The Anti-Corruption Commission (ACC) has suspended five business entities in Phuentsholing, Dagana and Thimphu from their operations with immediate effect after finding prima facie cases of corruption.
The commission, in a public notification on March 30, suspended the operation of Ajay Enterprise, Sonam Dolma Enterprise, both located in the lower market of Phuentsholing, Gopal Tshongkhang and Powdel Tshongkhang in Dagana and Elite Enterprise in Thimphu until new order. However, business entities had one month to liquidate their existing inventory from the date the suspension order was issued.
Elements of Corruption
The ACC investigation in October 2021 revealed that Ajay Enterprise, which handles betel leaf (pani) company in Phuentsholing, engaged in bribery of customs officials. The owner made several unexplained transfers directly or indirectly to customs inspectors from the Regional Revenue and Customs Department (RRCO) while they were on duty at the Mini-Port Sec (MDP).
An ACC official said the payments were made to public officials to allow for under-declarations or/and non-declarations of goods in Bhutan by the importer.
Sonam Dolma Enterprise allegedly bribed customs inspectors for tax evasion.
The investigation established that the company was involved in multiple cases of tax evasion and failure to report shipments at the port of entry.
Sonam Dolma Enterprise deals in all kinds of school supplies, hardware, electrical and plumbing items. The company also arranges toner and printer cartridges based on the order of supplies placed by various government and corporate offices.
The ACC investigation also revealed that the importer, Elite Enterprise, allegedly bribed a customs inspector to clear goods imported from non-CDM countries. The imported goods were all taxable (sales tax and customs duty), but the importer intentionally evaded any 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 clients who were the actual importers.
In doing so, according to ACC sources, they falsified invoices, bribed a customs official and an RBP staff member to evade sales tax. The duo also bribed a customs agent to import the restricted item and plastic packaging materials. Gopal Tshongkhang’s license was revoked on August 4.
Modus operandi of the betel nut trade
A team of ACC officials, with support from RBP, intercepted four vehicles carrying undervalued or undeclared consignments of CDM-cleared betel nut and betel leaf on December 14 last year.
The ACC team found that two vehicles carrying betel nuts not only claimed a lower weight of over 1,000 kg, but also assessed Nu 250 per kg. The weight and price discrepancies led to a reassessment of the tax. The inspection also revealed that each shipment belonged to more than 18 importers sent by several Jaigaon suppliers but declared on behalf of a single importer.
Betel nut and betel leaf also provided a good combination for importers to play around RTGS. Since betel nuts are taxable at 20% and betel leaves are not taxed, the suppliers have understated the taxable item and overstated the non-taxable, thus maintaining the overall import value as is. . In this way, importers were able to send complete RTGSs without having to resort to other fraudulent practices.
In a previous interview, ACC officials said the problem of revenue leakage is further exacerbated by the existence of collusive arrangements between transporters and customs inspectors that have facilitated the non-declaration of betel nuts. in exchange for bribes.
The ACC has opened an investigation into allegations of bribery and extortion by customs officers and shippers in connection with the import and transhipment of goods through the MDP and other designated areas at a time when the There was growing concern over the relentless rise in Covid-19 cases in Phuentsholing despite the strict lockdown.
Operation of the CDM began in November 2019 under Phuentsholing thromde and was handed over to the Ministry 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 the truck parking lot on a monthly basis. They worked in shifts every other day.