Category / Corruption

by Mike Poverello

Worldbank – Corruption in Customs

Customs are often perceived as one of the most corrupt institutions in developing countries. Though difficult and complex, fighting corruption in customs is possible but requires an approach that is less centered on transposition of norms and practices from developed countries.  

In the World Bank’s recently published Global Report on Anti-Corruption, we argue that addressing the root causes of corruption goes beyond legal reforms, code of ethics or IT system upgrades. Currently, there is no lack of prescriptions, norms, or standards to address corruption in customs. For instance, the Kyoto Convention advocates standardization and simplification of customs procedures, codes of ethics and conduct, and measures focusing on wage incentives and staff rotation. Although these types of initiatives are important, the results have often been disappointing in developing economy contexts. 

It is important to establish a robust legal framework and measures such as simplification of processes and import policies or automation but they must be supplemented with other comprehensive approaches that address the root causes of corruption. 

The obstacle of social norms
Corruption is often deeply embedded in the social norms and expectations of political and social life. Such norms provide the unwritten rules of behavior. In countries riddled with corruption, laws often fail to regulate conduct, so the prevailing social norms guide many interactions by dictating the rules of the game. Thus, there may also be social sanctions for violating these norms.

Rwanda and Georgia had been confronted with pervasive corruption in customs for years. With new leadership in the 2000s in both countries, a comprehensive approach to tackle corruption in customs was launched with some drastic measures. In both countries, a combination of measures addressing the broader social roots of corruption and technical measures were implemented. The experiences from Georgia and Rwanda are, of course, context specific and refer to particular events in the two countries’ history. Still, some lessons of broader relevance can be identified.

In Georgia, the tax code was simplified, including the elimination of many tax loopholes and a reduction in the number of taxes and import tariffs. One-stop windows were introduced for customs clearing procedures. In Rwanda, reforms led to significant improvements in collection efforts and auditing procedures. The reforms in these countries were part of larger and radical public sector reforms, with a clear message from the political leadership that corruption will not be tolerated. 

Discredited public agencies were dismantled and replaced with new ones. The reform packages involved a drastic reshaping of the bureaucracies with simplification of administrative procedures. Opportunities and the space to engage in corrupt practices were then dramatically reduced. The new rules were strictly enforced based on effective monitoring mechanisms and little or no tolerance of deviations. 

Local ownership, leadership and data analytics 
Local ownership is essential for the sustainability of anti-corruption reforms in customs, and it is important to offer political backing to reformers. At early stage of reforms, it is important to have measures that lead to an increase in customs revenue as it helps to establish credibility and trust in the reform process for high-level officials. 

However, sustainable change demands effort, commitment and leadership over time from heads of customs.

Finally, the emergence of data analytics tools and individual performance-based indicators, such as average processing time between inspectors in the same port, can help detect corrupt inspectors based on their practices. 

Source: World Bank, Blog by Odd-helge Fjeldstad & Gael Raballand ,20 October 2020

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by Mike Poverello

WCO – COVID-19 Update

Counterfeit medical supplies and introduction of export controls on personal protective equipment

The WCO reminds the general public to exercise extreme caution when purchasing critical medical supplies from unknown sources, particularly online. The use of these goods may cost lives. 

While the world is gripped by the fight against COVID-19, criminals have turned this into an opportunity for fraudulent activity. There have been an alarming number of reports quoting seizures of counterfeit critical medical supplies, such as face masks and hand sanitizers in particular. 

Customs and law enforcement agencies in China, Germany, Indonesia, Uganda, Ukraine, United Kingdom, United States and Vietnam, to name but a few, have reported such seizures in the past three weeks. 

Moreover, there was a significant increase in seizures of counterfeit and unauthorized face masks and hand sanitizers during Operation Pangea XIII, a collaborative enforcement effort by the WCO, Interpol, Europol, Customs administrations, Police forces and other law enforcement agencies. This Operation, held from 3 to 10 March 2020, resulted in the seizure of 37,258 counterfeit medical devices, of which 34,137 were surgical masks. 

Online retailers have also announced a surge in sales of counterfeit goods. In particular, a US company reported the removal from its marketplace of a million products claiming to cure or prevent COVID-19. Tens of thousands of listings were removed because of price hiking, particularly for products in high demand such as masks. In one operation, US Customs and Border Protection seized counterfeit COVID-19 test kitswhich had arrived at Los Angeles International Airport (LAX) by mail from the United Kingdom. This seizure triggered a joint investigation by the City of London Police’s Intellectual Property Crimes Unit (PIPCO), the Medicines and Healthcare products Regulatory Agency (MHRA) and the United States Food and Drug Administration (FDA), resulting in one arrest and the seizure of 300 more kits and 20 litres of chemicals for the production of such kits. 

Given the shortages and the activities of market speculators, another important trend is the introduction of export licences for certain categories of critical medical supplies, such as face masks, gloves and protective gear. In particular, on 11 March 2020 Vietnam adopted Decision 868/QD-BYT by the Ministry of Health, introducing export permits for medical masks. The European Union (EU) introduced a temporary export licensing scheme for personal protective equipment as of 14 March 2020 (see Commission implementing Regulation 2020/402). Other countries, such as Brazil, India, Russia, Serbia and Ukraine, have also followed suit. 

The EU’s dual-use export control regime will also continue to be applied to more sophisticated items such as full face masks, protective gear, gloves and shoes, specifically designed for dealing with ‘biological agents’. The full list of such items can be found in Annex I to EU Regulation 428/2009, as amended.  

The WCO urges its Member Customs administrations to remain vigilant in these difficult times.

Please consult the relevant section of the WCO’s website regarding COVID-19 information, including changes in legislation, new trends and patterns, and initiatives by partners and Member administrations. 

The WCO stands ready to continue working with all its partners to disrupt the supply chains of counterfeit products that put the lives of millions of people at risk.

Source: WCO Website, 23 March 2020

by Mike Poverello

Top Wildlife Detective Shot in Cold Blood

Recent good news reports indicating a decrease in rhino poaching have been marred by the sudden death of one of law enforcements top detectives.

Colleagues and friends of Lieutenant Colonel Leroy Bruwer are in shock after the leading rhino-poaching detective was gunned down in an apparent assassination.

Leroy (49), commander of the Hawks in Mbombela (formerly Nelspruit), was shot dead in his car on Tuesday morning while on his way to work.

The investigation is ongoing but according to a police statement, he was shot with a heavy-calibre weapon.

Pieter Smit, commander of the Mbombela police’s quick-response unit, says his heart broke when he arrived on the scene and saw his colleague and friend’s lifeless body.

“Hate, sadness and tears with mixed feelings,” Pieter, who was one of the first people to arrive on the scene, wrote on Facebook.

Leroy’s body had been unrecognisably mutilated by the AK-47 gunfire, Pieter continued his Facebook post. He says the only way he knew it was Leroy is because he called his friend’s number and saw the cellphone ringing in the car.

“It breaks the heart of a grown man. Leroy, you were an honest policeman and worthy officer. You didn’t deserve this.

“I salute you. Rest in peace, colleague and friend.” 

Brigadier Hangwani Malaudzi, Hawks spokesman, says a specialised task team has been formed to investigate the murder. “We’re hoping for a breakthrough soon.”

He adds Leroy was a formidable detective and made many breakthroughs in the fight against rhino poaching.

“All the evidence points to Leroy having been the target. It looks like an assassination,” Malaudzi says.

Police are following up on all leads to find the suspects.

Source: Picture and article by Jacques Myburgh, News24, 19 March 2020

by Mike Poverello

AfCFTA – an uphill struggle in quest for regional trade on the continent

Picture : Bloomberg.com

The following article was published by Bloomberg and sketches the day-to-day hardship for cross border trucking through Africa. In a sense it asks the very questions and challenges which the average African asks in regard to the highly anticipated free trade area. While rules of origin and tariffs form the basis of trade across borders, together with freedom of movement of people, these will mean nothing if African people receive no benefit. As globalisation appears to falter across Europe and the West, it begs the question whether this is in fact is the solution for Africa; particularly for the reason that many believe globalisation itself is an extension of capitalism which some of the African states are at loggerheads with. Moreover, how many of these countries can forego the much need Customs revenue to sustain their economies, let alone losing political autonomy – only time will tell.

Nyoni Nsukuzimbi drives his 40-ton Freightliner for just over half a day from Johannesburg to the Beitbridge border post with Zimbabwe. At the frontier town—little more than a gas station and a KFC—he sits in a line for two to three days, in temperatures reaching 104F, waiting for his documents to be processed.

That’s only the start of a journey Nsukuzimbi makes maybe twice a month. Driving 550 miles farther north gets him to the Chirundu border post on the Zambian frontier. There, starting at a bridge across the Zambezi River, trucks snake back miles into the bush. “There’s no water, there’s no toilets, there are lions,” says the 40-year-old Zimbabwean. He leans out of the Freightliner’s cab over the hot asphalt, wearing a white T-shirt and a weary expression. “It’s terrible.”

By the time he gets his load of tiny plastic beads—the kind used in many manufacturing processes—to a factory on the outskirts of Zambia’s capital, Lusaka, he’s been on the road for as many as 10 days to traverse just 1,000 miles. Nsukuzimbi’s trials are typical of truck drivers across Africa, where border bureaucracy, corrupt officials seeking bribes, and a myriad of regulations that vary from country to country have stymied attempts to boost intra-African trade.

The continent’s leaders say they’re acting to change all that. Fifty-three of its 54 nations have signed up to join only Eritrea, which rivals North Korea in its isolation from the outside world, hasn’t. The African Union-led agreement is designed to establish the world’s biggest free-trade zone by area, encompassing a combined economy of $2.5 trillion and a market of 1.2 billion people. Agreed in May 2019, the pact is meant to take effect in July and be fully operational by 2030. “The AfCFTA,” South African President Cyril Ramaphosa said in his Oct. 7 weekly letter to the nation, “will be a game-changer, both for South Africa and the rest of the continent.”

It has to be if African economies are ever going to achieve their potential. Africa lags behind other regions in terms of internal trade, with intracontinental commerce accounting for only 15% of total trade, compared with 58% in Asia and more than 70% in Europe. As a result, supermarket shelves in cities such as Luanda, Angola, and Abidjan, Ivory Coast, are lined with goods imported from the countries that once colonized them, Portugal and France.

By lowering or eliminating cross-border tariffs on 90% of African-produced goods, the new regulations are supposed to facilitate the movement of capital and people and create a liberalized market for services. “We haven’t seen as much institutional will for a large African Union project before,” says Kobi Annan, an analyst at Songhai Advisory in Ghana. “The time frame is a little ambitious, but we will get there.”

President Nana Akufo-Addo of Ghana and other heads of state joined Ramaphosa in hailing the agreement, but a number of the businesspeople who are supposed to benefit from it are skeptical. “Many of these governments depend on that duty income. I don’t see how that’s ever going to disappear,” says Tertius Carstens, the chief executive officer of Pioneer Foods Group Ltd., a South African maker of fruit juices and cereal that’s being acquired by PepsiCo Inc. for about $1.7 billion. “Politically it sounds good; practically it’s going to be a nightmare to implement, and I expect resistance.”

Under the rules, small countries such as Malawi, whose central government gets 7.7% of its revenue from taxes on international trade and transactions, will forgo much-needed income, at least initially. By contrast, relatively industrialized nations like Egypt, Kenya, and South Africa will benefit from the outset. “AfCFTA will require huge trade-offs from political leaders,” says Ronak Gopaldas, a London-based director at Signal Risk, which advises companies in Africa. “They will need to think beyond short-term election cycles and sovereignty in policymaking.”

Taking those disparities into account, the AfCFTA may allow poorer countries such as Ethiopia 15 years to comply with the trade regime, whereas South Africa and other more developed nations must do so within five. To further soften the effects on weaker economies, Africa could follow the lead of the European Union, says Axel Pougin de La Maissoneuve, deputy head of the trade and private sector unit in the European Commission’s Directorate General for Development and International Cooperation. The EU adopted a redistribution model to offset potential losses by Greece, Portugal, and other countries.

There may be structural impediments to the AfCFTA’s ambitions. Iron ore, oil, and other raw materials headed for markets such as China make up about half of the continent’s exports. “African countries don’t produce the goods that are demanded by consumers and businesses in other African countries,” says Trudi Hartzenberg, executive director of the Tralac Trade Law Center in Stellenbosch, South Africa.

Trust and tension over illicit activity are also obstacles. Beginning in August, Nigeria shut its land borders to halt a surge in the smuggling of rice and other foodstuffs. In September, South Africa drew continentwide opprobrium after a recurrence of the anti-immigrant riots that have periodically rocked the nation. This could hinder the AfCFTA’s provisions for the free movement of people.

Considering all of these roadblocks, a skeptic would be forgiven for giving the AfCFTA little chance of success. And yet there are already at least eight trade communities up and running on the continent. While these are mostly regional groupings, some countries belong to more than one bloc, creating overlap. The AfCFTA won’t immediately replace these regional blocs; rather, it’s designed to harmonize standards and rules, easing trade between them, and to eventually consolidate the smaller associations under the continent­wide agreement.

The benefits of the comprehensive agreement are plain to see. It could, for example, limit the sort of unilateral stumbling blocks Pioneer Foods’ Carstens had to deal with in 2019: Zimbabwe insisted that all duties be paid in U.S. dollars; Ghana and Kenya demanded that shippers purchase special stickers from government officials to affix to all packaging to prevent smuggling.

The African Export-Import Bank estimates intra-African trade could increase by 52% during the first year after the pact is implemented and more than double during the first decade. The AfCFTA represents a “new pan-Africanism” and is “a pragmatic realization” that African countries need to unite to achieve better deals with trading partners, says Carlos Lopes, the former executive secretary of the United Nations Economic Commission for Africa and one of the architects of the agreement.

From his closer-to-the-ground vantage point, Olisaemeka Anieze also sees possible benefits. He’s relocating from South Africa, where he sold secondhand clothes, to his home country of Nigeria, where he wants to farm fish and possibly export them to neighboring countries. “God willing,” he says, “if the free-trade agreement comes through, Africa can hold its own.”

In the meantime, there are those roads. About 80% of African trade travels over them, according to Tralac. The World Bank estimates the poor state of highways and other infrastructure cuts productivity by as much as 40%.

If the AfCFTA can trim the red tape, at least driving the roads will be more bearable, says David Myende, 38, a South African trucker resting after crossing the border post into South Africa on the way back from delivering a load to the Zambian mining town of Ndola. “The trip is short, the borders are long,” he says. “They’re really long when you’re laden, and customs officers can keep you waiting up to four or five days to clear your goods.” 

Source: article by Anthony Sguazzin, Prinesha Naidoo and Brian Latham, Bloomberg, 30 January 2020

by Mike Poverello

‘Flying out of Africa’, an essay on China -Africa relations

cina-africa-focac

The following article featured in BusinessLive (eEdition) on 25 July 2019. It is authored by John Grobler. The article was compiled with the financial support of Journalismfund.eu’s Money Trail grant programme. 

Chinese ‘lying money’, or fei qian, is an ancient form of value exchange. But its modern incarnation is blamed for stripping Africa of its resources.

The secret of Chinese commercial success in Africa, as suggested by an 18-month investigation into the drugs-for-abalone and rosewood trade and a major Namibian tax fraud case, is an ancient system that not only allows African countries to be robbed of taxes, but also plays a part in financing the global $270bn-a-year wildlife contraband trade.

Fei qian, or “flying money”, dates back about 1,200 years, to the Tang Dynasty in China. In its simplest modern incarnation, it is a low-cost and trusted method of remitting money, much like the Islamic hawala system. For example, a person who wants to send funds to a recipient in Africa will pay a fei qian broker in China. For a commission, the broker will arrange that a counterpart in Africa pays the recipient, again for a commission. The two fei qian brokers later settle their account through, for example, the transfer of commodities of equivalent value — but also sometimes through less salubrious methods such as transfer mispricing or invoice manipulation.

In practice, the system relies on the systematic underinvoicing of Chinese imports into Africa and a seamless chain of payments system in which accounts are settled through the transfer of high-end — and often illicit — goods such as abalone, rosewood, rhino horn and ivory. In brief: goods are undervalued on their import documentation; they are then sold for cash; and that undeclared cash is subsequently channelled into high-end commodities that are remitted to China to balance the fei qian books.

“The trick behind fei qian is that the money never actually leaves China,” says a former Singaporean finance expert, speaking on condition of anonymity. “It’s just the commodities that get moved around” as part of a longer payment chain among the Chinese diaspora.

Unlike barter trade, fei qian is not a straight swap; it is an exchange in stored value that leaves no paper trail, except in the books of the fei qian operators themselves. What makes the system even more impenetrable, the investigation has found, is that these operators mostly seem to be older, well-established women working in a closed network of mutually trusted contacts.

This nexus, and lack of paper trail, means fei qian is largely invisible. But it occasionally appears as a gaping hole in a country’s balance of payments account with China – as Namibia has discovered in an ongoing import-tax fraud investigation.

Jack Huang, a business associate of President Hage Geingob, and Laurentius Julius, a former Walvis Bay customs official and now a customs clearing agent, are among eight suspects facing 3,215 charges of fraud and money laundering in the Windhoek high court. Continue reading →

by Mike Poverello

SA Documentary on Rhino Poaching wins International Award

STROOP – Journey into the Rhino Horn War, is getting a lot of attention all the way around the world at the moment and its clear to see why!

The film tells the shocking and touching story of the ongoing poaching of the rhinos and the trade in its coveted horn. Four years in the making, this labour of love saw de Bod and director Susan Scott sell their houses, leave their jobs and move in with their mothers in order to document what is happening in the fight to save the rhino from extinction.

The locally made documentary film, has just been awarded the 2018 Green Tenacity Award by the judges of the Eighth Annual San Francisco Green Film Festival, coming ahead of the film’s world premiere at the festival which will run from Thursday September 6 through to Friday, September 14. STROOP was one of 26 final films selected out of 350 submissions and one of five to win awards – a huge credit for producer, Bonné de Bod.

It was supposed to be a 6-month project but soon turned in to a dangerous and intense expedition for which the passionate duo often found themselves in immense danger. In an exclusive first, de Bod and Scott filmed special ranger units inside the world-famous Kruger National Park and at the home of the white rhino, the Hluhluwe iMfolozi Park and travelled undercover to the dangerous back rooms of wildlife traffickers and dealers in China and Vietnam.

The result is a hard-hitting – and ultimately moving – documentary that challenges and shocks viewers.

Says Bonné “We are over the moon at receiving this prestigious award and it makes all our hard work and dedication to this film that much more worthwhile. Hopefully, it also means that the recognition will create additional awareness and encourage even more people to see the film when it releases.”

According to the festival’s criteria, the Green Tenacity Award is given to filmmakers “who show great tenacity in exploring crucial environmental issues in their work.”

Made solely with crowdfunding and grants – the film shows why this hunted and targeted species deserves to live in dignity, free from exploitation by illegal traders, poachers, money men and corrupt governments.

STROOP – Journey into the Rhino Horn War will premiere in South Africa in February 2019 after its film festival run overseas.

Source: sandtonchronicle.co.za, 22 August 2018.

by Mike Poverello

Argentina Customs Fraud – Similarities to Venezuela

Arg-aduana

A customs fraud that allegedly allowed a criminal network to steal millions from Argentina’s government looks eerily similar to how some of Venezuela’s private businesses and corrupt government officials have also benefitted from that Andean nation’s efforts to manipulate currency values.

Argentine authorities conducted 23 simultaneous search warrants and arrested 10 individuals accused of defrauding the state by more than $300 million between 2012 and 2015, according to a July 11 press release by Argentina’s Security Minister.

The scheme was rooted in the difference between the dollar’s official value against the Argentine peso and its informal black market price. Authorities claim that 55 front companies were used to falsify Anticipated Sworn Declarations of Importation (Declaraciones Juradas Anticipadas de Importación – DJAI). These documents allowed import companies to buy dollars from the government at a subsidized price in order to buy foreign goods. Argentina’s previous administration artificially boosted the value of a peso, so an official dollar was worth much less than on the black market. But under the scheme, DJAIs were produced for goods that were never imported and with the sole purpose of buying cheaper official dollars, before selling them at a much higher price on the black market exchange.

The investigation, initiated last year after an official complaint from the director of Argentina’s customs agency, focuses on a network of textile companies owned by members of Buenos Aires’ Korean community, according to Infobae.

Infobae, which described the well-structured network integrated by professional accountants as a “mafia,” notes that not a single official has been charged for corruption, even though the official press release admits that bribes were paid.

The scheme currently investigated in Argentina illustrates how organized crime can profit from government monetary policy, as well as a good dose of corruption.

The sum involved may appear large, but other regional country’s losses to such frauds are measured in percentages of the gross domestic product and reach the highest levels. In Guatemala, for example, corruption reached as high as the president, who was directly leading and benefitting from a vast customs fraud, according to government investigators prosecuting the case.

Argentina’s case, however, appears to have more similarities to Venezuela. Indeed, the latter’s government control of currency exchange rates and the sale of dollars was exploited to embezzle as much as $70 billion in a decade, reported The New York Times. And following a regional pattern, corruption stood as a primary factor enabling these frauds.

Source: InsightCrime.org and WCO IRIS Portal

by Mike Poverello

Zim Revenue Scourge – porous borders lose millions

cigarettes

The Zimbabwe Herald suggests that Zimbabwe could be losing millions of dollars in unpaid taxes due to rampant smuggling of cigarettes into South Africa, investigations by this paper have revealed.Between 2014 and 2015, local customs officials seized nearly 2 500 cartons worth around $500 000 in taxes, according to the Zimbabwe Revenue Authority.

Figures from the South African side are staggering, showing a wide discrepancy in the value of confiscated contraband between the two neighbouring southern African countries.

The South African Revenue Service told The Herald Business that it had seized R87 million (US$6,2 million) worth of Zimbabwean cigarettes since 2014, or 95 million sticks.

This will likely be worth millions of dollars in evaded tax in Zimbabwe, but the ZIMRA director for legal and corporate services Ms Florence Jambwa said the figures were difficult to determine because smuggling was an underground trade.

South Africa, however, says it loses an estimated R40 million (US$2,9 million) to cigarette smuggling each year, on the average, more than half of it Zimbabwe-related.

And this is just from what is on public record. Customs officials from both countries admit the figures could be higher. Both are also greatly incapacitated to detect illegal trades quickly.

“It is difficult to measure the levels of smuggling as this is an underground activity mostly done through undesignated entry points,” said ZIMRA’s Jambwa, by email.

“The value of the potential loss cannot be easily ascertained,” she said, failing to provide an estimate.

Tax analyst Mr Tendai Mavhima said the figures from ZIMRA represent only a small portion of the actual amount of money Zimbabwe is losing to trafficking of cigarettes.

“The disparity in figures (ZIMRA and SARS figures) indicate there are problems in controls on either side, which may result in the revenue and tax losses from both countries being understated,” he said by telephone.

Zimbabwe is the world’s fifth largest producer of tobacco after China, the USA, Brazil and India.

The country produces flue-cured Virginia tobacco, considered to be of extremely high quality and flavour, according to a report on Zimbabwean tobacco companies by local stockbroking firm, IH Securities.

As such, Zimbabwean tobacco ends up in many top cigarette brands across the world, it says.

It is especially popular in China, the largest importer of Zimbabwean tobacco, and in South Africa, the country’s largest trading partner.

In South Africa, Zimbabwean cigarettes are on demand for two key reasons: high quality and affordability.

It costs just $1,50 for 20 sticks in Zimbabwe compared to $3,20 for the same number of sticks in South Africa, according to estimates by regional economic bloc, SADC.

The South African Revenue Service (SARS) said: “Cigarette clientele opt for cheaper cigarettes. The high supply and demand for illicit cigarettes creates the market for it.”

South Africa imposes very high taxes on cigarette imports – about 80 percent meaning many Zimbabwean dealers choose to export illegally.

SADC says illegal dealers supply nearly two thirds of the number of cigarettes smoked by South Africans.

In 2011 alone, at least 4 billion cigarettes smuggled into South Africa originated from Zimbabwe, it says.

The undeclared cigarettes are usually concealed in trucks, buses and other vehicles destined for South Africa by organised cartels, said Florence Jambwa of ZIMRA.

Sometimes the cargo is shipped at undesignated points on the porous border between the two countries. Source: Zimbabwe Herald

by Mike Poverello

Watch Ghana President’s reaction to Corruption

The following video is somewhat dated, but reports still abound regarding corruption within the Customs division of the Ghana Revenue Authority. The video appears to be about 4 years old. The president, John Evans Atta Mills, seen here rebuking staff at the Port of Tema, has since passed on. His message is nevertheless timeless and should be heeded by all customs officials across the continent.

by Mike Poverello

Zimbabwe tightens border controls on imported goods

Zimbabwe-flagZimbabwe has introduced custom-control measures aimed at reducing the inflow of smuggled and inferior goods, and boosting its revenue from customs duty. Goods being exported to Zimbabwe will have to undergo consignment verification from May 16.

The government’s customs officials are also tightening up inspections at the Beitbridge border post to stem the flow of cheap, illegal goods, which Zimbabwean companies blame for their financial woes.

Executive chairman of the European Union Chamber of Commerce and Industry of Southern Africa Stefan Sakoschek said on Thursday that “the general idea is for Zimbabwe to protect its borders from substandard goods, as well as from undervaluation”.

Mr Sakoschek said the consignment-based conformity assessment programme fell within the framework of the World Trade Organisation’s technical barriers to trade as well as the regulations of the General Agreement on Tariffs and Trade.

Exporters and clearing agents have been informed of the new consignment verification measures, which will ensure conformity to standards and the value of goods declared. A certificate will be issued for the consignments for presentation to customs officials on arrival in Zimbabwe. Goods without a certificate will be refused entry.

Targeted products include food and agricultural goods, building and civil engineering products, timber and timber products, petroleum and fuel, packaging materials, electrical and electronic appliances, body care products, automotive and transportation goods, clothing and textiles, engineering equipment, mechanical appliances and toys.

Trade Law Chambers director Rian Geldenhuys said the pre-shipment verification process would entail additional costs but should not contribute to further delays in shipment. Consignment verification was widely practised especially in developing countries as a way to ensure the collection of customs duty revenue, Mr Geldenhuys said.

“Underinvoicing is a huge problem throughout the world, especially least developed and developing countries which Zimbabwe is one of,” he said.

Trade Law Centre researcher Willemien Viljoen also said the assessments would entail additional costs. Much of the effect would depend on how the conformity assessments were implemented and the standards that would be applied, Ms Viljoen said.

The Zimbabwean government has appointed well-recognised French company Bureau Veritas as the conformity assessment company for verification purposes, and has given the assurance that “compliant exporters will be able to benefit from fast-track procedures reducing systematic intervention on their frequent exports to Zimbabwe.”

Zimbabwean Industry and Commerce Minister Mike Bimha was quoted by the Zimbabwean press as saying that Zimbabwe was being “flooded with sub-standard imports which do not meet quality, safety, health and environmental standards”.

These goods had a negative effect on the country’s economic development and the competitiveness of its industries, Mr Bimha said.

In terms of its four-year agreement with Bureau Veritas the Zimbabwean government will receive monthly royalty fees equivalent to 5% of all monies received for its services. This arrangement will eventually lapse when the Zimbabwe Standards Regulatory Authority is established to monitor and control imports, exports and local goods to ensure compliance with quality, health, safety and environmental standards. Bureau Veritas operates in 140 countries and offers pre-shipment services to SA, Ethiopia, Kenya, Somalia, Uganda and Côte d’Ivoire. Source: BDLive (Reporter: Linda Ensor)

Read also the following articles, published in Zimbabwean Situation – Govt moves to tighten border controls (September 2014) as well as Zim mulls one-stop border post (November 2014) which might suggest that entry arrival procedures at Zimbabwean ports of entry may not be that expeditious given a prominent focus on revenue collection.

by Mike Poverello

Zimbabwean Customs seizes 48kg illicit South African gold worth R20m

goldZimbabwean Customs (ZIMRA) seized 48 kg illicit gold worth R 20 million and arrested 46 people for initial investigations. Forged gold serial-number stamps, specially designed armoured vehicles, clandestine refineries, fake customs clearance papers and documents with links to the black market.

These and other pieces of evidence are the keys that the Hawks believe link a Zimbabwean and South African gold-smuggling syndicate to scores of buyers in Europe masquerading as dealers in precious metals. For two years police have been zeroing in on the syndicate, whose roots are in illegal gold mining in Zimbabwe. Inside were 48kg of gold bars valued at R20-million.On Friday, they acted. In the early hours teams from the Hawks, the Special Task Force and Crime Intelligence raided luxury homes and farms across Gauteng and the North West.

In one of the raids police discovered a walk-in vault at a warehouse outside OR Tambo International Airport. Inside were 48kg of gold bars valued at R20-million. They were being prepared for stamping with official South African gold serial numbers designating that the metal had been officially mined and refined in the country. Police sources say the gold was to have been flown to at least three European countries at the weekend before being smelted, re-refined and distributed.

A source with knowledge of the investigation has revealed the inner workings of the syndicate, from how and where the gold is mined to how corrupt customs and mining officials facilitate the metal’s passage across borders.(Now should’nt this prompt some serious cause for concern, if true?)

“The amount this syndicate has handled is immeasurable. We have known about them for two years and in that short time we have recovered R40-million,” he said.

“They have operated both in South Africa and Zimbabwe as well as other SADC [Southern African Development Community] countries for years, well before we even discovered them”

Illegal miners in Zimbabwe supplied the syndicate. “With the instability and corruption there [South Africa?] it’s dangerous but easy. Once they have the gold, runners take it to the border where, through corrupt officials, it is smuggled across disguised as things such as household products.”

The gold was taken to farms in and around Modimolle in Limpopo where illicit refineries smelted and refined it, the source said. With the help of South African mining officials, gold clearance documentation and special serial and insignia stamps were sourced.

“Once stamped you would never know the difference. We have placed it next to legitimate bars and it looks and feels the same.” He said the gold was distributed through legitimate channels in Europe.

“Those running the syndicate know what they are doing. They are well-connected and influential businessmen with ties to Africa, Europe, the US and Asia”.

“They are linked to the gold powerhouses of the world. These are not ‘mickey-mouse’ people. They are immensely powerful and extremely well connected to some of the world’s top legal firms. Within hours of Friday’s raids lawyers were arriving at their clients’ homes and businesses.”

He said police seized hundreds of official gold clearance documents, serial stamps and other paperwork with links to mines and importers and exporters. Source and picture: CustomsToday.com

by Mike Poverello

ZIM Police struggle to bust cigarette racket

CigarettesAn intricate web of smugglers, which reportedly involves manufacturers and middlemen, has been illegally carting cigarettes worth millions of dollars out of the country over the years, prejudicing the treasury of vital revenue.

Cigarette manufacturer, Savanna, has been fingered as one of the main culprits, while multinationals like BAT have also been mentioned in the illicit cross-border trade, mainly to South Africa.

Commonly smuggled brands include Remington Gold, Madison, Sevilles, Magazine Blue, Chelsea and Pacific Blue, manufactured by Savanna – which consistently denies smuggling.

A senior police sokesperson said “Even though we don’t always talk about it, we have managed to make significant arrests and the cases have been taken to court. The arrests include smuggling attempts at undesignated spots along the border and through official exit points such as Beitbridge”

A senior customs official told The Zimbabwean that cigarette smuggling, particularly through Beitbridge and Plumtree border posts, was difficult to arrest because of corruption.

“Policing at the border posts involves several agencies, namely the police, CIO (Central Intelligence Organisation), customs and special deployments from ZIMRA (Zimbabwe Revenue Authority). The problem is that these officers work in collaboration with the smugglers and haulage trucks and other containers carrying the cigarettes are cleared without proper checking. Hefty bribes are involved and the money is too tempting to resist,” said the customs official.

“You would be amazed how wealthy these officers have become. They have bought houses, luxury cars and send their children to expensive schools – yet their regular salaries are so low,” he added.

Immigration and customs officials, who also constantly liaise with their South African and Botswana counterparts and meet physically regularly, pretend to be checking the containers but clear them without completing the task, and know what the trucks and other carriers would be ferrying.

ZIMRA has four scanners for detecting contraband and an anti-smuggling team that also uses sniffer dogs, in addition to guard soldiers posted between the Zimbabwean and South African borders.

There are about 15 regular roadblocks along the Harare-Beitbridge road and 10 between Bulawayo and Plumtree that search trucks, buses and private cars. Despite this, the smuggling continues because of the collusion among the officials, said the source.

In early January, the Ferret team, a joint operation involving Zimbabwean and South African officers, intercepted a truckload of 790 Remington Gold cigarettes worth an estimated $119,000 destined for South Africa along the Masvingo-Beitbridge road. The smugglers were caught and arrested while offloading the cartons into small trucks. Source: The Zimbabwean

by Mike Poverello

2 Rhinos and 30 Elephants Poached Every Day

With record levels of global ivory seizures in 2013, mostly in ports, a new Interpol report highlights the need for greater information sharing to enable a more proactive and effective law enforcement response against trafficking syndicates.

Large-scale ivory shipments – each one representing the slaughter of hundreds of elephants – point to the involvement of organized crime networks operating across multiple countries. Head of Interpol’s Environmental Security unit, David Higgins, said while there was a global recognition of the problems of elephant poaching and ivory smuggling, a more integrated approach was needed for a more effective response.

“Ivory seizures are clearly an important step in stopping this illicit trade, but this is just one part of a much bigger picture,” said Higgins. “If we are to target those individuals behind the killing of thousands of elephants every year, who are making millions at the cost of our wildlife with comparatively little risk, then we must address each and every stage of this criminal activity in a cohesive manner.

The report ‘Elephant Poaching and Ivory Trafficking in East Africa – Assessment for an effective law enforcement response’ was launched at the Canadian High Commissioner’s Residence in Nairobi, Kenya.

While poaching in Kenya has reduced due to more pressure by security agents on poachers, the country is being used as a transit route with the port of Mombasa becoming a favorite for poachers. The ivory is packaged in shipping containers for transport to the port, and interception of the majority of ivory has occurred in maritime ports with the loot hidden in shipment containers usually concealed by other lawful goods.

Uganda though a landlocked country is becoming a transit route for the ivory, mostly from Tanzania. Tanzania was the leading source of illegal ivory in the East African region last year. At the same time, the port of Mombasa accounted for the largest volume of seizures in Africa with a total of over 10 tonnes of illegal ivory intercepted between January and October 2013.

Approximately 30 elephants are killed in Tanzania daily amounting to more than 10,000 animals annually. An estimated 22,000 elephants were killed illegally continent wide in 2012.

Tanzania’s elephant population has continued to plummet in recent years and in Selous Game reserve which boasted the world second largest elephant population at 70,000 elephants in 2006, the numbers have fallen to an estimated 39,000 elephants in 2009 and currently stand at 13,084 elephants.

There is global concern about the problem. The Illegal Wildlife Trade Conference, held in London this month, agreed key actions to stamp out the illegal wildlife trade. During the conference, chaired by Foreign Secretary William Hague and attended by the Prince of Wales, the Duke of Cambridge and Prince Harry, world leaders from over forty nations vowed to help save iconic species from the brink of extinction.

The London Declaration contains commitments for practical steps to end the illegal trade in rhino horn, tiger parts and elephant tusks that fuels criminal activity worth over $19 billion each year.

Key states, including Botswana, Chad, China, Gabon, Ethiopia, Indonesia, Tanzania, and Vietnam, along with the US and Russia, have signed up to actions that will help eradicate the demand for wildlife products, strengthen law enforcement, and support the development of sustainable livelihoods for communities affected by wildlife crime. Continue reading →

by Mike Poverello

Death by China

DeathByChina1013x1463-709x1024The featured documentary should be mandatory viewing for all small to medium company owners, economic and foreign trade advisers. While we are inclined to blame the Chinese for all prevailing economic woes, it is in fact the blatant greed of western CEO’s – multinational companies in particular – who have placed profit above prosperity of their country. The film clearly spells out the causes for the systematic destruction of the american economy and manufacturing base, all for the sake of shareholders and outrageous CEO bonuses. The rampant expansion of China in Africa should raise serious concerns for all sub-Saharan African citizens whose elected leaders appear happy, but oblivious, in courting the Chinese with little or no consideration of the realities of their economic and human rights track record.

DEATH BY CHINA is a documentary feature that pointedly confronts the most urgent problem facing America today – its increasingly destructive economic trade relationship with a rapidly rising China. Since China began flooding U.S. markets with illegally subsidized products in 2001, over 50,000 American factories have disappeared, more than 25 million Americans can’t find a decent job, and America now owes more than 3 trillion dollars to the world’s largest totalitarian nation. Through compelling interviews with voices across the political spectrum, DEATH BY CHINA exposes that the U.S.-China relationship is broken and must be fixed if the world is going to be a place of peace and prosperity. Visit – www.deathbychina.com for details on acquiring this powerful documentary.

“A truly life-changing, mouth-dropping documentary film…Peter Navarro’s ‘Death by China’ grabs you by the throat and never lets go.” Francesca McCaffery, Blackbook Magazine

by Mike Poverello

Africa and the War on Drugs

Co-authored by Neil Carrier - a researcher based at the African Studies Centre, Oxford and Gernot Klantschnig - a lecturer in International Studies at the University of Nottingham, Ningbo, China.

Co-authored by Neil Carrier – a researcher based at the African Studies Centre, Oxford and Gernot Klantschnig – a lecturer in International Studies at the University of Nottingham, Ningbo, China.

Given the much over-stated phrase ‘the war on drugs’, enforcement and security agents alike will find the following book of immense value, especially in that it provides a continental view of the problem in Africa. Nigerian drug lords in UK prisons, khat-chewing Somali pirates hijacking Western ships, crystal meth-smoking gangs controlling South Africa’s streets and the Bissau-Guinean state captured by narco-traffickers. These are some of the vivid images surrounding drugs in Africa which have alarmed policymakers, academics and the general public in recent years. In this revealing and original book, the authors weave these aspects into a provocative argument about Africa’s role in the global trade and control of drugs. In doing so, they show how foreign-inspired policies have failed to help African drug users who require medical support, while strengthening the role of corrupt and brutal law enforcement officers who are tasked with halting the export of heroin and cocaine to European and American consumer markets.

‘A fresh, ambitious, and critical survey of drug use and trafficking in Africa, where globalization has added cocaine, heroin, and methamphetamine to local staples like beer, khat, and cannabis. Carrier and Klantschnig explore the continent’s changing drug ecologies, the mixed implications for development, and policy responses that have ranged from more drug wars to state complicity in the traffic.’ David T. Courtwright, Presidential Professor,Department of History, University of North Florida

‘Reliable data on the use of drugs in Africa is notoriously hard to find, and this is a topic which tends to attract sensationalism and political opportunism rather than rational commentary and debate. In this readable and thorough book, Carrier and Klantschnig offer a calm and reasoned review of the existing evidence and develop an effective critique of the “war on drugs” approach. Picking apart many common assumptions about psycho-active substances in Africa, they effectively challenge the value of supply-side regulatory approaches and attempts at prohibition, and argue for policies based on harm-reduction. This book will be essential reading for anyone interested in drugs policy in Africa.’ Justin Willis, Durham University

Reviews: courtesy Amazon.com