How Fraudulent Foreigners Exploit Govt's Industrial Incentives To Steal Billions Anually - Senate

Hope Uzodinma

 

The Senate Committee on Customs, Excise and Tariff said it has discovered how foreigners exploit the Federal Government's fiscal policies and industrial incentives to steal hundreds of billions of naira annually through evasion of payment of appropriate import duty.

The Committee said it has commenced probe into the import transactions of one of the indentified foreign companies, Fouani Group, the sole importers and distributors of Samsung and Hisense electronics in Nigeria for alleged involvement in the multi-billion naira import duty scam.

Chairman of the committee, Sen. Hope Uzodinma, told newsmen in Abuja on Thursday that some foreign companies, including Fouani Group, were importing finished goods into the country in the guise that they were Complete Knocked Down (CKD) parts.

He said the government in pursuit of boosting local manufacturing and creation of employment put in place various policies and incentives to encourage companies to establish production and assembly plants in Nigeria.

The Senator said one of the incentives is zero import duty granted to companies importing Completely Knocked Down (CKD) parts, who claim to have factories where they assemble the components into full electronic units.

Uzodinma said, "unfortunately many fraudulent foreigners are here, pretending to be manufacturing different products in Nigeria, pretending to be importing raw materials or Complete Knocked Down (CKD) parts,  but in the real sense, they have no assembly plant in the country.

“You can see how a globally acclaimed company like Samsung, through their sole distributor in Nigeria, is importing into the country and fraudulently pretending to be manufacturing or assembling their products in Nigeria.

“Meanwhile, it has been confirmed now that they have no assembly plant in Nigeria.”

He said that the committee also found out during its oversight visit to a company in Lagos, called Somotex that the claim that they were assembling Samsung fridges and television in Ikeja and discovered that it was not true.

“We visited the site, we saw no assembly plant. Samsung has confirmed that Somotex is one of their distributors whom they supply finished products.

“The question is, if they supply finished products to Somotex and Somotex is their distributor, how come Somotex is importing CKD and claim to be assembling it in Nigeria.”

The lawmaker lamented that Nigeria’s economy “is bleeding” and called for the recovery of the country’s non-oil revenue.

“The non-oil sector must be protected because this investigation has revealed a lot of things and we will continue without fear or favour until all these things are properly stamped out,” he said.

Uzodinma said that the committee’s investigation entailed looking into the entire import and export value chain with a view to identifying areas of abuses and leakages.

“Apart from the lousy nature of customs duty collections by the authorised banks and their non-remittances and partial remittances, where revenues have been recovered, we have gone into the abuse of fiscal policies.

“Government incentives are being abused by non-manufacturers, and fiscal policies that supposed to assist people to import raw materials are being abused; free trade zones have become points of smuggling.

“These are the areas we have identified and we have raised alarm so that it can be corrected,” he said.

According to him, the fiscal policies are borne out of good intentions but the abuses and manipulation by some of these people must be stopped so that the expected impact could be seen.

“We have adopted a segmented approach of all discoveries sector-by-sector, under several subheads; different types of infractions ranging from falsification of Form M and round tripping of foreign exchange, were unearthed.

“Abuse of fiscal policy, abandonment of Customs duly accessed fees and levies, these are different sub-heads that are being addressed.”