The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Customs has warned its officers they cannot moonlight as "de facto brokers" because of the fraud and corruption risks this practice presents, a top Ministry of Finance official has revealed.

Marlon Johnson, the acting financial secretary, told Tribune Business that the agency had "recently" issued such a reminder to its personnel due to an "informal practice" occurring at certain locations where Customs officers were helping to clear import shipments as well as inspect them.

"There has been an informal practice in some locations of Customs officers assisting persons to clear goods by helping them to fill out declaration forms," he disclosed. "That can create complicated situations where the Customs officer is acting as a broker, but is facilitating the same entry that they have to validate.

"The Customs hierarchy has reminded Customs officers of their responsibilities. They cannot act as de facto brokers and also as Customs officers."

While Customs officers are responsible for checking and validating all import entries to ensure the correct amount of VAT and duty and/or Excise Tax has been paid, as well as inspecting shipments to prevent tax evasion/avoidance and the smuggling of illegal goods, brokers work with clients to facilitate the smooth and rapid clearance of their consignments.

The two roles should not mix because having the same person be responsible for entries and validation represents a major conflict of interest that can lead to revenue loss for the Public Treasury, plus facilitate a variety of fraudulent and corrupt practices.

Mr Johnson spoke after the issue surfaced last week in the House of Assembly. It was sparked by Picewell Forbes, the Opposition MP for south Andros, who raised concerns that the clearance of import shipments at his constituency's airports was being delayed. He suggested that Customs could help facilitate that process.

K Peter Turnquest, deputy prime minister, responded by saying that having Customs officers combine the roles of regulator and broker was, "as you can imagine, fraught with risk and conflict".

"That is obviously unacceptable. We don't condone that, and don't see us as supportive of that initiative," he continued. "This provides a wonderful opportunity for enterprising young Bahamians in central and south Andros, and entrepreneurs, to get involved in the brokerage industry. They can provide a service to the community and earn a living.

"But no. We do not promote, support and, in fact, are adamant that Customs officers that work on behalf of the Government cannot engage in private practice in Customs brokerage. We're certainly of the view that is a corrupt and conflicting practice."

Mr Forbes acknowledged the point, but urged the Government to "get over that hurdle as soon as possible" when it came to validating and clearing imports as products were piling up at the airports in central and south Andros. He called on the Government to act "post haste to move this process along".

The infusion of technology into Customs processes through the nationwide roll-out of its Electronic Single Window (ESW) was designed to drastically reduce the potential for tax evasion, fraud and other corruption related to the import process via the creation of a digital paper trail for every entry and consignment.

Jasmine Hudson, superintendent of Customs and lead administrator for the system, said the ESW technology will now reject the "garbage information" that brokers and importers were previously feeding the revenue collections agency under the former paper-based system.

And a customs consultancy, TTEK, has been given a $1.38m consultancy contract to examine whether Bahamas Customs' operating procedures meet "best practices" in a global trade environment. Ut has pledged to identify no less than $15m in uncollected revenue during its eight-month effort to crack down on leakages.

Speaking on the consultant's progress during last week's mid-year Budget statement, Mr Turnquest said: "As a part of the Government’s broader objective of modernising the antiquated and outdated tax administration system, the Government recently announced the roll-out of the management optimisation project at the Customs Department.

"In addition to strengthening the capacity for further reform and revenue enhancement within the Customs Department, this initiative will also optimise the Department’s investigative and data analytic capabilities.

"There are currently four persons working on phase one of the project, which includes the production of an assessment report to help define the scope, range of activities and goals for the remainder of the project," he added.

"TTEK has provided the Ministry of Finance and the Comptroller of Customs with an initial report highlighting preliminary recommendations on institutional strengthening and reform that will inform the remaining portion of their engagement.

"The implementation of the recommendations will continue to shape a modern, dynamic and accountable Bahamas Customs Department that maximises revenue yield while championing tax-payer ease and convenience."