Fidelity Investments avoided further charges on Wednesday when thirteen custom officers and two brokers were slapped with a string of charges for alleged corruption at customs involving the company, despite recommendations by a special task force for the company to face a new charge.
A special task force headed by Auditor General (ag), Deodat Sharma, which probed the allegations of corruption surrounding polar beer imports, had contended earlier this year that Fidelity submitted false documents during the investigations, and therefore recommended that the relevant charges be instituted against the importer for producing false documents to the task force.
On July 10 last year, Fidelity head Joshua Safeek of Fidelity Investment appeared in court to answer a charge of allegedly producing falsified documents to customs in connection with the polar beer imports.
Safeek, who was jointly charged along with the company, pleaded not guilty to the charge.
The charges were filed under the Customs Act, Article 217 and according to the particulars Safeek wilfully presented falsified documents to customs on or around June 25.
While a string of serious disclosures was made in the report, stretching from customs declaration forms that had numerous discrepancies to data being tampered with after being inputted into GRA’s TRIPS system, the task force report also focused on a critical part of the investigations, which were the taxes that were allegedly evaded by Fidelity; customs duties totaling $321.5M were said to have been evaded during the scam. It was recommended that custom duties and taxes be calculated on the polar beer found at Fidelity and, any other fine as prescribed by the Customs Act and or any other relevant legislation against the importer [Fidelity].
The report concluded that it was polar beer that had been brought into the country and not soft drinks as had been claimed by some Customs employees. Furthermore, while a price of US$2.15 per case had been listed by Fidelity, an investigative team that travelled to Venezuela found that Fidelity had been sold the beer at US$4.40 per case.
The task force perused 17 custom declarations (produced by GRA) made during the period July to December 2007, which revealed that Kong Inc. imported 48,160 cases of assorted beverages and 8, 700 cases of soda water in 40 containers, and according to the said declarations, the items were purchased from Refrescos San Jose C.A. located in Venezuela.
But the report revealed that it was unable to verify the physical existence of Refrescos San Jose C.A. based on the address obtained from invoices. The task force had travelled to Venezuela where it was discovered that the sole manufacturer of the Polar beer brand products in Venezuela is Cerveceria Polar C.A. in Caracas.
A certificate of registration was produced for Refrescos San Jose C.A. by Fidelity Investment, which states that the company was registered in Saint Vincent and the Grenadines on July 31, 2008, but customs records showed that Kong Inc made purchases from the company in 2007. When confronted with this, a second certificate of registration was produced by Fidelity, which showed that the company was registered in July 2007. However, the task force’s report pointed out that the first invoice from the mysterious Refrescos was dated even before this – June 22, 2007. Said the report: “This clearly proves that (Fidelity or someone on its behalf) fabricated the invoices produced to GRA via customs declarations and the invoice produced to the task force”.
Further, the task force found that the exporter’s stamp, ‘Refrescos San Jose, C.A’, were all evident on the invoices produced by the importer, however it pointed out that the stamps were in a particular angle, adding that “it would be almost impossible for a person manually shipping a document, to do so at a particular angle every time”. Also, the invoices on ten customs declarations had signatures of the Export Manager of the Exporter which appeared to be different, although the same name was signed, the report stated.
The investigation at the Customs and Trade Administration (CTA) was initiated at a special meeting convened by President Jagdeo on April 7, 2008 where he stated that there was a scheme to systematically defraud the Customs and Trade Administration of revenue and he wanted to get to the bottom of it.
On January 15, 2008 a team of customs officers had raided Fidelity and found in excess of 73,000 cases of polar beer for which no import documents could be produced. It was then claimed by Fidelity that the broker had substituted invoices for polar beer with invoices for mixed flavours aerated beverages – the duty rate being vastly different for the two.
The Internal Affairs Department of the GRA then conducted its own investigation and arrived at the following conclusions on March 28, 2008:
The polar beer had been smuggled into the country, that some of the beer was smuggled via trawlers and discharged at a Parika landing, and that the rest of the beer was illegally brought in at the rear of containers which were declared to contain only aerated beverages.
