Fraudsters cash in on SA's preferential EU duties
Ray Smuts
A HUGE scam utilising fake documentation to export fish purportedly of South African origin but actually caught in international waters, is at the heart of an in-depth investigation by Cape Town's special investigations branch of the South African Revenue Service.
Fraud involving as much as R20 million and many thousands of tons of frozen, polluted, fish landed by non-European Union member countries including Japan and Taiwan, is involved in the probe after Sars was approached five weeks ago to assist a joint European anti-fraud office known as Olaf which has been probing the allegedly illicit goings-on in Cape Town and Europe (mainly Germany and Italy) for some time.
A team of some 70 investigators under Keith Hendrickse, branch manager of Sars' special investigations in Cape Town, visited nine locations in the Mother City last month, attaching documents from five companies for forensic purposes in what is said to be the largest operation of its kind thus far and the first conducted jointly by South Africa and the European Union (EU) in the fishing industry.
"Plenty people are breaking the law, huge amounts are involved and some cases under investigation include the freight industry, which goes to show that Sars is serious about fighting white-collar crime," asserts Hendrickse.
The way he tells it, scientifc tests on fish exported from South Africa were conducted in Germany, casting doubt on their origin, while also showing higher levels of mercury than permitted and acceptable for human consumption, even though not life-threatening.
Olaf's part in the whole investigation, explains Hendrickse, is to clamp down on those importers concerned by trying to prove they are bringing in fish which is not of South African origin while claiming it actually is, thereby benefiting from the preferential rate of duties.
"What is happening here is that more than 350 false Department of Trade and Industry certificates of origin and a similar number of false SABS health certificates were issued by the South African-registered exporters.
"In order for them to get the chain correct, we found false customs documents were also being presented. The exporters allegedly use a DA26 form to remove the fish, mainly shark and swordfish, awaiting export in a bonded warehouse.
"Then they submit to Customs a DA550 which pertains to the export of local fish but is used instead for foreign fish in the guise of South African fish. We found also that after the document had been stamped other fish products, squid for instance, were added (to the document)."
This is all tantamount to a false declaration in terms of Section 84 of the Customs and Excise Act, carrying a penalty of R40 000 for each declaration. Perhaps as many as 600 of these could be involved.
Hendrickse warns also of the added danger that the European Union could prohibit fish exports from South Africa if it does not abide by the EU's rule of origin decree.
Explaining the past role of special investigations, Hendrickse says it concentrated on collecting unpaid taxes and penalties.
"What was happening, however, is that people were Ôstealing' for the coming five years to pay for those unpaid taxes of the previous five so Sars was paying its own unpaid taxes and the only way to stamp this out was clean up what was going on out there by instituting criminal prosecutions."
