The Anti-Corruption Commission (ACC) has suspended five business entities in Phuentsholing, Dagana and Thimphu from operations with immediate effect after finding prima facie cases of corruption.
The commission in a public notification on March 30 suspended operation of Ajay Enterprise, Sonam Dolma Enterprise, both located at lower market in Phuentsholing, Gopal Tshongkhang and Powdel Tshongkhang in Dagana and Elite Enterprise in Thimphu until further notice. However, business entities were given a month to clear their existing stocks from the date of issuance of suspension order.
Elements of corruption
ACC’s investigation in October 2021 revealed that Ajay Enterprise, which deals with betel leaf (pani) business in Phuentsholing, was engaged in bribery of customs officials. The proprietor made several unexplained transfers either directly or indirectly to the customs inspectors of the regional revenue and customs office (RRCO)while they were on duty at Mini-Dry Port (MDP).
An official from ACC said the payments were made to the public officials in order to enable under-declarations or/and non-declarations of goods to Bhutan by the importer.
Sonam Dolma Enterprise is alleged to have bribed customs inspectors for tax evasion.
The investigation established that the firm was involved in multiple instances of tax evasion and non-declaration of consignments at the point of entry.
Sonam Dolma Enterprise deals in all kinds of school stationeries, hardware, electrical and plumbing items. The enterprise also deals with printer toner and cartridges based on the supply order placed by various government and corporate offices.
ACC’s investigation also revealed that the importer, Elite Enterprise had allegedly bribed a custom inspector for clearing goods of third country imports from the MDP. The goods imported were all taxable (Sales Tax & Custom Duty), but the importer intentionally evaded possible taxes.
Gopal Tshongkhang and Powdel Tshongkhang in Dagana not only imported betel nuts and leaves but also cleared taxes and made Real Time Gross Settlement (RTGS) payments on behalf of their customers who were the actual importers.
In doing so, according to sources from ACC, they forged invoices, bribed one custom official and one RBP personnel to evade the sales tax. The duo also bribed a custom official for importing the restricted item and plastic packing materials. The licence of Gopal Tshongkhang was revoked on August 4 last year.
Modus operandi of betel nut business
A team of ACC officials with the support of RBP intercepted four vehicles carrying undervalued or undeclared consignments of betel nuts and betel leaves cleared from the MDP on December 14 last year.
The ACC team found that two vehicles carrying betel nuts had not only declared lesser weight by more than 1,000 kg but also valued at Nu 250 per kg. The discrepancies in weight and price resulted in reassessment of the tax. The inspection also discovered that each consignment belonged to more than 18 importers sent by several Jaigaon suppliers but declared in the name of just one importer.
Betel nuts and betel leaves also provided a good combination for importers to play around RTGS. Since betel nuts are taxable at 20 percent and betel leaves fall under zero tax items, the suppliers undervalued the taxable item and overvalued the non-taxable thereby maintaining the overall value of the import as it is. In this way, the importers were able to send full RTGS without having to resort to other fraudulent practices.
In an earlier interview, ACC officials said that the problem of revenue leakages is further exacerbated by the existence of collusive arrangements between transporters and customs inspectors who facilitated non-declaration of betel nuts in exchange for kickbacks.
ACC launched an investigation into the alleged bribery and extortion by customs officials and loaders in connection to the import and transhipment of goods through the MDP and other designated areas at a time when there was heightened concern about the unrelenting surge in Covid-19 cases in Phuentsholing despite being under strict lockdown.
The operation of MDP started in November 2019 under the Phuentsholing thromde and was handed over to the Department of Revenue and Customs in October 2020. The port has been designated as one of the self-containment areas. In each batch, 20 customs inspectors were placed at the MDP and truck parking on a monthly shift basis. They used to work in shifts every alternate day.