Nedlac partners call for tougher customs and excise fraud penalties
Monday, 15 September 1997

A crackdown on customs fraudsters has been calledfor by the social partners in Nedlac: government, business, labour and community.

"Customs fraud results in an estimated R3billion per annum loss of tax revenue to the fiscus and undermines local industry and,hence, South Africa's industrial-policy and job-creation objectives. The consequences offraud are being strongly felt in various sectors-including clothing and textiles, footwearand electronics-where thousands of jobs have been lost," said Jayendra Naidoo,executive director of Nedlac.

"The Nedlac Management Committee agreed on ajoint statement that reflects a firm commitment and call to start work against a cultureof criminal and illegal conduct, and that strengthens the efforts of the authorities toeliminate this problem."

Naidoo made this remark at a media briefing in a South African Revenue Services (SARS)warehouse piled high with confiscated goods, including motor vehicles, clothing,appliances and liquor.

The Nedlac social partners call on all aspects ofSouth African society to play a part in bringing this situation to an end, and commend theefforts that have already been taken in this regard.

The Ministry of Safety and Security has adoptedthe Border Control Project, managed by the SARS and the Department of Home Affairs, inorder to combat escalating cross-border criminal and trade abuses.

Government has reduced the number of land borderposts for bulk commercial traffic, and the number of airports authorised to clearcross-border flights. It is essential that cooperation from other members of the SouthAfrican Customs Union is also sought in this regard.

The social partners welcome the restructuring ofthe Department of Customs and Excise and its incorporation into the SARS. They note theprogress made by the SARS towards results-orientated management. The seriousness ofcontinued customs fraud warrants further urgent action on measures to enhance theeffectiveness of the SARS.

Organised business used this opportunity to callon its constituents to help combat this problem by refraining from providing an outlet forcontraband being offered in the marketplace.

The trade unions-Cosatu in particular-raised thismatter in Nedlac's predecessor, the National Economic Forum, as early as 1992, when theinflow of fraudulent imports started to disrupt domestic production in various industries,in particular the electronics, textile and clothing industries.

Said Ebrahim Patel, representing the labourconstituency of Nedlac: "Customs fraud, both directly and indirectly, has resulted inthousands of jobs being lost in South Africa. We call on all South African citizens tosupport initiatives to combat this problem by not buying goods at prices which areobviously unrealistic.

"What is most important for the public torealise is that it is illegal to buy stolen goods, and that it is immoral to support thisculture. What might seem to be short-term financial gain by buying counterfeit or stolenproperty causes untold damage to us all in the long-run."

Customs and Vat fraud includes theunder-valuation of imported goods, forged documentation, the abuse of the import-permitsystem, the removal of imported goods in transit, the incorrect description of goods,false claims on Vat refunds and the redirection of imports.

Furthermore, the Nedlac partners would like toencourage:

• Coordination between the SARS, the South African Police Services, the Department of Justice and the Department of Home Affairs in investigating and prosecuting criminals.
• Upgrading information-technology systems to improve data collection and the ability to monitor and cross-reference customs activity.
• Coordination between the SARS and the Department of Trade and Industry on a cooperation agreement with Southern African Development Community and Southern African Customs Union countries to investigate cross-border trade irregularities.
• The implementation of the 13-point plan for the restructuring of customs and excise functions agreed by the social partners in the National Economic Forum.
• Ongoing criminal prosecution of offenders, including, where appropriate, the executives of guilty companies, with stiffer penalties, including imprisonment.