Hidden goods part of truck deal tax dodge

SPARE parts and a diplomat’s furniture which were hidden in buses imported from China were the latest ingredients of a N$2 million tax evasion operation to come to light in the trial of former Public Service Commissioner Teckla Lameck and two co-accused in the High Court in Windhoek on Friday.

A day after hearing evidence indicating that the value of trucks and buses imported for the Swapo-owned transport company Namib Contract Haulage had been substantially understated when customs duties and value-added tax to be paid on the consignment had to be calculated, Acting Judge Maphios Cheda was also told that vehicle parts and furniture were concealed in the imported buses, and not declared to the customs authorities.

The judge further heard testimony indicating that the payment of customs duties and VAT totalling more than N$2,2 million was evaded through the declaration of incorrect low prices for the imported trucks and buses to the customs authorities.

All of this evidence is actually irrelevant in the trial of Lameck (52), her business partner Kongo Mokaxwa (34), and Chinese national Yang Fan (42), because the 18 charges on which they stand accused do not include any count of tax evasion, senior counsel Gerson Hinda, who is leading their team of defence lawyers, argued when he raised an objection against the testimony on Friday.

Chief Prosecutor Danie Small, who is leading the prosecution’s team in the trial, argued that the evidence was indeed relevant, since the two fraud charges which the three accused face both involve the alleged change of invoices to inflate the price paid for goods bought from Chinese companies.

He also argued that the evidence about the calculation of the customs duties and VAT paid on the imported vehicles is relevant with regard to the methods allegedly used by the three accused in respect of the second fraud charge, which deals with a transaction in which the Ministry of Finance was allegedly defrauded when it paid an inflated price for security scanning equipment bought from a Chinese manufacturer for US$55,3 million (about N$477 million).

Acting Judge Cheda allowed Small to continue to present evidence on the calculation of the customs duties and VAT to the court.

The third State witness to testify in the trial, Leonard Shidute, told the court that the customs duties and VAT which Namib Contract Haulage (NCH) paid on eight tipper trucks and twelve buses which it imported from China in January 2007, and also on an additional four trucks imported by close corporations of Lameck and Mokaxwa, amounted to a total of just over N$1,039 million.

That amount was calculated on the basis of invoices on which the prices of the trucks and buses had been substantially understated, though.

If the prices which Lameck and Mokaxwa claim were the correct ones actually paid for the buses and trucks are used to calculate the customs duties and VAT, a total amount of N$3,27 million should have been paid to the Ministry of Finance, the court heard.

Shidute, who is a manager at the Walvis Bay company Woker Freight Services, which was the customs clearing agent used by NCH, confirmed that NCH paid the customs duties as calculated for the eight trucks and twelve buses imported by it, and also for the four trucks imported on the accounts of the close corporations of Lameck and Mokaxwa.

Mokaxwa was present at the Walvis Bay harbour when the lorries and buses were removed from the port on 29 January 2007, Shidute said.

Lameck and Mokaxwa are accused of defrauding NCH, where Mokaxwa was employed as financial manager and Lameck served as chairperson of the board of directors until March 2009, to the tune of US$144 000 through a truck purchase transaction between 16 December 2006 and 10 June 2009.

It is alleged that Lameck and Mokaxwa brought NCH under the false impression that it had to pay a price of US$54 000 (about N$383 523) for each of the eight trucks it was buying from a Chinese company, China FAW Group Import & Export, while the correct purchase price in fact was US$36 000 per truck.

By inflating the total cost of the trucks by an amount of US$144 000, Lameck and Mokaxwa managed to buy an additional four trucks for themselves, while those trucks were also paid for by NCH, the prosecution is alleging.

Lameck and Mokaxwa have claimed in a plea explanation given to the court that the final price that NCH paid for the lorries was US$54 000 per truck. That unit price included spare parts, they claim.

On the invoices used to calculate the customs duties and VAT due to the Ministry of Finance, though, the price of the trucks was stated as US$12 000 (N$85 227) per truck.

Hinda had only a few questions for Shidute in cross-examination.

These included questions in which he was asked if he was aware that spare parts, and also furniture belonging to the then Namibian ambassador in China, had been stuffed into the buses. Shidute said he was not aware of that.

There was no mention of spare parts or furniture on the forms used to declare the goods to the customs authorities, he also told the court. Had the customs authorities found the undeclared goods they would have confiscated it, he said.

The trial is due to continue today.