The Economic and Organized Crime Organisation (EOCO) has been directed to take over investigations into alleged evasion of tax by some companies at the Tema Shipping yard following JoyNews’ latest exposé, Frozen Tax.
The documentary uncovered how some frozen food companies falsified the contents of their containers which led to underpayment of taxes up to the tune of ¢4.6 million.
In one case a container load of full chicken was declared as Sardinella fish, per the undercover report filed by Latif Iddris.
On the back of these findings, EOCO officials have launched an investigation into the issues raised in the report.
JoyNews sources say the companies will be required to submit responses on the allegations and also answer for infractions which will be detected by EOCO investigators on documentation and other material it has obtained.
Ultimately, EOCO will seek to recover every pesewa lost to the state from the individuals and companies involved in the falsification of the import items.
Details of the ‘Frozen Tax’ exposé
The Workers Union of the Ghana Revenue Authority (GRA) at a durbar on July 24, 2019, criticised the political class.
They alleged that family relations and close associates of people with political power and influence were using their influence to clear goods at the ports without paying the required tax.
They argued that that phenomenon was contributing to the revenue shortfalls of the country.
The accusations by the staff of GRA struck a chord with the investigator. So on August 1, 2019, in a sting operation after the launch of Operation “collect, name, and shame,” a team from the Customs Staff Association and two other labour unions stormed the premises of Labianca Company Limited to examine the consignment declared in the name of Ajax Company Limited and White Stone Frozen Food limited.
The objective was to verify the contents of 72, forty-footer containers at their premises following a tipoff that the companies involved had given false information to customs officials.
After an hour’s search, the team found out that the frozen food companies had concealed boxes of chicken instead of Sardinella fish they had stated on their declaration forms.
On 30th July 2019, one of the frozen food companies, Ayax Company Limited, gave misleading information about the content of some twenty forty-footer containers.
In two separate shipments made on 26th of July, 2019 with declaration numbers 42019305804/0 and 4201305794/0, Ayax Company Limited paid a duty of GHc168,731.68, and GHc166,731.68 totaling GHc335,463.36. By virtue of the misclassification of the content of the containers, Ayax Company Limited ended up underpaying a tax of GHc377.232.2 to the state.
White Stone Frozen Foods Limited also declared to customs authorities as Sardinella fish instead of chicken, content of at least five forty-footer containers with varying declaration numbers heavily protected by armed men.
Documents sighted by JoyNews show that the container with commodity code 03035300, 03035400 with varying declaration numbers, paid a duty totaling GHS851,102.5 withholding GHc807,915.12 which should have gone to the state.
Ayax Company Limited and White Stone Frozen Foods Limited paid GHc1,019,834.18 instead of GHc2,204,147.32. So in as the documents show, in just a single shipment, the two companies put together failed to pay taxes amounting to GHS1,185,147.32 million.
In the heat of the moment during one of the days of the investigations at the Tema fishing harbor, my cover was blown at the premises of Labianca Company Limited by armed officers of the Ghana Police Service who were providing security there.
Together with an Associate of Labianca company limited, they cursed and threatened to assault me. Armed offices from the Customs staff association quickly shielded me and escorted me to a nearby vehicle to prevent what would have been a brutal assault.
After months of investigations, JoyNews uncovered that by virtue of the misdescription of content of containers, the companies involved in the entire operation collected, name, and shame, underpaid a tax amount of GHS4.6 million.
Following the revelation, JoyNews confronted a representative of Ayax Company Limited with documentary evidence to enquire why the company gave misleading information to the state. His explanation was that the shipping company is the one that committed the error by deploying a container with content other than what they had purchased.
Meanwhile, attempts to get a response from White Stone frozen food limited have not yielded the desired result.
Months of attempts to get a top hierarchy at GRA to comment on the findings of this investigation have so far proved futile.
A junior rank officer at Customs who spoke with me on the condition of anonymity said, “Persons with political backing are now doing it (deliberate misdescription of products) with brazen impunity. The difficulty we have is how the law is applied. Perpetrators are allowed to walk after paying the difference when they are caught…that for me is not deterrent enough because many of them get away with it.”
The Customs Act of 2015 is clear about what should happen to persons who fall foul of the provisions.
A person who “furnishes or causes to be furnished any information relating to any matter under this Act which the person knows to be false, commits an offence and is liable on summary conviction to a fine of not less than two thousand five hundred penalty units and not more than seven thousand five hundred penalty units and any goods in respect of which the act was committed is liable to forfeiture to the State.”
Section 2 of the Customs Act 2015 also states that where the full amount of duties payable under subsection (1) is not paid, “the person in contravention shall incur a penalty of not more than three hundred percent of the amount not paid in addition to forfeiture of the goods where applicable; and (b) the person is liable on summary conviction to a fine of not more than two hundred percent of the value of goods in question or to a term of imprisonment of not more than five years or to both”.
A portion of this penalty was triggered when after our investigations customs officials presented documents and evidence of misdescription to the companies.
There was however no evidence of forfeiture of the goods.
According to Customs officials, leakages like the one uncovered in this investigation are among the drivers of the country’s failure to generate enough revenue at the ports, making government’s ambitious Ghana Beyond Aid agenda ever herculean.
