Some people are always ready to use their ingenuity to devise schemes to embezzle taxpayers’ money through fraudulent means. The cash incentive introduced to attract more remittances through formal channels and boost export earnings is a good example. No one knows for sure how widespread these abuses are. There are indications that the amount of money scammed must be substantial.
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The government is reported to have allocated 73.50 billion taka to be disbursed as cash incentives to exporters at variable rates in FY2020-21 (FY20-21). Exporters of agricultural products receive the benefit at an attractive rate of 20 percent. The incidence of counterfeiting appears to be high in this particular area.
According to a report published in a major vernacular daily late last week, at least 18 companies misappropriated cash incentives showing 800 export shipments over the past five years. Only one company escaped with 100 million taka against the export of agricultural products. Investigations revealed that the company in question did not export any items. Further investigations are underway to detect the actual amount of cash incentive misappropriation.
There have been many stories about the abuse of bonded warehouses and cash incentives. But the abuse has continued unabated for years. Customs often talk about detecting one or two of these cases, but the actions against the culprits are not known.
It remains a mystery as to how the scammers properly handle all their paperwork, receive cash incentives, and blend in with the air. In most cases, investigators discover that the addresses given in the export documents are false.
No exporter is supposed to benefit from incentives until the export proceeds reach the country. These bogus exporters would have their men overseas who issue export orders and send money against them. Everything is done in a planned way to receive the cash incentive. Interestingly, many shipments do not even reach the depots intended for the storage of export goods. However, the exporters concerned receive export revenues and cash incentives. Customs and relevant agencies have their explanations, but most are deemed untenable. There must be the complicity of a party of clearing and forwarding agents and unscrupulous customs officials in such fraud.
An exporter of a certain product must become a member of the relevant trade body, and such identity is used in export documents. Thus, it is incumbent on the professional bodies to know the authenticity of the exporter(s) concerned before giving them their membership. But demanding such vigilance from trade bodies seems meaningless, since the top brass of one or two of these trade bodies would be implicated in counterfeiting. The outgoing president of the Fresh Fruits, Vegetables and Allied Products Exporters Association of Bangladesh would be one such person. The irony is that the same person was recently awarded the ‘Commercial Significance Card’ for their ‘significant contribution to export trade’.
It is suspected that some elements are also involved in taking 2.5 cash incentives against incoming remittances. Taking funds from outside the country these days is not a big deal. These funds are again sent back to the country using the CF accounts of expatriate Bangladeshis. It does not take too long to secure cash benefits against fake incoming remittances.
The illegal transfer of huge funds abroad has become a major problem for the country. Most of these funds would be taken out of the country through commercial invoicing. Here, companies can hardly deny their involvement. At least the scammers are using the trade routes for the evil purpose of laundering money. Money launderers must open letters of credit (LC) for the export or import of goods. So they must have the identity of businessmen. Professional associations of all kinds provide this. Here, business organizations must exercise caution when accepting people as their members. There should be a review process.
The cash incentive is part of the facilities offered to exporters. The state has many other costs to “stimulate” exports. The government provides tax benefits of various kinds, including tax and duty exemptions. Taken together, cash incentives and other tax benefits are huge in the context of affordability.
It is undeniable that the country’s export earnings have recorded substantial growth. But the government needs to see if the incentives offered over the years have paid off in terms of export earnings growth. India recently decided to revise the incentives, as the growth in export earnings has not reached the desired level.
The government should not allow leakage in export incentives in various forms. The culprits involved in the embezzlement of government funds cannot continue their diabolical missions without the connivance of the heads of the agencies concerned. Only close monitoring of the activities of these agencies could stop the plunder of public funds.