The House of Representatives on Wednesday said it had uncovered a N5 billion import duty waiver illegally granted a Chinese firm, China Harbour Engineering Company (CHEC), by the Federal Government.
CHEC is involved in multibillion dollars road and port contracts in Nigeria. In 2017, Nigerian Ports Authority (NPA) said it entered into a deal worth more than USD$86 million with CHEC to buy out the NPA’s remaining equity in the Lekki Deep Sea Port.
The Chairman, House Committee on Public Accounts, Wole Oke, while speaking at the investigative hearing into the audit query issued by the office of the Auditor General of the Federation against the Nigeria Customs Service (NCS) on Wednesday, expressed disappointment with the various regulatory agencies that approved the waivers in breach of “due process and extant financial regulations”.
Oke said the waivers have a huge negative impact on Nigeria’s economy.
He said, “The solution is that we should step up our oversight and ensure that nobody is undermining the revenue accruing to this country, either through these schemes I’ve mentioned or fraudulently.
“Like in the case of China Harbour; China Harbour got a contract in Nigeria through contract financing and then you are claiming duty waiver of over N5 billion on items and materials that are available in Nigeria. They are importing them, they kill local industries. You are injuring us from both ends.
”We just have to resolve that the MD of China Harbour should cause appearance. All they are trying to do is to cover up. When it comes to capital flight they don’t mind but when it comes to accountability they are running away. And those who granted the duty waiver; we must ask them and that Is why we invited the Ministry of Finance to come and defend the duty waiver.
“A company that is bringing in cement when there is Dangote Plc producing in Obajana, we have in Okpella, Ewekoro, Ibesi and they also pay the duty, meanwhile they charge Dangote duty when they bring equipment.
“As we speak today, do you how many ships are berthed today? Who cares?”
The committee also frowned at waivers granted to some publicly quoted companies between 2014 and 2020. It, therefore, directed the Minister of Industry, Trade and Investment to provide evidence of the capital allowance certificates granted to over 600,000 companies and other relevant documents during the period under review.
“The Federation Account is nose-diving and they asked us why are we not filing the revenue profile of Customs? They said it should be audited, that’s what they said.
“And so we called Customs and Customs came and presented the list. There are a lot of things like tax avoidance. Tax avoidance is lawful but we are only checking the abuses. So that is what we are doing in a situation where you are based in Nigeria, import from France for example and the documents emanate from Mauritius! So all we want to establish is the goods from the manufacturer, is it the same pricing that is comes with from the manufacturer?
“Some multinational companies indulge in the abuse of tax avoidance, transfer service schemes and they use that to undermine revenue generation in Nigeria.
“So some of these companies float subsidiaries in tax haven countries and some of these companies are 100% owned by them; so they operate through their subsidiaries. The prices at which they buy from the manufacturers are not what is contained in the shipping documents. By so doing, they can even cut down 50% of duty that they ought to have paid to Nigeria.
“And that is the issue the Auditor General is raising that collections by Nigeria Customs, collections by FIRS, the remittance by DPR and NNPC is nose-diving and that we should check it.
“They are even particular about Customs that we should audit it and that is why we invited Nigeria Customs; and Nigeria Customs availed us – in response to the committee’s invitation – submitted list of over 600,000 companies, and like I said there is no how we can invite over 600,000 companies. We don’t even have the budget because it will cost us N1.2 billion to write them. So we have to do sampling to conform the fiat in the issues raised by Auditor General,” Oke said.