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Senate Uncovers N447bn Scam On Import Duty Waivers

Waivers: Senate uncovers N447bn fraud

…House probes tax scam, loss of $2.9bn

From Fred Itua and Kemi Yesufu, Abuja

The Senate said it has uncovered a N447.42 billion fraud allegedly perpetrated in the administration of import duty waivers, concessions and grants by Ministries, Departments and Agencies (MDAs) of the Federal Government.

Presenting a report during yesterday’s plenary, chairman of the Senate Adhoc Committee on Import Duty Waivers, Concessions and Grants, Senator Adamu Aliero bemoaned what he described as large-scale revenue leakages that robbed government of huge sums of money that would have been used for provision of infrastructural development and social services.

The report is a follow up to a motion moved on the floor Senate in January 2016.
According to the breakdown, the Federal Government lost
N78, 489,941,114.74 in 2011,
N128, 538,453,758.99 in 2012,
N46, 056,265,355.78 in 2013 and
N87, 654,744,360.22 in 2014 through waivers, concessions and grants to different private companies who were engaged in importing goods to the country.

The report also said former president Goodluck Jonathan-led Federal Government approved N106, 711,892,098.14 as waivers, concessions and grants to private companies in 2015 alone.

He blamed the flagrant abuse of the process on lack of synergy among MDAs charged with the responsibilities of administering import duty waivers, concessions and grants.

He specifically named Federal Ministry of Finance, Nigeria Customs Service, Federal Ministry of Industries, Trade and Investment, Nigeria Export Promotion Council, Federal Ministry of Agriculture and Rural Development and Federal Inland Revenue Service (FIRS), as agencies responsible for the loopholes.

“Customs duty waivers and concessions have been used by the Budget Office of the Federation to entrench a very destructive patronage system to our economy, whereby very few operators in the economy were singled out for favours resulting to unfair competition in the system,” Aliero noted.

Speaking specifically on waivers granted to importers of rice, Aliero said 27 companies benefited from the import quota with a total allocation of 1,434,658 metric tonnes.
He said four companies were yet to remit N23.603 billion to the Federal Government.

In the sugar sector, an estimate of N17.41 billion was lost between 2011-2012.
In the automobile sector, the committee report claimed that the then Minister of Industries, Trade and Investment, Olusegun Aganga granted waivers to two Lagos-based firms in 2015 to import 897 and 714 vehicles respectively.

The committee charged the Federal Government to restructure and streamline the functions and responsibilities of the Budget Office of the Federation in such a way that will prevent it from further abuses and excesses in the import duty waivers, concessions and grants process.
It also urged the Federal Government to ensure that in future, government contractors do not enjoy duty waiver benefits.

“The Federal Government should impose severe sanctions against companies found to have benefited from import duty waivers, concessions and grants, but at the same time engaged in acts of economic sabotage by diverting some vessels to neighbouring countries of Benin and Niger republics for the commodities to be smuggled into Nigeria through land borders,” the report recommended.

Accordingly, the Senate mandated relevant agencies of government to recover N10.3 billion from six companies that benefited from rice importation quota in 2014.
The six companies did not meet the criteria for granting the waivers, the senate noted.

In a related development, the House of Representatives yesterday mandated its Committees on Finance and Public Accounts to investigate alleged abuse of tax waivers granted to companies by the Federal Government.

The House made the call against the backdrop of an estimated annual loss totalling $2.9 billion.

Leading a debate on his motion entitled: “Urgent need to investigate tax incentives/waivers granted to multi-national corporations”, Kehinde Odeneye (APC, Ogun) expressed worry that Nigeria is foregoing about $2.9 billion yearly in form of tax incentives which are being used as a substitute for policies that could genuinely attract more and better investments, such as ensuring good quality infrastructure, reducing the administrative costs of setting up and running businesses and promoting predictable micro-economic policies.

In his contribution, Herman Hember (APC, Benue) wondered why oil companies were granted waivers by the Ministry of Finance, when government policy was targeted at companies introducing new services or products.

House Majority Leader, Femi Gbajabiamila, who agreed that many companies have found means of exploiting the tax waiver urged that investigation be extended to indigenous firms.

The investigative committees were given four weeks to carry out their investigations and report back to the House.

Meanwhile, Leader of the Senate, Ali Ndume, denied claims that the probe is targeted at Jonathan. He said lawmakers were after what was done wrong during the period under review and not the occupant of the office of the president.

Ndume also charged President Muhammadu Buhari to intensify efforts and recover the huge sum lost to abuse of waivers, concessions and grants. He said if the money was recovered, it would help the government in meeting some financial needs.

He said the various committees would monitor the progress made by the Federal Government in recovery the monies, adding that would not be business as usual.

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