|
István Szarvas:
Corruption in Customs Administration
1. Introduction
Earlier, the corruption cases of VPOP had emerged in connection
with individual border crossings. Bribery meant a few thousand
Hungarian forints (HUF) and value of the smuggled goods hardly
went beyond several thousand HUFs. From the mid 1990s, new
trends emerged. From the free moneys accumulated in private
business, much more bribe could be paid as "counter service"
for which significant abuse could be requested. These corruption
cases were connected to foreign trade activities and damage
could exceed HUF 10-100 million per case.
Today, the act of corruption at customs offices include:
- performing customs clearance out of turn
- cursory customs clearing on purpose
- allowing entry or exit of goods beyond prescribed quantities
or customs-free quotas
- fictitious exit or entry
- exit or entry without registration.
In the recent past, there was legal procedure launched against
five employees of the Customs Office of GY. upon the well-founded
suspicion of committing bribery. The court heard sixteen accused
who were sentenced later. The perpetrators undertook fictitious
exit procedures for chocolate, used tyres and sports goods
in a value of approximately HUF 100 million. On 27 occasions
S.T. customs officer (accused of the first order) assisted
the exit procedures of goods with a total value of HUF 55
million. He received HUF 5.5 million as counter service, half
of which was distributed among the contributor parties.
2. Fictitious exit procedure for chocolate
consignments
In 1995, B.L.G. accused of the third order established his
company G Ltd., which traded with confectionery products.
As G Ltd. was making losses, B.L.G. dissolved the company.
In 1996 P.S. accused of the second order established CC Ltd.
upon the initiation and with the financial support of B.L.G.,
who became co-owner of the new company. Business relationships
of G Ltd. were kept and P.S. was appointed general director.
If the new company had been lucrative as a result of solid
business returns, B.L.G would also have shared the profits.
Between the 1st of October and 30th of November 1996, B.L.G.
brought six chocolate consignments to Hungary on behalf of
CC Ltd. The chocolate was worth HUF 15 million and the consignments
came from the Austrian C Chocolate Factory. In the Hungarian
customs clearance procedure the goods were indicated as transit
goods in the customs documents, Romania being the destination.
The consignments reached Szeged - the site of CC Ltd. - and
were not carried forward out of Hungary.
The reason for indicating the chocolate consignments as transit
on the customs declaration was the following: if goods come
to Hungary so that they leave Hungarian territories within
72 hours, no customs duty has to be paid. The customs office
performing the exit procedure certifies exit within 72 hours.
Computer registration validates the certification.
B.L.G. wanted to evade customs duty by paying bribe to the
customs officers for performing fictitious exit of the chocolate
consignments. B.L.G. had the idea of fictitious exit procedure
and he also provided the money necessary for paying the bribe
to the customs officers. Initiated by B.L.G., P.S. accused
of the second order looked for customs officers, who were
ready to perform the fictitious exit procedure for bribe.
In order to find such customs officers, P.S. met K.CS. accused
of the eleventh order, who was an official at the Customs
Office of SZ. K.CS. turned to his ex-colleague V.Z. accused
of the twelfth order. V.Z. and T.R. accused of the thirteenth
order had been acquaintances and they had worked for the customs
office before. At the time of committing the crime they were
not members of the customs office staff. From B.L.G. - through
the above described chain - customs documentation of the first
two consignments and the money for bribe reached S.T. accused
of the first order (customs officer at the Customs Office
of GY.)
P.S. handed the customs documentation of the remaining four
consignments and their respective moneys for paying the bribe
directly to V.Z., who sent them to S.T. through T.R. The sum
of bribe was 10% of the consignment value destined for fictitious
exit. The intermediating persons accused of the second, eleventh,
twelfth and thirteenth order knew that the transmitted money
was bribe for S.T. to neglect his official duties. S.T. added
clause to the received six Standard Customs Documents, thus
certified that the consignments worth of HUF 15 million left
the Hungarian territories. This was not true and S.T. performed
misconduct of his official duties.
CC Ltd. received the customs documents with clause from S.T.
through the mentioned chain. On paper, the chocolate entered
Hungary as transit consignments and went through a fictitious
exit procedure. Consequently, CC Ltd. - B.L.G. and P.S. in
particular - was exempted from paying the customs duty, which
was 100% of the consignment value. Accordingly, CC Ltd. sold
the imported chocolate in Hungary.
Following the fictitious exit procedure of the last consignment
as of the 13th of December 1996, the fictitious exit was discovered
at the Customs Office of GY. and the customs documents with
clause were seized from S.T. As a result, the customs documents
could not reach CC Ltd.
At the company site chocolate worth of HUF 1.2 million was
distrained in the investigation procedure and the customs
guard sold the remaining products in advance.
3. Fictitious exit procedure for sports
equipment
ZS.Á. accused of the fourth order had been member of I. Ltd.,
which was running body-building gyms in Szeged. In December
1996 ZS.Á. imported some sports equipment - worth HUF 1.2
million - indicated as transit on the customs documentation.
The customs documents labelled a Romanian company, S.F. Co.
as destination. Nonetheless, the goods did not leave Hungary,
they were transported to Szeged.
In order to evade customs duty, ZS.Á. turned to an acquaintance
- K.CS. accused of the eleventh order. K.CS. forwarded the
received customs document and HUF 100 thousand bribe to S.T.
(Customs Office of GY.) via V.Z. and T.R. accused of the twelfth
and thirteenth order respectively. K.CS., V.Z. and T.R. were
aware that the money handed over was bribe for the customs
officer to neglect his official duties.
S.T. provided clause for the Standard Customs Documents,
which certified that the goods had left Hungary, however,
the consignment was still within the borders. The customs
documents with clause did not reach ZS.Á., because the commander's
supervision at the Customs Office at GY. discovered the crime
and distrain was set upon the documents.
4. Fictitious exit procedure for sports
goods and used tyres
In 1995 K.GY. accused of the tenth order established his
company KK Ltd. in Germany, which traded with sports goods.
Between May and November 1996, K.GY. imported sports goods
and used tyres from Italy and Austria on 36 occasions so that
the customs documents indicated the consignments as transit.
Romanian firms were recorded as destination.
The consignments taken to Hungary did never reach Romania,
whereas on the customs documents valid exit procedure had
been indicated. The value of sports goods and used tyres undergone
fictitious exit procedure was HUF 83 million.
5. Fictitious exit of sports goods initiated
by K.GY.
ZS.P.P. accused of the seventh order, imported goods to Hungary
on 14 occasions on behalf of J Partnership managed by him.
The consignments were taken to Hungary upon the directions
of K.GY., and "transit" was indicated on the customs documents.
The goods' value was HUF 28 million, and K.GY. was aware that
the consignments were not to leave Hungary. On the customs
documents Romania was the destination, instead the goods arrived
in Budapest.
Out of the mentioned consignments, J.T. (accused of the eighth
order) took 10 to Hungary on behalf of J Partnership, worth
of HUF 18 million. Transit goods were recorded on the customs
documentation on these occasions as well, however, instead
of Romania, the goods reached Budapest.
ZS.P.P. and J.T. - accused of the seventh and eighth order
respectively - did know that the consignments were in fact
not for transit.
6. Fictitious exit of various goods initiated
by K.GY. (25th of May - 28th of August 1996)
There were other different goods imported for K.GY.; their
value went beyond HUF 83 million. K.GY. initiated fictitious
exit procedures in these cases as well.
There were two intermediating persons, who helped in the
fictitious exit for K.GY.: K.J. accused of the fifth order,
and B.Z. accused of the sixth order. K.J. forwarded the customs
documentation and the money intended for bribe to K.T. accused
of the fourteenth order and B.S. accused of the sixteenth
order, who were customs officers at the Customs Office of
GY.
With the intermediation of K.J., B.S. received Standard Customs
Documents from K.GY. on five occasions. B.S. was supposed
to perform the fictitious exit procedure. K.J. turned to K.T.
on four occasions with the same purpose of performing fictitious
exit on the customs documents.
Together with the customs documents, K.GY. also sent 10%
of the consignment value in cash via K.J. to K.T and B.S.
The target persons were customs officers in charge so that
the consignment was supposed to leave Hungary on paper only.
Between the 25th of May and 14th of August 1996 B.S. performed
five times the fictitious exit procedure in the interest of
K.GY. (the consignment value was HUF 13 million). He added
clause to the Standard Customs Documents and exit was registered
on computer despite that the consignment did not leave Hungarian
territories. The documents with clause were sent back to K.GY.
via K.J. As a result of the bribe between the 16th of June
and 28th of August 1996 K.T. performed four times the fictitious
exit procedure for K.GY. (the consignment value was HUF 8.6
million). He acted in a similar manner to B.S. Sending back
the documents also took place via K.J.
7. The story by S.J., accused of the first
order
In the investigation process, S.T. said that he first got
in touch with T.R. (accused of the thirteenth order). T.R.
offered HUF 50 thousand per fictitious exits performed on
paper. S.T. accepted the offer, and agreed to tell when he
had his office hours. T.R. handed over the documents of the
consignments in question at the residence of S.T. During his
office hours, S.T. registered the consignments: gave registration
number and recorded on computer. After working hours, T.R.
visited him on each occasion, and took the transport documents
registered, stamped including the photocopy of the seventh
copy of the Standard Customs Document.
S.J. did not change his confession throughout the suit, however,
he mentioned that in his knowledge the consignments targeted
Yugoslavia but could cross the border due to the embargo.
In his defence he told that he thought the chocolate would
leave Hungary, no matter if not via the Gyula checkpoint.
The witnesses T.F and K.J., who transported the chocolate,
supported the above mentioned unanimous and detailed full
confession. The witnesses' and S.T.'s confession corresponded
to the above described statement of facts. The witnesses unanimously
told that B.L.G. contracted them to transport the chocolate
from Vienna so that at the Hegyeshalom checkpoint they had
to indicate Romanian destination in the customs documents.
Drivers of the vehicles (K.B. and B.F.) confirmed that the
final destination of the chocolate was Romania, however, their
client stopped the consignments in Hungary and told them to
unload at a site located in Szeged.
K.J. told during the investigation process that the registration
numbers of the transport vehicles used were A…-473 and D…-284.
Page 51 of the investigation documents contain that the control
with the Romanian checkpoint showed: in the Romanian customs
registration there was no evidence of the Hungarian car numbered
D…-284 on the 13th of December, which was the date of exit
procedure undertaken in Hungary.
Distrain was set upon the customs documentation of the chocolate
consignments as well. These customs documents - on page 89-100,
115-126 and 134-154 of the investigation documents - justify
that the consignments did come from the Austrian C Chocolate
Factory and the company of destination was the Romanian C
Import-Export S.R.L. headquartered in D. The mentioned evidences
unambiguously and clearly proved that the crime was committed
as the accused people told.
When the statement of facts was outlined and confessions
of the accused persons were accepted, the court took the circumstance
into account that the accused made full confession not only
with respect to themselves, but their presentations - adjusted
to one another - provided a consistent story, the details
of which were supported by direct and indirect evidences.
As we mentioned already, in his defence S.T. told that he
thought the consignments targeted Yugoslavia and the embargo
was the reason why they could not reach their destination.
He understood that the consignments would leave Hungary -
even if not at Gyula - and though that the money was paid
for customs procedures out of turn.
The court considered this defence of S.T. accused of the
first order unrealistic, because the customs documents indicated
Romania as destination, so the target could not be Yugoslavia.
Moreover, there was no explanation why the consignments did
not leave the country at Gyula, if the chocolate was meant
for Yugoslavia through Romania.
8. Court decisions
In deciding the punishments, the court paid attention to
several factors of the crime.
S.T. accused of the first order had no criminal records and
made full confession. He was bringing up a child under legal
age, and he committed the crime due to - partly - reasonable
circumstance; to gather money for his brother's surgery. With
respect to smuggling, the court assessed as mitigating circumstance
that S.T. was only accesory. However, there were aggravating
circumstances as well: plurality of deeds - outstandingly
many and relatively serious cases, high value of the consignments,
continuous offence of smuggling and bribery, and the reproductive
nature of corruption type of cases. A further mitigating circumstance
was that the accused people were under criminal procedure
for a longer period of time out of their fault.
Beside the mentioned circumstances the court also took into
account the principles of punishment (Section 83 of the Criminal
Code), the purpose of punishment (Section 37) and the requirement
of internal proportions among the accused. The verdict reached
were in line with the aforehand mentioned considerations.
Taking into account 85 of the Criminal Code, the court inflicted
one punishment on every accused people for cumulation of crime.
In case of S.T. accused of the first order, the court stated
that he committed crime as coprincipal and accessory (Section
20-21 of the Criminal Code). Based on Section 12 of the Criminal
Code, S.T. realised crime perpetrated continuously. S.T. was
sentenced to imprisonment (Section 40) executable in prison
(Section 43). The court decided that parole may only take
place if the convict has served at least three fourth of his
punishment in prison (Section 47). S.T. was prohibited from
public affairs as secondary punishment.
The period of preliminary detention was included in the inflicted
imprisonment according to Section 99 of the Criminal Code.
9. Anticorruption measures of the Customs
and Finance Guard
In the past, there were many anticorruption measures taken
both at national and regional levels to prevent and explore
corruption cases.
After 1994, national headquarter commands determined the
duties for the different authorities in the fight against
corruption. There were measures to increase the frequency
of internal supervision, e.g. the concluded resolutions must
go through the inspection of the commander.
Meetings of commanders and leading customs officials are
frequent in order to discuss corruption phenomena and to outline
the possible anticorruption measures. Disciplinary offences
and procedures receive publicity within the Guard: the Employees'
Information brochure and the Finance Guard Newsletter are
the forums. (In brackets we should mention that 3-4 years
may elapse between exploration and the non-appealable court
decision. In such cases preventive force of the sanction substantially
weakens.)
The special public duties, the police-like operation, increased
responsibility of performing service on command and the international
nature of service at the borders imply higher moral discipline
of customs officers than of the staff in other organisations.
Therefore, beyond the scope of laws and regulations, increased
moral attitude must be expected as stipulated in the Code
of Ethics of the Customs and Finance Guard. The Code provides
general rules on the ethical requirements of chief officials,
acceptance of gifts, rules of incompetence, etc. In ethical
cases of Guard members, the Ethical Committee is in charge.
The Committee members represent the national headquarters
and every medium level organisation. Here we should mention
the internal commands that outline the order of accepting
donations for the organisation.
There are direct and indirect anticorruption measures with
technical content that play role in the customs procedure
of the customs authority and in the prevention of crime. Customs
registration - if we put it as one sentence from the point
of view of fighting corruption - is the information system
of built-in control and selection, which enables central control
of customs procedures. With the help of this programme, computer
administration of individual consignments was realised at
the customs organisations. The police and other organisations
could make use of this programme almost immediately after
its introduction. The technological system of customs and
excise procedures was given a complex regulation. The division
of duties and bounding them to persons enabled the identification
of work stages. The control measures built in the procedure
support decent and rightful act of the customs authority.
Further development possibilities of the field belong to the
scope of customs procedure based on risk analysis, for which
the database is now available. The detailed concept of such
procedures is under elaboration.
Besides security, monitors at border checkpoints help the
identification of entries and exits. Such systems also help
the inspection of the work done by customs officers. This
technology and the automatic vehicle recognition system at
the vehicular checkpoints for instance can also prevent fictitious
entries and exits, which classify as corruption.
Out of the organisational measures against corruption first
we should mention the establishment of the Guard's Central
Headquarter of Patrols in October 1996. This headquarter has
national licence: it supports the border customs offices,
performs control at public domains, inspects excise procedures.
Since the patrols are entitled to perform unexpected supervision
anywhere, there is no danger of abuse pertaining to personal
acquaintances (cronyism). The headquarter helps the exploration
of infringements and contributes to more efficient prevention.
Within VPOP's Department of Special Cases, a Security Department
was established. This department helps the undisturbed operation
of the Guard with respect to the external security and lawful
activity of the staff. The Security Department collects and
analyses information on the breach of duty pertaining to the
work of customs officers (e.g. bribery, abuse of authority,
especially neglectful performance of service, forgery of official
or private document, counterfeit of official stamps and documents,
customs procedure of goods with high excise tax content, etc.),
and cooperates with other organisations in order to prevent
corruption and bribery.
Within the Inspection Bureau of VPOP, the Internal Inspection
Department was established. This department performs investigations
separated from the system of professional control built-in
the customs procedures. The commander-in-chief has direct
control over this department, which organises, evaluates and
analyses the activity and operation of the Guard with respect
to law and internal regulations. The department cooperates
with external supervisory organisations in the fight against
corruption.
The so-called Risk Analyser Group in the Customs and Excise
Tax Department of VPOP provides efficient support for the
use of the customs database and the databases at the disposal
of the Guard. For instance, this group may decide the level
and scope of customs inspection (inspection item by item,
administrative control, random check etc.). Choosing the inspection
process is the result of scientific work compiled from different
panels. Therefore, those who perform inspection have no influence
on the form of inspection, which excludes subjective elements
from the selection process. The Risk Analyser Group substantially
improves the inspection's efficacy on risky areas and the
group also helps in the keeping of continuity for trading
activities. Risk analysis should become a tool, which provides
considerable help for customs officers in the selection of
subjects and contingents of both immediate and postponed inspections.
Beyond the above mentioned, risk analysis also helps the fight
against criminals who abuse the possibilities of electronic
commerce, which is a global challenge.
Here we should mention incorporation of the Asycuda information
programme module in the technological system of customs procedures.
According to this module, the inspection type prescribed by
predetermined factors cannot be avoided and evaded; forwarding
of the consignment will not take place unless the prescribed
inspection is performed.
Institution of the independent inspector will be founded
with attention to the efforts to establish an internal financial
control system (sections in Act XXXVIII of 1992, Government
Decrees 217/1998 and 13/1999 on the governmental, supervisory,
internal budgetary inspection of government organisations).
The independent inspector will be subordinated directly to
the national headquarter. The importance of this institution
is that it supports tasks of the national headquarter in lawful
asset handling and budget spending of the Guard without depending
on the screened financial and economic field.
As public procurement is one of the areas mostly threatened
by corruption, procurements of the Guard should be paid special
attention. The Public Procurement Group in VPOP's Legal and
Administrative Department was founded for this purpose to
ensure smooth and sound public procurement procedures.
Spreading organised crime and its detected relationship with
corruption cases explain why the Guard's Central Bureau of
Investigation was established. This office efficiently helps
the measures taken against especially dangerous infringements.
The elaboration of a legal background for the Central Bureau
of Investigation, agreement with the legislators, proposals,
and implementation of the required organisational changes
enjoy certain priority at the national headquarter of the
Guard.
(GKI Economic Research Co., 2000)
|
