Time will tell if Danville Walker triumphs over customs cheats, says Collin Greenland. - File

Jamaica's intrepid Commissioner of Customs Danville Walker has brought the same level of fearlessness to his job that earned him the Order of Jamaica for outstanding public service; the CVM 'Newsmaker of the Year Award' - 2002; and the Gleaner Honour 'Man of the Year' Award in 2002.

Generally reputed to be a man of principle, Mr Walker's penchant for "tough talking" has earned him some detractors but he continues through his recent pronouncements to read the riot act to current and/or potential corrupt business operators contemplating customs fraud.

In fact, unlike one of his predecessors Mike Surridge, who was equally belligerent against fraudsters, Mr Walker has supplemented his aggressive decrees with more deliberate and structured crime-fighting strategies. It may be that Mr Walker, who now lectures on customs fraud locally when he has the time, is influenced by his accounting/auditing background and is more technically equipped for the task.

Nevertheless, despite his impressive record of achievements and obvious proclivity to prevail over challenges, he may find that curbing the evils of customs fraud may be his most testing assignment to date.

TYPES OF CUSTOMS CORRUPTION

Similar to other jurisdictions worldwide, the types of customs fraud occurring in Jamaica are inexhaustibly wide and varied. They may include tax evasion; use of artificial or 'shell companies'; illegal employment; carousel fraud; illegal import/export of exotic plants/animals; cyber crimes; drug trafficking; trade abuses; product piracy (intellectual property) and other smuggling.

Tax evasion, for example, involves the innumerable attempts to evade either partially or totally revenues due and payable to the Government. The methods attempted include many under-the-table transactions, underinvoicing, fictitious documentation and alteration of genuine ones, as openly bemoaned by Mr Walker since taking over the department for less than a year. Artificial or shell companies involve the setting up of fake companies for the systematic evasion of taxes.

Their lifestyles are usually short, many times less than six months, with new ones created on an ongoing basis as fraudulent attempts are made on customs transactions. Illegal employment scams are more immigration related but, once successfully perpetrated, the fraudulent work permits, diplomatic status, etc. can facilitate irregularities in customs transactions.

Carousel fraud or value-added tax (VAT) fraud is committed when a chain of supplies of goods exists and one or several links of this chain do not pass on VAT proceeds (such as GCT) to the tax authorities. If these goods actually find their way into normal sales outlets, they can distort competition as goods can be sold below customary prices, since profits are made in the form of GCT received but not passed on to the tax office.

Illegal import/export of exotic plants/animals include all forms of exotic plant and animals worldwide and may include orchids, cactuses, animal skins/hides/furs, tourist souvenirs such as shells, corals and protected plants and animals, and traditional Chinese medicines. Cyber crimes have resulted from the development of modern communication technologies and the increase in Internet trade as they pose new challenges for customs administration as many fraudsters are technologically savvy.

Business transacted electronically on the Internet has spawned novel and varied forms of fraud that are difficult to track down. Enterprises may remain anonymous, yet operate across traditional borders and find new ways of interfering with markets and businesses. Drug trafficking reflects the traditional cocaine, heroin, cannabis, illegal doping agents and other narcotic drugs that continue to be trafficked worldwide in large quantities by land, sea and air.

The Gleaner's business reporter, Mark Titus, reported earlier this month that between April of last year and February this year, the Customs Department seized contraband with street value of $583.47 million - $364.41 million of which was cocaine, $215.83 million marijuana and $3.23 million of hashish.

Trade abuses reflect the actions of unscrupulous traders who have sought to abuse trade concessions negotiated under trade arrangements of regional and jurisdictional consolidations such as CARICOM, European Community, NAFTA, etc., by attempting to circumvent revenue, health, and other regulations for fraudulent gains. Product piracy (intellectual property) or 'product counterfeiting' involves the imitating or forging of products, i.e. the deliberate violation of trademark rights, copyrights and other industrial property rights and their illegal exploitation.

These can include trade in counterfeit clothes, watches, sports shoes, cellular phones, computer components, medicines, etc. In addition to drugs and exotic plants/animals, the illegal transport of other goods in and out of Jamaica may occur in other smuggling activities. These may involve such items as cigarettes, arms, jewellery, precious stones, watches, textiles, alcohol and cash which are carried out in enormous dimensions by criminal organisations internationally, and Jamaica is no exception.

For example, Mark Titus also reported that in the period mentioned above, 22 illegal firearms and 854 rounds of ammunition were also discovered.

PUTTING THE BRAKES ON FRAUD

Prescribing specific techniques publicly may not be judicious since newspapers are read by both the honest and dishonest. Suffice to say, however, that curbing customs fraud can and should be approached conceptually by applying the generally tried and proven fraud investigation techniques of deterrence, prevention, detection, examination and investigation. Obviously, within these generalities, the tools and techniques utilised must be tailored specifically for the realities and idiosyncrasies of the rapacious world of customs fraud.

Mr Walker's thunderous and consistent warnings should go a far way towards deterring past, present and future perpetrators of illicit custom acts. More ordered and professional public education/ relations efforts nonetheless would further enhance his efforts.

The prevention, detection and investigative aspects on the other hand may be where the nation can make its greatest successes. Despite the general caution expressed, specific prevention/detection techniques to address shell companies are well known by fraud examiners/forensic accountants. Acting in collaboration with auditors from other tax-collection departments, data-mining forensic techniques can be used to collect, assess, evaluate, ascertain symptoms/red flags and extrapolate trends to unearth amazing findings that can counter tax evaders, illegal employment scams, carousel fraud, cyber crimes and drug trafficking.

Astounding success

Even more astounding success is possible in counteracting trade abuses product piracy and other forms of smuggling by securing affordable but effective forensic- documentation/authentication-techniques utilising a plethora of tools. These may include carbon dating, radiometric dating, conventional X-rays, advanced X-ray diffraction, ultraviolet fluorence, and infrared analyses. Other authentications to be considered may include the use of atomic absorption spectrophotometry, dendrochronology, stable isotope analyses, thermoluminescence, wavelet decomposition, and craquelure.

The Customs Department's shopping list for instruments useful in enhancing its effectiveness should include gadgets such as illuminated magnifiers, spectral comparators, electrostatic detection devices, and projectinas.

Time will tell if the success associated with Mr Walker's stewardship at other government agencies is replicated in the treacherous customs arena. What is certain, however, is that his high-decibel admonitions to fraudsters must be augmented with state-of-the-art forensic tools and techniques in order to curb the type of rackets perpetrated by Jamaica's criminals.

Collin Greenland is a fraud examiner/forensic accountant.