Returning Resident Scheme & Customs Fraud
An unusual case of alleged defrauding of the Treasury came to light last week. It is unusual because the case allegedly involves the Chairman of the Groupe Mon Loisir (GML), the biggest conglomerate of the island measured by asset size and by turnover. Persons belonging to this group of individuals are usually very rich, if not among the richest of the country. They have therefore the means to afford the luxuries they desire and pay their honest share of customs duties according to law.
The case has to do with what is termed the Returning Resident Scheme. If a citizen has stayed in a foreign country for at least 5 years and is importing his personal dutiable effects which have been in use for at least 6 months in the foreign country, the rate of duty is reduced to 15% of the assessed value, instead of 85% in the precise case of the high-powered Mercedes car in question. According to what has filtered out, a Mauritian by name Ashish Kumar Seeburrun was approached prior to his impending return to Mauritius from the UK to avail himself of the benefit of the duty concession scheme applicable to returning residents.
However, it is known that the genuine returning resident was provided a loan of Rs 11 million from Mauritius to enable him to acquire the luxury Mercedes car in the UK. On arrival here in Mauritius, the car was under-declared at Customs to a very low value compared with the actual value paid in the UK. As Ashish Kumar Seeburrun is a returning resident qualifying for the Customs duty rebate, the imported car was levied duty not only on its under-declared value, thereby benefiting from lower ad valorem duties to pay. It was also levied at the lower rate applicable to returning residents. Several millions have accordingly been underpaid to the Mauritius Revenue Authority (MRA), which has taken up investigating the alleged fraud and applying eventually the punitive rate of duty to be charged in such cases.
It has turned out that the car was allegedly imported at the instance and for the personal use of the Chairman of GML. Clearly, the real returning resident who has the car registered in his name for the purpose of benefiting from the lower duty applicable to qualifying returning residents would have aided and abetted in the committing of the Customs fraud.
The police is also on its toes to identify what has exactly transpired in the case and whether the matter should be referred to the DPP and eventually to the court. We will know hopefully who has triggered this entire fraudulent scheme in the case which has drawn so much public attention.
People of the social and economic rank of Thierry Lagesse are rarely if ever cited in cases of alleged Customs fraud of the sort. It has therefore come as an astounding revelation that he would be involved in the matter since he could easily have afforded to pay the sum due to the state if he really wanted to import directly on his own account such a high-costing luxury car. Since the matter came out in public, Thierry Lagesse has stepped down as Chairman of the GML as well as that of several other companies affiliated or belonging to the same conglomerate group. It would appear that such an action would be in keeping with the Code of Corporate Governance applicable to listed companies like GML and others. Economic leaders have to be seen to be above reproach in matters of public conduct. We normally assume that such leaders would not have recourse to devious means for securing private benefits or stay in a position of corporate control until and unless they have been cleared of alleged malpractices.
On the other hand, it is reassuring to see that institutions have not been intimidated from taking action, as it was appropriate, to investigate this case. The MRA and the Police need to be encouraged to pursue their actions without fear and favour whenever they are faced with such a situation, irrespective of the social profile of individuals concerned. Similarly, it is the role of Brian Glover as Chairman of the Equal Opportunities Commission to ensure that no adverse discrimination is used in all cases indistinctly in which citizens claim having been discriminated against. He must go as far as he can even if others involved in cases of discrimination he has drawn attention to do not discharge their part of the follow-up action effectively.
The more key institutions like the MRA, the Police, the EOC act in their own deliberate judgement to apply the provisions of the law indiscriminately, the more they will inspire confidence of the public at large that they will not choose and pick which case to take on depending on the social status or political influence-peddling of those concerned with the undertaking of wrongful actions in the eyes of the law. It is only when they will be in a position to fully and objectively implement the laid-down legal provisions that they can rise to the higher level of ushering in changes needed from time to time to expand their own scope and, by the same token, the country’s further development. When our institutions reach this stage of evolution, we also can, as Singapore has been doing for a long time now, beef up our businesses internationally projecting the high profile image of the country on the international arena. This will not be a negligible gain for the country as a whole. It is leaders of public institutions who have an immaculate personal image and the drive to get to grips with issues irrespective of who is to blame for miscarriages, who will make the difference for Mauritius.
* Published in print edition on 16 August 2013