Customs fraud accused wait for bail ruling

A WALVIS Bay-based businessman and two Chinese shopkeepers arrested in connection with an alleged customs duties fraud scam involving a staggering amount of N$3,5 billion are due to hear at the start of next week whether they will be granted bail.

Magistrate Alweendo Venatius reserved his ruling in the bail application of Laurentius Julius (40), Tao Huizhong (47) and Huang Jinrong (31) after hearing closing arguments on the matter in the Windhoek Magistrate’s Court on Tuesday. He said he would deliver the ruling on Monday next week.

Julius, who is the owner of two Walvis Bay-based companies, Extreme Customs Clearing Services (XCCS) and Organise Freight Services, which are involved in the customs clearing business, and Chinese citizens Tao and Huang, who run shops at Oshikango, are charged with counts of fraud and money laundering. They have been kept in police custody since their arrest four weeks ago.

Massive amounts of money in the form of foreign currency that has flowed out of Namibia as a result of payments made to companies in China have been mentioned in testimony heard during the bail proceedings before magistrate Venatius.

A chartered accountant involved in an investigation of foreign currency transactions that was launched by the Bank of Namibia early last year has told the court that the equivalent of about N$3,5 billion was remitted offshore through foreign currency accounts of XCCS and Organise Freight Services from January 2013 to February 2016, in more than 1 600 transactions on behalf of more than 100 companies.

The court was told that the payments were made on the basis of invoices for goods supposedly imported into Namibia at a cost of US$313 million. However, the total value for the imported goods reflected on invoices submitted to the customs authorities was only about US$13 million, and about US$298 million out of the total payment of US$313 million was made up by the costs of ancillary services like freight expenses for the imports – something that did not make commercial sense, the court heard.

The magistrate also heard that the difference between the value of the imported goods and the payments made to the foreign suppliers of the goods could be an indication that the customs process had been abused through the underdeclaration of the value of goods imported into Namibia, or of money laundering, or that payments made to exporters in China had been inflated in order to send foreign currency out of Namibia without having to comply with the country’s foreign exchange regulations.

The same witness also testified it was found that foreign currency cash deposits totalling more than US$600 million had been made into the bank accounts of Julius’ companies from 2008 to 2016.

The charges against Julius, Tao and Huang are mainly based on misrepresentations made to the customs authorities and Nedbank Namibia, through which the foreign currency payments in question were made, public prosecutor Rowan van Wyk said during his address to the court on Tuesday. He argued that the vast underdeclaration of the value of goods imported into Namibia by close corporations represented by Tao and Huang amounted to fraud.

The bail application of the three accused should be dismissed, Van Wyk argued.

Defence lawyer Sisa Namandje, representing Tao and Huang, argued that his clients were arrested without proper grounds, and were unlawfully detained when they were not promptly informed of the charges on which they were arrested.

He charged that the state has a weak case against the accused, and its case is bound to collapse.

Namandje and fellow defence counsel Louis Botes, representing Julius, both argued it was fatal to the state’s case that a schedule setting out the rates at which customs duties have to be paid on goods imported into Namibia has not been published in the Government Gazette.

Botes also argued there was a complete absence of evidence to show Julius was guilty on any of the charges he is facing.

Tao and Huang have offered to pay bail of N$100 000 and N$50 000 respectively. Julius, who told the court his businesses employ more than 130 people and have an annual turnover in the region of N$160 million, should be granted bail in an amount of N$1,5 million, Botes suggested.