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.

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

 

20^th 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 19^th 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 02^nd 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