Customs insists no revenue lost in fuel imported by BFO1
The Port of Kingston

Jamaica Customs Agency (JCA) has doubled down on its disagreement with a claim by the Auditor General’s Department (AuGD) that deficiency in the agency’s control systems led to an estimated $2.1 billion in financial exposure in relation to fuel import duties between 2018 and 2020.

Findings on the agency’s bunkering and private bonded warehouses’ operations have been before Parliament for review since November 2021.

Auditor General Pamela Monroe Ellis said the importer (BFO1) failed to declare a total of 50.08 million litres of imported fuel in five shipments, for up to three years after the shipments were made.

Government auditors said deficiencies in internal controls had led to a combined $664.24 million in arrears by the operators of three private bonded warehouse operations, but following the release of the report, JCA firmly refuted the main claims, outlining that no funds had in fact been lost.

On Tuesday, Monroe Ellis stressed that the transparency around BFO1 was “really weak”. Addressing a virtual meeting of the Public Accounts Committee (PAC), which had convened to review the report, along with the JCA’s management response and the AuGD’s further response to those explanations. Her office was represented by a team, headed by Deputy Auditor General Carolyn Lewis.

The report pointed to the JCA’s failure to ensure that exports from BFO1’s special economic zone (SEZ) were authenticated.

“It’s really for Jamaica Customs to admit that they have gone woefully wrong, where the control processes surrounding BFO1 is concerned. It’s just unfortunate that we received a whistleblower concern in relation to BFO1 and we were not able to substantiate anything, because the transparency around that particular importer is really weak. It’s for Jamaica Customs to recognise that they need to improve the system,” Monroe Ellis argued, again using the example of Petrojam, where all the required systems are in place for import and export verification.

The audit had also sought to ascertain but did not confirm the credibility of allegations, made by a whistleblower, regarding malpractice and deficiencies in the operation of the JCA’s private bonded warehouses.

Commissioner of Customs Velma Ricketts Walker stressed that the agency had initiated its own post-clearance audit, unprompted by the allegations.

“When we did our own internal assessment and reviewed the monies that came in there wasn’t any immediate risk. I want to give the assurance that the agency [will] continue to build out on its systems... but I don’t want it to be said that there is this great exposure because, based on where we sit, we would have taken the necessary steps to protect the revenue,” she said.

The JCA insisted that the duties were in fact paid, and the supporting documents presented to the AuGD. Manager for sufferance wharves Nashwell Thomas argued that “there should be no ambiguity as it relates to whether or not the payments were done. A comprehensive and detailed Excel spreadsheet was submitted to the auditor general… so to say that the payments were not done is grossly incorrect”.

But the audit team shot down the argument, with Lewis pointing out that the verification and reconciliation occurred after the AuGD highlighted the discrepancy, while principal auditor Oliver Francis explained that the five shipments were imports of finished goods, but what the AuGD received from the JCA were reconciliation documents showing that the majority of the fuel was primarily exported, and the rest sold locally.

“The main issue we are having is that with the absence of the [independent] survey report we are not entirely sure if fuel was exported, so there is a revenue risk exposure of the estimated duties of $2.1 billion,” Lewis stated. The auditors also contended that the JCA did not receive the required surveyor’s report from BFO1, as is done for Petrojam, to verify the importer’s information.

And Francis said that over an eight-month period the AuGD received five different reconciliation reports from the JCA. “Some of the items being taken from the SEZ wasn’t even fuel; it was like soybean and digestives,” he pointed out.

Walker stressed that the independent surveyor’s report was not mandatory and was only a secondary validation document, which added to the layer of robust physical control system which Customs has in place.

The JCA handled 135.22 million metric tonnes of cargo at the islands’ ports between 2015 and 2021.

BY ALPHEA SUMNER Senior staff reporter

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