KARACHI: The fraudulent activities of Gerry’s Dnata Customs have been unearthed by an investigation which found out the most sophisticated system of customs dodging ever encountered in Karachi airport, a system that took advantage of the very computerized systems of the terminal to erase any trace of their expensive electronics imports in customs records.
The order of penalty from the Federal Board of Revenue adjudged the extent of fraud committed by M/s Gerry’s Dnata (Pvt) Ltd, which amounted to penalties of Rs2.7 billion as well as recovery amounting to Rs221 million. This financial damage is the combination of not only the extent of fraud but also its seriousness as regards the involvement of the organization in a systemic fraud as opposed to mere personal actions.
Concealment of Airway Bills, Deletion of Index Numbers, Fabrication of Gate Passes
The fraudulent practice of Gerry’s Dnata in regard to customs was done using a technical procedure based on an advantage which the terminal operator had with respect to the customs processing infrastructure. There were three main aspects of the operation, namely concealment of airway bills from WeBOC, deletion of index numbers from the bills, and fabrication of gate passes.
This three-step process ensured that the consignment became invisible in the context of custom clearance, thus ensuring that high-value electronic items could be taken out of the airport without declaring the goods declaration and without paying customs duty. It was the UAE-based suppliers who supplied the luxury electronic items such as laptops, iPhones, iPads, MacBooks, PlayStation consoles, tablets, and memory cards, all of which required the payment of heavy customs duties in the grey markets of Pakistan.
This is not about Rogue Employees This is About Corporate Complicity
As established through five separate rulings from the customs officers, it became clear that the Gerry’s Dnata customs fraud case is more serious than simple misconduct by a handful of rogue employees. In fact, the use of false gate passes was a result of systematic failure, lack of internal controls, and complicity of the terminal operator himself, which means that the corporation itself has to take responsibility for this act.
There was yet more proof provided by customs officials concerning the institution’s involvement through the way that Gerry’s Dnata operated during the course of the investigation itself. This was because, despite discovering the fraud committed by some of its employees, the company was still shielding those employees. It was hiding evidence of fraud as required to be maintained by Section 211 of the Customs Act. Despite being served multiple notices as per Section 26 of the Customs Act, it kept resisting the investigation.
Female Employee Confesses to Falsely Issuing Gate Passes Under Supervisors’ Instructions
Gerry’s Dnata customs fraud investigation resulted in the arrest of eight individuals, including five Gerry’s Dnata employees, and also included confession statements that provided operational insight into how the fraud had been carried out. A female employee confessed to issuing gate passes based on the instruction of her supervisors, pointing toward the complicity of management in the fraud that the orders of adjudication had found to be institutionalized.
The captured agent also gave a much more serious confession regarding the operations of a system that had been in place for several years. The system involved the manipulation of manifests and the stealing of goods imported into the country on a scale which indicated that there must have been a larger number of consignments manipulated than the six officially acknowledged by the customs officers during the investigation process. Another piece of evidence included the counterfeiting of the stamps of the customs gate officers.
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Corporate Responsibility at the Terminal Operator Level
The ruling in the Gerry’s Dnata case is a warning to other companies as well because of the nature of their business. The terminal operators occupy very powerful positions in the system of imports in Pakistan as they have access to the consignment, use the computer systems interfacing with the custom clearance system, and also deal with the imported products.
If and when it is found that the computer systems belonging to a terminal operator are the very means through which fraud is committed rather than an instrument for preventing fraud, then the whole customs clearance mechanism would lose its credibility. The Rs2.7 billion punishment for Gerry’s Dnata by the FBR for customs clearance fraud shows that authorities consider this case as a completely different one from that of individual customs fraud.
