PRESS STATEMENT, 5 September 2014, Kuala Lumpur – Transparency International-Malaysia (TI-M) acknowledges the success of the Malaysian Anti-Corruption Commission (MACC) in detaining twelve (12) Customs officers, including a senior State Director for alleged corrupt activities involving hundreds of millions of ringgit worth of contraband items. The twelve were allegedly part of a group of 22 people that were members of a largest syndicate smuggling cigarettes and alcohol from Port Klang’s duty free zone, for sale of contraband items in local and international markets.
As reported, the modus operandi was for the syndicate to import the items without going through the usual Customs inspection, resulting in duties not being paid and goods were then distributed to local sundry shops to be sold off at a fraction of the regular price. It is believed the unpaid duties for the smuggled items amounted to hundreds of millions of ringgit.
In this case, according to MACC’s deputy chief commissioner Datuk Seri Mohd Shukri Abdul, the enforcement officers detained had allegedly accepted bribes to “let through” the smuggled items without collecting Customs duties. MACC also seized money from those detained and the smuggled items from a warehouse in Port Klang.
TI-M calls for more combined raids by the MACC and other government enforcement bodies against those involved in the proliferation of the multi-million illegal trade especially where corruption facilities such as illegal activities. Raids on known and suspected outlets, apart from Port Klang’s duty free zone should be an ongoing process and not done randomly. Only when the importation of contraband stops, will the selling also stop. TI-M envisaged more arrests soon, given the magnitude of the smuggling efforts, this syndicate would obviously involve a bigger pool of collaborators.
Perhaps the time has come for the Customs Department to look at smuggling in a different perspective altogether, particularly in redesigning and reviewing new and innovative approaches to the old issues that keep recurring despite the best efforts of its officers. The Department should embark on pre-emptive measure to stem the flow of contraband from their source, make interception at land and sea boundary control points and strengthen intelligence collection would prove to be effective to ensure more encouraging enforcement results.
TI-M notes that the MACC’s success was due to one year of intelligence gathering at Port Klang’s duty free zone. That said, to uncover smuggling activities of such magnitude, would require the cooperation of multi-agencies. For example, in the United States polices smuggling through various federal agencies, including the U.S. Customs Service, the U.S. Border Patrol, the U.S. Coast Guard, and the drug enforcement administration (DEA). The Malaysian Marine Police just like the U.S. Coast Guard must have the suppression of smuggling as one of its chief activities. TI-Malaysia is heartened by the fact that the combined efforts from the MACC, PDRM, Bank Negara officers and members of CyberSecurity had made the arrests possible.
According to the 2013 Goldman Sachs Global Investment Research report following a study of 52 countries around the world in 2012, Malaysia ranked No.1 in the illegal cigarettes trade, compared to more developed countries such as Canada, Australia and the United Kingdom. The fact that Malaysia have the dubious honour of becoming the global leader in this trade, which is extremely concerning due to the several dangers posed by the illegal cigarettes trade to the country and society at large.
TI-M is alarmed at the alarming level of illegal cigarettes trade situation in Malaysia. It had increased from 20% in 2002 to 34.5% in 2012. Based on the current volume of illegal cigarettes trade for which taxes/duties are evaded, the Government is estimated to lose approximately RM2 billion of revenue in taxes annually. This if left unchecked could contribute to Government losing more revenue in the coming years.
Investigators have revealed that regional terrorist organisation such as Abu Sayyaf and Jemaah Islamiyah could be getting funding from local organised crime gangs and using Malaysia as a base to fund their activities. The Home Ministry and crime prevention groups have begun drawing links to these organisationsand the thriving illicit cigarette business. (Refer to NST http://www2.nst.com.my/nation/general/cigarettes-and-the-terrorist-link-font-color-red-exclusive-font-1.365536 )
From a legal perspective, the local legislation must impose harsher penalties and sanctions for the offense of smuggling prevalent in the country. It was a good start yesterday, but much more needs to be done. How does one explain the prevalent imitation goods in the country and the presence of fireworks during festivities when such fire crackers are banned in Malaysia?
If this country wants to stop smuggling and not just present a rhetorical obstacle on this big issues, it must take a more analytical approach to what motivates the smugglers and how they illegally move contrabands in such large volumes with such impunity.
Going after the contraband products at retail outlets and points of sale, as this country has been doing for years, is destined to be an endless chase. The syndicates will just regroup and continue operations, learning from their mistakes and accepting yesterday’s losses as the cost of doing business. Anyone serious about stopping the threats on the border and free trade zones, must dismantle the criminal organizations that carry the contraband by destroying their infrastructure and disabling their tools, including cutting off their supply of cash that make them so effective. Anything less will fail.
Dato’ Akhbar Satar
Transparency International Malaysia
Transparency International-Malaysia is an independent, non-governmental and non-partisan organisation committed to the fight against corruption.