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Report: Multinational companies encourage under-invoicing

KARACHI (December 05 2002) : The role of multinationals and foreign based companies with regard to the under-invoicing practised and promoted in the international trade has been highlighted in recent a report.

The report was prepared by the “Friends of Pakistan (FoP)”, an organisation working for the protection of the economic interest of Pakistan and struggling for the eradication of corruption from the government departments.

The report particularly highlighted the corrupt business practices by the UK and Belgium based multinationals. The type of corrupt business practice relates to the corrupt business practices of the multinationals based in developed hemisphere, ie issuance of under value commercial invoices on the goods and machinery exported to Pakistan.

In some of the cases, the FoP report said, the multinationals had issued such invoices to the Pakistani importers and in some others, they themselves were beneficiaries in the capacity of exporters as well as the importers.

The FoP, in its report, cited some case-wise incidents. The first case related to the UK-based multinational, Messrs Nectar (Asia) Limited, which exported six units of “new complete containerised bagging units with standard accessories packed in 12 x 20 feet shippers own containers”.

The said company, the report said, issued invoice in favour of the importer, Messrs Barwil Shipping (Pvt) Ltd, Karachi, declaring the value 69,600.00 per unit total value 417,600.00, excluding freight. The shipment of goods was effected from Antwerp, Belgium, whereas, the commercial invoice of the exported goods was issued by Messrs. Nectar (Asia) Ltd, UK.

The documents established the fact that the exporter, in league with all concerned, issued doctored commercial invoice to facilitate the importer on account of payment of duty and taxes in Pakistan, said the report.

Nector Group Ltd is an UK-based company, providing innovative and cost effective solutions for cargo handling requirements in the dry bulk sector. It is engaged in this field for about the last 30 years, supplying mobile bagging equipment and services all over the world.

The FoP quoted another case of a UK company, Messrs. Clyde Materials Handling Ltd, Doncaster, which exported two units of “mobile bagging machines, standard model 120N. PLC container Pak upper with feeder hopper with material low level control 4-EPG electro pneumatic net bagging weighers” to Messrs Crown Associates, Karachi, issuing commercial invoice to facilitate the Pakistani importer in evasion of duty and taxes. The extent of under invoicing in the instant matter is more than 200 percent.

According to the FoP report, the facts, supported by documents, established that these multinationals unashamedly joined hands in the preparation of documents to conceal the actual value of goods to help the importer to evade duty and taxes leviable thereon.

The extent of under-invoicing in the above cases is more then 100 percent. “These international thugs have done this all under the cover of so-called concept of transactional value prepared and implemented under the guidance of World Trade Organisation (WTO)/World Customs Organisation (WCO),” said the FoP report.

It said this concept had been forced upon the under-developed nations to protect the economic interest of the multinationals and business houses operating from developed, industrialised and exporting countries.

The report was also forwarded to the consulates and embassies of the above-mentioned companies, hoping that they would consider their moral duty to initiate action against the violator and to provide the details to Pakistan Customs as well as to the FoP.

The report said:” While the Western governments, World Bank, International Monetary Fund (IMF), World Customs Organisation (WCO), World Trade Organisation (WTO) and International Chamber of Commerce shout more loudly about corruption, their own policies are making it worse in both North and South.”

The multinational corporations and exporters of the developed countries engaged in corrupt business practices effect under-developed or developing countries in many ways. Their business techniques are undermining the development and increasing equality and poverty.

S Amjad Ali Shah of the Friends of Pakistan has requested the administration of the Central Board of Revenue (CBR) to raise the issue of under-invoicing at all international forums and has assured the FoP's assistance in this regard.

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