The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An ex-prime minister yesterday argued there “had to be collusion” between Customs officers and unscrupulous importers over Dorian tax breaks abuse as he challenged if the culprits have been punished.

Dr Hubert Minnis told Tribune Business he is “not satisfied” with the explanations given by Customs after it largely confirmed his accusations that concessions designed to help Abaco and Grand Bahama recover from the devastating Category Five storm were exploited by “agents” and importers hired by unsuspecting auto buyers to facilitate their vehicle’s importation.

Ralph Munroe, the Customs comptroller, last Thursday revealed that the agency had recovered some $435,889 in due Excise Tax through the seizure of 30 high-end vehicles on New Providence and two other islands. Only four autos, upon which $200,000 worth of taxes are owing, remain in its custody.

Customs’ top official explained that these agents/importers had exploited tax breaks provided under the post-Dorian Special Economic Recovery Zone (SERZ) Order to bring the vehicles in duty-free without telling their buyer clients. Instead, they themselves pocketed the money provided by their customers to pay the due Excise Tax and failed to remit the necessary sums to Customs and the Public Treasury.

However, Dr Minnis yesterday demanded that Customs conduct a “proper investigation” and make public the findings. He also questioned whether any of those involved in the “fraudulent activities” had seen their import licences revoked and if any further action had been taken against the culprits.

Noting that the blanket SERZ Order had expired in 2022, with tax breaks subsequently only granted on a case-by-case basis, the former prime minister asserted that the only way the importation of these vehicles could have been processed, approved and uploaded into Customs’ system was through collusion between some of the agency’s officers and the agents/importers.

“The big question I have: They didn’t address how these entries were able to be processed by Customs knowing full well the SERZ exemption Order expired in December 2022,” Dr Minnis said. “The amount of orders processed unlawfully would suggest there was mass collusion between the brokers involved and Customs officers.

“All those SERZ applications must be uploaded into the system for the entry to be approved. The amount of entries processed unlawfully would suggest there had to be some collusion between the importers and Customs officers.” He added that all Customs declarations must pass through three stages - entry, valuation and checking - before vehicles and other imported goods are cleared into The Bahamas.

The Killarney MP said Customs’ account also failed to address whether legal, regulatory or any other action has been taken against those found to have participated in the abuse, which has likely cost Bahamian taxpayers and the Public Treasury, and if the vehicle buyers lived in the two Dorian-ravaged islands and were this entitled to the tax concessions on their imports.

“The agents who have been found to engage in fraudulent activity; have their licences been revoked? What action has been taken against them if they are blaming it all on the brokers?” Dr Minnis asked, also questioning whether Customs has investigated any of its own employees.

“Customs must tell us whether those individuals who got the duty-free concessions were living in those islands and entitled to them. Those who would have been applying would have had their furniture and vehicles destroyed during the hurricane. Did the individuals who received the concessions under the SERZ Order live in the hurricane belt?

“If not, there had to be collusion through the entry system. Customs needs to do a proper investigation. I am not satisfied with Customs’ explanation.” Customs spoke out only after Dr Minnis exposed the Dorian tax breaks abuse in the House of Assembly and tabled documents to back-up his allegations.

The Killarney MP said the Government has lost more than $1m in Excise Tax revenues on high-end vehicles that were being brought in duty-free even though the blanket SERZ Order facilitating such relief had expired in December 2022.

The Davis administration is still providing concessions on a case-by-case basis to persons judged as requiring assistance to rebuild after the devastating Category Five hurricane, but Dr Minnis asserted that high-end vehicles - including brands such as Mercedes, BMW, Lexus and Land Rover - had been imported under the SERZ Order and then illegally shipped to islands not struck by Dorian.

Documents tabled by the former prime minister in the House list 41 imported vehicles upon which $1.008m in total revenues due to the Public Treasury could have been evaded. Dr Minnis added that many of the high-end vehicles imported via abuse of the Dorian SERZ Order had already been licensed by the Road Traffic Department and have the necessary plates.

But Mr Munroe said Customs was “satisfied” that, in most instances, the vehicle owners did not know their autos were imported using the SERZ Order tax concessions. Most had employed the services of agents and importers to clear the vehicles into The Bahamas, and were able to present proof they had paid the full price to agents inclusive of the necessary Excise Tax.

“We were satisfied, in most instances, that many of the owners had no knowledge that their vehicles were imported under concessions as they were able to provide proof of payment in full to the agent for the payment of all costs involved in the delivery of their vehicle, which included full revenue payment,” Mr Munroe said.

“While our investigation continues into possible actions against the agents involved, the owners themselves in several cases have intimated that they would be pursuing legal remedies for the refund of their money that was provided to their agents for the payment of Customs revenue.

“Where it was established that there was no culpability on the part of the owner, the outstanding revenue was collected on the vehicle and they were subsequently released.”

Dr Minnis, meanwhile, yesterday reiterated his concerns over the Government’s outsourcing of Lynden Pindling International Airport’s (LPIA) air freight terminal to JDL in a $25m public-private partnership (PPP). He maintained his argument that a private company has “usurped” Customs’ functions, while the additional fees it is levying on imported freight are helping to prolong the cost of living crisis.

Mr Munroe, though, has refuted suggestions that the JDL deal will undermine Customs’ ability to do its job. He explained that many ports of entry, such as the Nassau Cruise Port and the Arawak Cay port, are run by private firms but Customs still continues to fulfil its mandate at those sites.

However, an unconvinced Dr Minnis argued that the nature of those two PPPs was substantially different from the JDL deal, and said Customs was “mixing them up”. He added: “The normal procedure is Customs is the official port of entry. Customs is the one that receives, opens and inspects the package.

“At air freight, JDL has become the official port of entry. They receive the package, weigh the package and then pass it to Customs. The Arawak Port doesn’t interfere with Customs’ functions. Nor do they usurp Customs’ functions.

“The main function of the Arawak Port is to make sure cargo is offloaded from vessels, and containers dropped to a customer’s premises for inspection or taken to the Gladstone Road freight terminal for break bulk. Arawak Port doesn’t hold any freight like JDL does. It’s two different stories; they’re trying to muddy the waters,” Dr Minnis continued.

“They cannot compare JDL, which is usurping Customs and raising the cost of living, because JDL is levying its charge and Customs is giving their charge. The Arawak Port is completely different. They cannot mix them up.”

Mr Munroe, though, last week maintained that a private firm conducting cargo management at LPIA is no different from doing it at a sea port, and Customs will still be “in charge” of collecting revenue on behalf of the Government.

He said: “If you go to air freight, again, it is no different from a seaport. You’ve got an airport. It may be in the Government’s view that it’s better to have it run by some private concern.

“We’re down to Odyssey, which is private. We over at Nassau Jet Centre, that’s private. They do what they have to do and we do what we have to do. I don’t think it in any way impedes on what Customs is doing no more than what it impedes on what we’re doing in Arawak Cay or Prince George Wharf.

“Customs is still in charge of what it’s been doing. And the same thing up in Grand Bahama. If you go to Freeport Container Port, it’s Freeport’s container port, but Customs is there. We only deal with what we are supposed to be dealing with.”