KARACHI: Customs officials in Karachi say a case that began with illegal router imports has uncovered a network of fake companies and possible money laundering.
The Federal Board of Revenue asked Karachi’s airport customs office to act on a tip that importers were bringing in internet routers without approval from the Pakistan Telecommunication Authority. Officials stopped 10 shipments carrying 71,815 routers. The importers had not obtained the required approval certificate.
The shipments were linked to two companies, Muslim Son’s Enterprise and Moosani Syndicate. Customs officials ordered the routers confiscated. The companies complained to the Federal Tax Ombudsman, which dismissed both complaints.
After that, several people came forward, each claiming to own a part of the goods in one shipment and asking for a separate release. Customs officials say this made them wonder whether the two companies were real.
According to the customs report, both companies are paper firms registered in the names of front men and used by hidden operators. Investigators say neither company existed at its listed address. One address was a rice and flour shop, and the other was a family’s rented home. The report says this counts as fraud under Pakistan’s customs law and anti-money laundering law.
Investigators also say Moosani Syndicate was not an importer at all. It was registered with the tax board as a service provider.
The companies’ accounts on the customs clearance system were logged into from 2,983 and 2,732 different internet addresses, and 1,048 of those were shared. The report says a real importer would use only a few. This suggests many hidden people were using the same accounts.
The two firms imported goods worth 2.2 billion rupees, or 3.2 billion rupees with duties and taxes. But the owners’ combined capital was only 2.2 million rupees when imports began. The most they later declared, about 77.7 million rupees combined, would not cover even one month of imports, the report says. Investigators conclude that hidden owners paid for the goods with undisclosed money.
The report says the firms appear to be run by the same people. They shared 108 local buyers and 12 foreign suppliers. One supplier, A.K. Sons Trading Company, provided 61% of their combined imports. Their tax returns were often filed within minutes of each other.
The firms sold about 2.9 billion rupees of goods locally but paid almost no sales tax, the report says. Many sales went to buyers who were blacklisted, suspended or inactive. Investigators say this points to fake invoices.
Customs officials also say the firms understated the value of their goods. They raised the declared value by 1.3 billion rupees. For the routers alone, the firms declared 97 million rupees, and officials raised that to 565 million.
The report says the firms sent money abroad through the bank accounts of the front companies, which is a pattern seen in trade-based money laundering.
It also says that after customs officials refused to release the goods, people linked to the firms pressured officials, threatened them and ran a campaign against them. The report alleges an organized group of hidden operators was behind the firms.
Customs officials want a joint investigation team made up of anti-money-laundering units from customs, Inland Revenue and the Federal Investigation Agency. They also want the companies’ customs accounts suspended or canceled, and the case sent to the Regional Tax Office-II in Karachi for income tax and sales tax action.
