventive Service, Ghana Ports and Harbours Authority Security, officials from National Security are fully engaged in bribery and corruption. They usually demand specific amounts from agents who are found evading tax through mis-classification, under-valuation or over-valuation of goods. Sometimes, they demand money before allowing entry into certain points within the port or before signing documents for the agents. It is common to see security officials admonishing agents to learn how to give bribes. “Without this, you cannot succeed in this business”, they usually say. On one occasion, we encountered a Senior CEPS officer named Mr. Kwakye at the CEPS laboratory who demanded money before approving our goods. When The New Crusading GUIDE could not pay the money the officer demanded, this is part of what transpired: LAB MAN: You! See you should always remember that, this is like when you come, next time come here again, and then you have become our friend. You see! TIGER: Yeah! Yeah! LAB MAN: So how much are you saying? TIGER: Boss! Boss! Let me give you GHC 50 LAB MAN: How much? GHC 50, add something TIGER: Pardon sir? LAB MAN: Add something; is that all you have? TIGER: That is why I am saying… LAB MAN: You cannot say anything TIGER: We can be saying something which will be looking so provocative, you being in the system and this being our first time, you can tell us this is how we are doing it and we also say oh! So far as this is our first time, Boss we, we are now becoming friends. LAB MAN: You just make it GHC 100 TIGER: GHC100? LAB MAN: Nice lady and nice like this, you are thinking of opening your company in the future, you have to know certain things on the ground, you see! TIGER: Yes sir! LAB MAN: But if you start with your hands like this… TIGER: Oh! No sir that is not that LAB MAN: If you open your company things will not go well On another occasion, this reporter met a GPHA Security official who demanded money before allowing him entry into the port: SECURITY MAN: You be agent? TIGER: Yeah! SECURITYMAN: Then you get money, bring am make l chop inside. Yes! Bring your requirements. I go chop ooh!! TIGER: You go chop? SECURITY MAN: I go chop small one TIGER: No! Problem OFFICER: No be big one Clearly, the case of bribery and corruption as it exists between agents and CEPS has far-reaching consequences as far as national revenue mobilization is concerned. As these shady deals come to a head, current and potential investors are seriously frustrated as agents normally include the proverbial “Bribe-fees” to their charges. Though most importers overlook the illegality and pay these monies, they sometimes go through hell to get access to their goods. The cases of Becky Mensah and Emmanuel Ahulu typify the order at the Tema Harbour. BETWEEN CORRUPTION AND FOREIGN AID Financial and policy experts have suggested that Ghana could wean itself off donor support if those in charge of Ghana’s ports city worked hard enough and cut out the corruption and negligence. The exemption system granted under the name of Parliament and the Office of the President has been abused, and this has taken a toll on the National treasury. “The situation where it seems as if these exemptions were being abused instead of bringing in materials and the rest that will prop up our economy becomes worrying”, says Dr. Lloyd Amoah, a policy analyst and professor at Ashesi University. To put an end to the incessant borrowing by government, he maintains that the Harbour, as an entry point, “provides a lot of revenue and so it means that fundamentally for a developing country this ought to be looked at critically”. A senior fellow at IMANI Ghana, Kofi Bentil, also argued, that “If we manage our ports well, we could actually make more money out of the port system than we are making out of cocoa for instance”. He continued, “If we were to make services a central issue in this economy, it is possible that we will improve the economy, l means government revenue, and actually serve the sub-regions, and one of the areas l identified as a note for such service economy is the port system. Between Tema and Takoradi port, we can actually establish a system which will serve the whole West Africa sub-region”. The question of Ghana’s inability to meet its revenue targets is more an issue of mismanagement and corruption rather than the lack of resources. The World Bank Country director to Ghana, Ishac Diwan, believes Ghana’s revenue mobilization efforts needs to be improved. “ The various taxes need to be linked together in a database so that, knowing how much VAT, how much volume of business which is useful for the VAT, informs the tax authority about incomes and profits so that cooperate taxes can be collected. So, there is the need for more efficiency in terms of the different services working together and finally, also, facilitating the entry of business into the formal economy”, he says. “It is very important to close the loop falls and to have a more disciplined system. There are just too many exemptions that have been granted left and right through lobbying by the various industries, sectors, companies”, he points out. Though sunrise promises clear skies suitable for navigation, this very advantage so often turns out to be the cause of shipwrecking storms. Oh how aptly the above Shakespearean quote describes the case of Destination Inspection Companies, GCNET and an array of importers who operate at the Tema Harbour! Launched amidst lofty hopes and expectations that these would help staunch the profuse bleeding of the Tema Port, Destination Inspection Companies (DICs), the GCNet system and the likes have ended up adding another burdensome layer to the mounting strata of incompetence, negligence and downright fraud that is plaguing Ghana’s potential breadbasket, thus threatening to wreck the boat of national development. The Customs Excise and Preventive Service, charged to keep the boat afloat, joins in the fray with reckless abandon of its mandate. Aside the daily cases of bribery, corruption and other illegalities uncovered among clearing agents and CEPS officers at the port, there were multiple cases of fraud and mismanagement perpetrated by some institutions, under the watch of the Customs Excise and Preventive Service (CEPS) at the Tema Harbour. The New crusading Guide’s investigations revealed that Ghana Community Network Services Limited (GCNet), Destination Inspection Companies (DICs) and a number of private companies were at the foreground of several acts of corruption and collusion within the port system. The Ghana Ports and Harbours Authority (GPHA) is not left out in this case. CEPS, which manages the activities of GCNet, Destination Inspection Companies as well as companies that transact business at the port, appears to have failed in discharging its duties. As a result, the cheating and corruption have become a free-for-all affair for the companies. The lack of an effective policing regime by CEPS in the revenue mobilization drive has led to miscreants evading tax with cheeky ease. A look at the Ghana Customs Management System (GCMS), a repository of all transactions engaged in by both genuine and dubious businesspersons across the country, showed a plethora of shady deals such as tax evasion, partial and full exemption grants. There was also evidence of other antics employed by companies to rob the nation. This is usually done with the assistance of CEPS officers. The New Crusading Guide’s assessment of the electronic system showed dubious transactions by some officers who circumvent the rules to facilitate minimal or no duty payment, when short collections are identified. For instance, a tabular representation of the situation which we examined indicated that deliberate attempts are made by some of these CEPS officers to engage in transactions without the use of the electronic system: Thus, in a particular situation, the records we perused stated that “on one occasion a supervisor asked an Examination Officer to release goods against a cheque of GH¢3,663.37. To date, there is no evidence in the system of the payment of the short collection of GH¢3,663.37 assessed”. Another record uncovered shows that, “A Supervisor instructed an Examination Officer to release the goods because he (Supervisor) has secured the short collection of GH¢16,882.98. No evidence in system of short collection supposedly secured was paid and many more examples of deliberate manipulation of the system to cheat the state by some companies and their CEPS officer cronies”. The many acts of corruption by CEPS, have produced a trickling effect on Destination Inspection companies, Importers and GCNet. DESTINATION INSPECTION COMPANIES AND THEIR ACHILLE’S HEEL In the past, people colluded with their various suppliers to reduce the value of invoices to ensure that they pay low taxes at the port. To check this, government brought in Destination Inspection Companies whose task was to check and find out the real values of goods imported into the country. DICs are paid 1% of cost plus insurance and freight on every import transaction. Instead of concentrating on the terms of their agreement, some DICs have over the past few years been found to be cheating on the system through under-classification, misclassification and over classification of items. The New Crusading GUIDE therefore moved in to find out the truth about the situation. Posing as an importer, our investigative reporter, Anas Aremeyaw Anas, looked into how destination inspection companies work. The key issues The New Crusading GUIDE wanted to unearth were whether or not the charges by these DICs was commensurate with the services they provide; whether or not the DICs were discharging the duties for which the state had contracted them. The paper imported a container of assorted goods under the name Hakim Dufour of an imaginary Emmanuel Tiger Shipping. A 1X 20 container STC with registration number IPXU3302534 and a seal number TSK1460655 were imported and cleared by our reporter. The container was laden with 300 cartons of sterilized chocolate milk with a gross weight of 3465, 00 kg; 500 cartons of sterilized peach and mango milk also with a gross weight of 5775, 00 kg and 800 cartons of sterilized strawberry milk of 9240,00 kg gross. Though the original invoice would have required a payment of 14, 654.27 Ghana Cedis, an invoice was deliberately prepared by our undercover reporter to test the efficiency or otherwise of the system. The fake invoice bore a smaller amount to see whether the DI Company would be able to detect the fraud. We tended it in to the DI Company, but they could not detect the fraud. We successfully evaded 30% tax which should have gone to the state. Now, just imagine the thousands of transactions which go on with these DICs every day. If everybody is evading 30% tax, it definitely leads to the loss of billions of cedis. What is interesting is that Customs officials are sometimes able to detect the fraud by looking at the values, but instead of checking the anomaly, most of them prefer getting their palms greased. DICs have also been found on the electronic system, using wrong HS or CPC codes in making declarations. These codes help to determine a duty rate of 5, 10, 20 or 30 per cent applicable to a particular transaction. … OF THE GHANA LINKs, GSLs, BIVACs Instances of wrong tactics employed by some DIs to cheat the system include the classification by Gateway Services Limited (GSL) of boiler pipes under an HS number which is zero rated for Duty and VAT, instead of the right one which attracts 10% duty and 12.5% VAT, resulting in a ¢56.329 million shortfall. On another occasion, GSL wrongly classified Latex gloves under an HS of 10% instead of one that attracts 20%. There was also the usage by Ghana Link of wrong HS code attracting a10% duty for vinyl artificial leather instead of one that attracts a 20% duty. Also, there was wrong classification of a consignment of waste paper from Belgium under an HS number which is zero rated, instead of being entered as one which is 20% dutiable. GSL wrongly classified Jag Bitter alcohol under an HS number of less value instead of one which attracts a special tax of 20%. Then, there was also the classification of floor panels from the United Kingdom under an HS number at a duty rate of 10% instead of an HS number which attracts 20%. Another wrong classification was made on woven mesh from China, using a zero rated code instead of the correct duty rate of 10%. There was also a classification of GSM copier paper; wrongly using a 10% rated code instead of the required 20%. There was also the case of BIVAC. Records show a Classification of vertical blind fabric from south Africa under HS 3925300000(10%) instead of HS 63039200000(20%) by BIVAC. These acts form the crux of acts of corruption perpetrated by DICs. THE BIZZARE TALE OF SERVISTAR, B5, AGRO DELTA COMPANIES The first to hit our eyes when we dived into the electronic System was a company called Servister, an importer of frozen poultry, fish and meat products. We discovered that this company had devised strategies for evading tax worth millions of cedis on its imports. After importing the products, Servister protests that the values on the Final Classification and Valuation Reports (FCVR) from the inspection companies were too high. Subsequently, they applied for permission to clear the products “on permit”, pending the outcome of their petition to the DIC. This action is in contravention of the laid down procedure, which stipulates that the goods must be valued and assessed based on the Transaction Price Database (TPD), supplied to CEPS by the appropriate Destination Inspection Companies. A deposit representing 150% on the assessed duties and taxes payable is taken by CEPS before the permit is issued. The New Crusading GUIDE however, discovered that no evidence exists on the GCMS to show that this deposit had been taken by CEPS Tema in respect of all the permit transactions involving Servister. With the permit granted, the goods end up being sold on the market, with the appropriate import duty unpaid. If Servister had actually paid the correct deposit, which is usually in excess of the actual duties payable, they would have perfected those permits in order to recoup the excess deposited. The company however skillfully paid only on the basis of their invoice values, not on FCVR or TPD values. Out of 881 transactions done by Servister only four had FCVR values. A careful scrutiny of the four transactions for which they went for FCVR indicates that those FCVR’s, though questionable, always uplifted the invoice values, making Servister to pay higher duties and taxes. To avoid paying the right duties the FCVR portions of their declarations on the database read like this is a very skillful way of evading tax. In 2006 alone, Servister allegedly evaded tax in the region of millions of cedis with the connivance of CEPS officials who were expected to check this. In comparison with similar products imported from the same region at the same level of quantity and cleared around the same time by another company, we found out that Francopat, a sister company, was paying higher values in taxes than Servister. The situation goes further in the area of canned mackerels imported from the same place at the same period of time; having the same quantity and quality. There were huge disparities in the assessment of values. Steel Sheets, Milk Products, Batteries, Cooking Oil, Tyres, Fish, Fridges/Freezers were some of the products that importers have found dodgy ways of milking the state dry through tax evasion. For instance, Agro Delta brings in cooking oil; they claim they process that as soap. They pay less value for that under the guise of processing. But when we hit the market, we realized that they were busily selling it as edible cooking oil instead of using it for soap. Who is investigating this company? All these evidence exist on the electronic system. In 2010, FOB on unperfected declarations came to GHC103, 755,276 (about US$ 74,110,907). The projected amount that could have been recovered based on this FOB should have been GHC4, 162,784 (about US$ 2,973,417). TOO MANY EXEMPTIONS The scale of both partial and full exemptions has been growing in the country, with devastating effect on revenue collection. In 2005, a total of 1.649 trillion cedis was granted as exemptions at Ghana’s main ports. By the end of 2006, however, it had shot up to a total of GHc1, 125,124,115,114 . In 2009 an approximate amount of 815 million cedis and an equivalent of 545 million dollars was forgone in tax exemptions. Agencies and individuals that benefited from exemptions were varied. They included manufacturing concerns, free zone operators, NGOs, mining companies, construction firms, and MDAs. Nestle Ghana Limited imported approximately ¢555.728 billion CIF (US$61.069 million) worth of finished products. The duty/tax exempted on these imports amounted to ¢82.678 billion (US$ 9.085 million), an approximate increase of 83 percent over the total exemption of US$4.969 million that Nestle received in 2004 for its imports amounting to ¢488.728 billion (US$54.333 million) CIF. Messrs Smart City Holdings Limited received partial exemptions amounting to ¢9.951 billion (approx. US$1.093 million) for its importation of bathroom slippers and polythene bags from Nigeria. This amount represents a 96 percent increase over a similar exemption (i.e. US$558,171) for the importation of similar items, which amounted to ¢25.53 billion (or approximately US$2.85 million CIF), that was granted the company in 2004. Mis-discriptions, misclassification and undervaluation of imported goods on the Electronic System constituted the major source of revenue leakages. New goods (eg. tyres or electronic items) were declared as used, or the sizes or specifications deliberately mis-described (eg. Rim 17 tyres declared as rim 14 or 21” TV sets described as 14”TVs) Superior types of goods declared as a low quality products (eg. Porcelain tiles declared as ceramic tiles), or the actual quantity mis-described (eg. 3,888 sq. metres declared instead of the actual 5,104 sq. metres imported). 480 undeclared Sollatek AVS stabilizers that were found among a consignment of UPS and multi-guards from China; 16,144 kg of used clothing that were not declared in one particular container; 1,000 dozens kitchen towels that were not declared in a consignment from China. smuggling goods out of the ports. Two such prominent cases were the attempt to smuggle two containers from the Tema port, and the attempt to smuggle 2,566 mobile phones out of the AFGO Village at the Kotoka International Airport. FAILURES OF THE WATCHMAN GCNet operates the electronic system for processing trade and customs documents in Ghana. This electronic system, which has been provided by the state, is a database of the description and value of all goods that have been landed and have been cleared in the country and their respective duties and taxes paid. It contains all transactions engaged in by both genuine and dubious businesspersons across the length and breadth of the country. It is only a select few of special people who know the secrets and can interpret the electronic system. Although the system has been very efficient since its introduction into operations at the Harbour, The New Crusading GUIDE uncovered that GCNet has over the years failed to check reported cases of fraud which are detrimental to country’s revenue mobilization efforts. GCNet’s running of the system has being quite successful until the discoveries of fraud in what has since been tagged as the “Elliot Ansah saga”. Young Elliot went into the system one day and deleted records of some companies who were supposed to be indebted to the state. Though the GCnet control `system is so robust that any such attempt must be detected, it took CEPS to blow the whistle on Elliot’s activities. Elliot, after he was found out, submitted a letter of resignation and left the shores of Ghana without anybody arresting him. Management of GCNet never gave reasons for arresting not Elliot, but only said they “have reported the matter to the Serious Fraud Office”. In the company’s response to a questionnaire from The New Crusading GUIDE, GCNet indicated, that “had the anomaly not been detected at, the nation would have lost an estimated amount of GH¢29,000”. This however contradicted our checks, which indicated that the state would have incurred a greater lost than GCNet’s estimates. CEPS ANIPA ENGAGES IN A MERRY-GO-ROUND GIMMICK After we came across these anomalies in the system, the Deputy Commissioner of CEPS in charge of Public Relations, Annie Anipa, was contacted for an official response on some of the discoveries we made at the harbour. The Deputy CEPS Commissioner requested for a questionnaire which was readily provided. We however found some of her responses unsatisfactory and called for a follow-up interview to clarify some points raised. When we called to arrange a time for the interview, Annie Anipa said she was busy with other needs and needed time to prepare for the interview. Two weeks later [two days ago] she called for the interview. We got to her office for the scheduled time of 11am, but when we called, she refused to pick up. As the chief institution in charge of Revenue mobilization for the nation, CEPS has once again fallen short in offering reasons for the apparent rot that is hemorrhaging Ghana’s tax system. Actions, such as those exhibited by Annie Anipa remain a tip of the iceberg in efforts to absolve CEPS from its responsibilities. In our next issue, we bring you details of how Business Tycoons improve their lot through deals with CEPS officials to influence the auctioning of goods at the Tema Harbour. Be prepared for insiders’ account of how key CEPS officials sign contracts with business people to provide them with goods for a fee. Here, the much talked about auctioning process and gazettes are used as smokescreens to mislead the public. Stay tuned. Source: New Crusading Guide/Ghana