25 July, 2017

Customs DG’s Collusion To Embezzle Hundreds Of Millions Tax Revenue Reported To President Sirisena

In a dramatic tern of events the Director General of Customs, Jagath Wijeweera’s collusion with certain Customs officers to misappropriate hundreds of millions of tax revenue has been reported to the President Maithripala Sirisena.

Director General of Customs, Jagath Wijeweera with the President Mahinda Rajapaksa

Director General of Customs, Jagath Wijeweera with the President Mahinda Rajapaksa

Writing to the President with overwhelming evidence of exploitation due to the lawlessness in the Customs Administration exposed by the Nagananda Kodituwakku, the former Head of the Customs Revenue Task Force, and now a public interest litigation lawyer.

In his detailed report to the President on these abuses, the lawyer Kodituwakku said that in number of previous occasions he had drawn DGC’s attention to the blatant abuses pursued by certain officers for unjust enrichment and in some cases with names of those officers with overwhelming evidence of their connivance with the ethanol smugglers.

However, in his report the lawyer Kodituwakku, states that DGC turned a blind eye condoning such actions, apparently in collusion with such officers, incurring colossal loss of tax revenue and therefore he was compelled to report these organised frauds to the Corruption Commission, seeking it to launch a proper investigation into the major tax revenue losses incurred by the Government due to the monumental failure on the part of the Customs chief, Jagath Wijeweera.

We publish below the letter in full;

Mr Maithripala Sirisena

The Hon’ President of the Republic of Sri Lanka

Presidential Secretariat

Colombo 01

 

20th April 2015

Hon’ Sir,

You have been given a clear mandate by the people to restore the Rule of Law in this country, which has been completely undermined by the Rajapakse administration.

This is a massive national task and you need time and men of integrity to meet this national objective. However, there are highly sensitive places like Sri Lanka Customs, which are integral to the economic lifeline of this country.

DGC’s incompetence and ignorance of Customs Law & Procedure

Currently, the Customs is headed by Mr Jagath Wijeweera, the Director General of Customs (DGC) who is not up to the required standards as the lawlessness prevails in each and every Directorate in the Department.

A person appointed to the office of the Director General of Customs is expected to be an honest, knowledgeable and a person with integrity. However, the conduct of Mr Jagath Wijeweera suggests that he lacks these prerequisites and apparently mixes up his priorities with other considerations.

  • Lack of awareness of the laid down law to protect the public funds

As set out in the Customs Ordinance, being the general superintendant of all matters relating to Customs, the primary role of the DGC and those employed in the Customs Department is to collect and protect the tax revenue for the government.

  • Supreme Court intervene to enforce Rule of Law

However, further to a dispute over recovery of tax revenue (evaded by those engaged in the import export trade) as penalties or forfeitures out of which 1/3 is claimed by the offices as cash rewards, the process was challenged before the Supreme Court (SC Appeal 49/2008 decided on 20-03-2009) and in this regard a clear and unambiguous ruling was given by the Supreme Court. According the said Court ruling in all cases where the tax revenue is evaded, underpaid or defrauded, the proper course of action shall be the recovery of the said tax so evaded as fiscal levies and NOT as a penalty or forfeitures and distributing 1/3 of such recoveries amongst the officers as cash rewards under section 153 of the Customs Ordinance. The Court held that ‘… the proper recourse should not to effect a seizure of goods and impose penalties but to recover additional amounts that may be claimed as duties…’

Yet what is observed since Mr Jagath Wijeweera appointed to the office of the DGC is completely the opposite. It is observed that he is directly responsible for inducing the dishonest officers to recover billions of rupees of defaulted tax as penalties, habitually permitting such officers to share 1/3 of such recoveries as ‘cash rewards’, despite this practice has been outlawed by the Supreme Court.

  • Permitting officers to abuse law to remand suspects for improper purposes

In the year 1988, the Customs law was amended by the govt, affording the DGC with sweeping powers to protect the tax revenue, which includes powers to enforce Customs law effectively against the tax evaders.

Under the said reforms a new provision of law was introduced to the Customs law (Section 127A, 127B and 127C), permitting the DGC to keep suspect persons accused for evasion of payment of tax revenue in the remand custody, in order to conduct a ‘proper investigation’ and to bring them to book. This law was so stringent as it provides no jurisdiction whatsoever to the Magistrate to consider a bail application even under exceptional circumstances.

Therefore, with a view to ensure that the new law is not abused by the officers and that they would comply with the ‘due process requirement’ enacted in the Article 13 (2) of the Constitution to protect the liberty of citizens, a new Departmental Order 252 of 02-10-1995 (a copy Marked X1 enclosed) was issued by then DGC, with the concurrence of the Attorney General.

The said Order states that ‘… under no circumstances a person arrested be detained beyond twenty-four hours. The officers should note that it is MANDATORY for the Director General of Customs to express an OPINION relating to the nature of the offence and the involvement of the persons so arrested for the purpose of Section 127A of the Ordinance. Therefore, an explicit report in the form of an application (‘B’ report) should be prepared and signed by the Director of the Division concerned, when seeking permission from the Magistrate, to keep any person in the remand custody (to conduct a proper investigation) …’

  • Encouraging defying of law (127A) for improper purposes

However, it is observed that in a large number of cases the DGC, Mr Jagath Wijeweera has completely ignored his statutory duty and permitted some dishonest officers to abuse the Section 127A to keep suspects in the remand custody for the purposes not permitted by law, such as to induce them to pay extortionate penalties under compulsion. It is noted that in some cases hundreds of millions of rupees have been recovered in this manner, 1/3 of which have been shared amongst the officers as cash rewards thereafter.

The last reported case in this regard is a revenue fraud inquiry (ICT/INV/14/2015) against Janatha Garments (Pvt) Ltd, conducted by Asst Director of Customs (ADC), Mr A Lankadeva in March 2015. In this case in response to summons served two accused persons have attended to customs ICT Directorate on 13-03-2015. Then on the directions of the ADC, Mr A Lankadeva, both the accused persons have been produced before the Magistrate’s Court (B/24054/6/15) and remanded for two weeks, alleging that their custody in remand was necessary ‘to conduct a proper investigation’. However, in this case, it is observed that the head of the investigations, Mr A Lankadeva has deliberately defied the Departmental Order 252 referred to above, and has failed to furnish a report (B Report) through the Director of the ICT to the Court, apparently the Director ICT was willing to furnish a false report to the Magistrate.

Whilst the two suspects were in the remand custody Mr A Lankadeva has negotiated a ‘deal’ with one of the suspect’s father, who was naturally being nervous about his son’s custody in remand, to pay 120 million rupees penalty/mitigated forfeiture. Thereafter, on 18-03-2015 Mr A Lankadeva has made his officers to seek permission from the Court to produce the two suspects before Customs from the remand, alleging that presence of suspects was required at Customs on 19-03-2015 ‘for the purpose of recording further evidence’. The Court has then permitted this request. This was a clear false representation made to the Court, as the suspects had been brought to customs from the remand custody not to record further statement but to attend a formal customs inquiry that is forbidden by law.

And on 19th March 2015 Mr A Lankadeva, who was leading the investigation, himself has conducted the formal customs inquiry against the suspects (whilst they were in the remand custody) and he had imposed and recovered a penalty of 60 million rupees in spot cash with a undertaking obtained from the suspect’s farther to pay another penalty of 60 million rupees in a month’s time. This whole process was absolutely unlawful, as he had failed to recover a single cent as tax revenue, which should have been recovered and credited to the revenue.

It is noted that the said formal inquiry was conducted the suspects have been returned to the remand custody and on the following day (20-03-2015) a manifestly false report has been filed in Court, notifying that ‘investigation into the matter has been completed therefore to release the suspects from the remand custody.’ (a copy marked X2 enclosed)

The whole process was unlawful – DGC condone wrongdoing

This is not the first time the law is blatantly abused in this manner for unjust enrichment by dishonest officers of Customs that has been openly condoned by the DGC. Many similar incidents including this and the names of the officers connived with the ethanol smugglers have been reported (a copy marked X3 enclosed)to the DGC, Mr Jagath Wijeweera, yet he has failed to initiate any action whatsoever against errant officers, evidently due to his collusion with such officers. In this backdrop this matter has also been reported to the Corruption Commission to launch a proper investigation (a copy marked X4 enclosed). The Customs officers displeased with the action taken to against them, has strictly warned the suspects whom I represented in Court, that they should not retain my services in future. I have duly reported this matter to the Chief Magistrate’s Court, on 02nd April 2015, as per the instructions of the suspects, who have been severely warned against retaining my legal representations (a copy marked X5 enclosed).

This report is furnished with a hope, that stern action would be taken against the DGC, Jagath Wijeweera, and the rest of the officials, who have been abusing the Customs Law to embezzle tax revenue.

Yours faithfully,

Nagananda Kodituwakku

Attorney-at-Law (Sri Lanka) & Solicitor (England & Wales)

Copies to:

1. Mr Ravi Karunanayake, Minster of Finance

2. Mr Jagath Wijeweera, DGC

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    This story reminds me a nice song. [Edited out]

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    I’m one of the close associates of Mr Kodituwakku, and I know in and out of all what he was doing in the public interest since he joined the public service in 1978. I am happy to say that I have done my part and supported him throughout in his fearless campaign against all sorts of wrongdoings, denying and deceiving the people of their legitimate rights.

    I have read some of the defamatory comments probably made by misguided young officers in the Customs, who knows probably nothing about the role Mr Kodituwakku played in the Customs since 1978, before he was finally sent to the UK under life threatening circumstances, by the then DGC Mr Luckshman Perera in 2001. The letter sent to the British High Commission by the DGC seeking him international protection in the UK, talks volumes of the role Mr Kodituwakku played in the Customs under extremely difficult circumstances where he had to face tremendous opposition from the fraudster elements within and outside the Department.
    There is no question that, like many other fellow citizens, I respect Mr Kodituwakku for his fearless uncompromising stance that he always maintained, doing what he believed right, according to his conscience. I know that he never changed that stance even after he was forced to leave Customs under terrible circumstances in 2001.

    From the beginning of his public life, he was an officer with an uncompromising character. This stance had cost him dearly as he had been forced to undergo sustained pattern of persecution, probably no other officer in the Customs in the known history had experienced.

    In 1983 he had the courage to catch Mr Manikdivela’s (then President JRJ’s Secretary) daughter at the departure lounge at the airport, and the Director of Customs Selvarathnam, in the act of attempt to smuggle out some contraband (silver bars). As a result of this action on the orders of the President, he was immediately removed from the airport duties and transferred to Export Directorate. This whole story was carried in the Island newspaper.

    in 1984, When he was serving in the Export Directorate, he detected one of the biggest organised revenue frauds (900 million rupees) committed with the collusion of then head of the Intelligence Directorate, who was later on shot dead at the BRC grounds by a rival smuggler who had invested in the smuggling trade with him. This is a case where billions of rupees worth of fabric imported for garments industry for export market had been sold in the market and then accounted exported with false information of exports produced for Customs purposes to claim export incentives and duty rebates. In this case there were number of Air Lines involved. The Pakistan Air Lines and the Swiss Air was in forefront with few other shipping lines involved. They had issued fictitious cargo manifests with nonexistent export shipments and they were caught red handed with false and authentic manifests and as a result the Swiss Air Line had to close down its operations in Colombo.
    The JRJ Govt did its best to suppress this fraud being duly dealt with. This made Mr Kodituwakku to seek assistance from, then a powerful cabinet minister, Ciril Mathew (who was not in good terms with the Finance Minister Ronnie De Mel) to ensure that the those who have violated the law brought to book including a large number of Officers who had falsely certified that they have physically examined and allowed the nonexistent the export shipments, which had never been taken place. Through a cabinet paper submitted Minister Mathew demanded the Govt to appoint a Special Presidential, which however never approved by the Cabinet.
    However, as a result of this exposure, Mr Kodituwakku was victimised for releasing the information about the fraud to Minister Mathew and he was transferred to the Customs Marine Directorate with special direction issued not to get involved in any smuggling operation.

    Immediately thereafter in 1986, as a result of a plot hatched by the smugglers with the direct involvement the Director Intelligence (who was later killed) he was framed in a bribery charge and remanded for 2 weeks.
    Since he had many enemies within and outside the department, the then Principal Collector of Customs Mr Dissanayake had to intervene and to speak to the Commissioner of Prison Mr Janns, to secure his life whilst in the remand Custody. And then to protect his own life he was transferred to a cell meant for convicted murderers in the death row in Welikada prison.

    At the High Court Bribery Trial then followed, Mr Kodituwakku himself conducted his own defence and DGC Mr P Weerasekara and the DST Mr Dissanayake was called in to give evidence at the Trial and finally in 1992 he was exonerated from the Bribery charges. However, that exoneration came only after 6 years of sustained persecution directed at him for no wrong done but purely for his refusal to compromise his integrity.

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    Somewhere in 80’s, the known reconvicted criminal, Gonawala Sunil, the man who was providing cover for the smugglers unloading contraband at Modara beach, threatened a Customs Preventive Officer with a death threat.

    I was one of his batch mates, I believe that the senior officers in Customs in the retirement age probably know the way this officer countered this threat.

    He, backed by some service personal, visited Gonawal Sunil at his own house at Gonawala, Kelaniya, and made a counter threat to Sunil in the very presence of his wife, that if any harm is inflicted on him consequences that Sunil’s family face would be very serious. Of course, both Sunil and his wife was killed later, probably by rival underworld elements.

    The way the young officers behave, probably misguided by sinister elements in the service, suggest that they are clueless about the true character of this officer.

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    Officers in the new generation, please learn from the recent history.

    Don’t blame Mr Kodituwakku for joining private practice, which he never wished. His loyalty was always with the Customs. But he was forced to shift his loyalty as the corrupt Customs Chief Jayathilake refused his offer, made in 2009 to return to active service.

    I have no doubt that Mr Kodituwakku did his best for Customs but the Customs Chiefs were corrupt to the core, they always saw him as a threat to their survival; did there best to ensure that doors were closed for him in the Customs.

    Mr Kodituwakku was forced to leave to the UK in Sep 2001, however the reason for his exit was not the result of his actions. He refused to carryout unlawful orders from Jayathilake to let Ranatunga off the hook, when caught involved in a tax-free car permit abuse together with Aravinda. Aravinda pleaded guilty but Ranatunga sought refuge from the President CBK.

    Despite this, he was directed to let Ranatunga scot-free, but Mr Kodituwakku stood firm and wanted to treat every person who violated the law equally. He refused to carryout illegal orders but confiscated the car imported by Ranatunga. As a result he was forced to leave the country under life threatening circumstances as the DGC betrayed Mr Kodituwakku and informed the President (CBK) that he declined to carry out given orders.
    When CBK and Minister Reggie Ranatunga was accused in Parliament for forcing Mr Kodituwakku to leave the Country, the Minister had the audacity to say that his son committed no wrong but Mr Kodituwakku demanded 2.5 million bribe from his son to release the car. And he was forced to leave the country as the Minster wanted to take action against him, a diabolical lie by a parliamentarian. All this information is freely available for you in the Parliamentary Hansard (9 pages) proceedings of 09th Oct 2001.

    The whole truth has been twisted. After Mr Kodituwakku left the country, the President, CBK, ordered the DGC to release the car confiscated by Mr Kodituwakku, on a recovery of mitigated penalty of one million rupees. Unfortunately, the people are completely kept in the dark about this high profile act of corruption, involving a DGC, the Minister and the President.

    I hope that the new generation in the Customs will blame their own administration for its failure of not getting the best out of this officer, who had never compromise his integrity or loyalty to the Customs Administration.

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    I do not think that it is the right thing to take the side of the culprits
    This ‘thing’ you called the voice of law in the country, twists each and every word ONLY to his betterment, not the country

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    Can someone who is concerned about the True Role of the Customs, as the collector and protector of the govt revenue, mention the names of two officers who had undergone terrible hardship for selflessly fighting corruption and lawlessness within the Customs. Arrest, remand, malicious prosecution, interdiction, dismissal – all that for not compromising integrity. You can go back to the known history to find answers.

    There maybe many pseudo greats, whose only concern is their private benifit. When sense a threat their greatness melts like a candle.

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    Its common knowledge that you cannot do anything at customs without extra payment. Its better to legalise extrapayment in some form This practice is as the oldest profession in the world

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    Watch this video from 11:30 mins

    http://www.sirisara.lk/watch?v=11811

    This is Mr Kodituwakku!
    What a guy!
    You are a true hero!

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    We have heard about “Three wheel” parties!
    This is very first time we saw a “BICYCLE Co.”

    “N KODITUWAKKU & Co.” —> BICYCLE COMPANY

    hah hah hah hah hah!!!

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    -Fact

    I was there at the MC
    This AAL got failed defending his client at the Magistrate’s Court!
    The client/s firmly opposed his appearance!

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    [Edited out]

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    The AAL, Mr N Kodituwakku, has filed a FR before the Supreme Court, challenging the Director General of Customs and the Attorney General!

    Does anyone know the outcome!

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      Yes, I know the outcome!

      The Supreme Court has dismissed the case without even granting ‘Leave to Proceed’.

      I was there at the Supreme Court today, Kodituwakku got failed defending his petition and the same was found baseless by the SC.

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      We heard that Customs even did not make a representation during the hearing.

      If the AAL cannot defend his own case what can be said about his clients cases.

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    [Edited out]

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