The Sunday Leader

Corruption ‘Steals’ Rs. 10 Billion Annually From RMV

By Nirmala Kannangara

Following last week’s expose on rampant frauds that takes place at the Registrar of Motor Vehicles (RMV), we are in receipt of more information how the country is losing billions of rupees in the form of taxes as a result of illegal vehicle registrations at the RMV.

Commissioner General RMV has come under severe criticism by a section of his own staff for ignoring Auditor General (AG) Department’s investigations on various frauds that takes place and for not taking any action against any individual who has a hand to these malpractices.

According to the sources, RMV is called ‘Little Japan’ as the officers can ‘thrive’ rapidly by ‘quick earning’ from illegal transactions.

Meanwhile, sources from the Customs Department said how the RMV has deprived Sri Lanka Customs of its revenue from vehicle importation when vehicles that have not been paid the taxes are registered.

“As there are ‘ways and means’ to get illegal vehicles registered at the RMV, people are prone to import vehicles and evade customs duty. Unlike other goods where the importer can evade Customs duty, if the RMV strictly abides by its regulations and does not leave any room to register any illegal vehicle, the importers have no other option but to pay Customs duty and make their vehicles legal to get the registration. Since the RMV is a den of corruption and registers these illegal vehicles, the annual loss to the Customs Department is around Rs.10 billion,” sources said.

Referring to a government audit investigation, RMV sources who wished to remain anonymous explained how the RMV is blocking government revenue by registering illegally imported vehicles or the vehicles assembled in Sri Lanka. “Either these vehicles have been imported without paying taxes or assembled as brand new, using imported used vehicle spare parts. It is illegal to register such vehicles by the RMV as it deprives revenue to the government,” sources said.

According to the sources, it has come to light how a Hummer vehicle, which cost around Rs.30 to Rs.40 million, has been registered by the RMV in 2012, although the Customs Department says this vehicle details do not appear in their system which means it has been imported illegally – without paying Customs duty.

“The Customs duty of a Hummer is around Rs.20 million. There are not more than ten Hummer brand vehicles in the country used by extremely rich people. By registering this illegal vehicle the country has lost Rs.20 million tax,” sources claimed.

According to the sources, in an audit query dated December 31, 2012 (Ref No: FB/ DMT/ DE/ 2012/ 18), the AG’s Department has brought the fraud to the notice of the Commissioner General but surprisingly the RMV is yet to start an investigation to find out who were behind the fraud and who is the owner of the vehicle and take action against the vehicle owner as well.

“There was ample time for the Commissioner General to find out who were behind this fraud and take immediate action against the perpetrators as per the Establishment Code guidelines. The reason why the Commissioner General does not take action would be that the owner of this Hummer could be a powerful person in the government,” sources added.

 

Continuous illegal vehicle registration by the RMV

The sources meanwhile accused the Finance Ministry Secretary for not taking any action against these frauds as the Customs Department, which comes under the Finance Ministry, is losing its revenue because of the continuous illegal vehicle registration by the RMV.

“The AG’s Department has informed of this racket to the Secretaries to the Finance Ministry and Transport Ministry and to the Audit Superintendent of the Sri Lanka Customs. However, no action has been taken against the RMV still, which indicates that they do not have objection to this fraud. Hence we assume the vehicle owners of these illegal vehicles are connected to the government,” sources alleged.

Meanwhile, the Customs Department confirmed to The Sunday Leader that the illegal vehicle registration by the RMV has prevented Sri Lanka Customs the opportunity to earn more revenue in the form of taxes.

“Most of the time, those who import food and textiles evade paying Customs duty. It is the same with the vehicle importers as well. However, no one can evade paying taxes when importing vehicles if the RMV does not register the illegal vehicles. Once other goods are cleared from the Customs without paying duties, there is no way we can trace the offenders. But in the case of vehicle importers or spare part importers, they will never be able to get the vehicles imported illegally, run on the roads, if they are not registered. If the RMV is stern and does not allow such vehicles to get registered then the vehicle or spare part importers are compelled to pay the taxes and go through the legal process to get the vehicles registered,” Customs sources said.

According to the sources, out of the Customs annual revenue, 30% is earned through vehicle taxes.

“We cannot calculate how much the revenue loss is, because of these illegal registrations. However, we cannot put the entire blame on the RMV but the Customs Department too has to take responsibility as they too have failed to find out who these vehicle owners are, and, take the necessary action against them as these details have been unearthed by the AG’s department,” the sources added.

 

Customs Department loses over 150 million

The RMV sources meanwhile said that there are many methods to register these illegally imported and assembled super luxury vehicles and added that this system is continuing further through the computer system.

“Although the auditors have found out that these frauds are taking place from 2004 and 2005, and have requested the higher authorities to take action to stop this,  RMV has not taken any action against the offenders. Instead they have allowed them to carry out more frauds,” he said.

According to him, five Toyota brand cars – Toyota Allion, Toyota Premio and Toyota Corolla Axio have been registered systematically by the RMV under old motor cycle registration numbers which has cost the Customs Department over Rs. 150 million.

“Allion and Premio cars are registered under NZT chassis and Axio cars under NZE. When checked the Dustoms declarations from their computer systems it was revealed that five motor cycles have been imported but the RMV has changed these five Customs declarations and has registered five Toyota cars instead. According to Customs declaration numbers CMBVI 2919, CMBI 2921, CMBI 3721, CMBI 5063 and CMBI 20370 dated August 6, 2009, August 7, 2009, September 17, 2009, December 2, 2009 and December 1, 2008 respectively shows all these vehicles are brand new imported motorcycles but the RMV data shows they are imported used Toyota petrol cars. This shows that the RMV has registered these five cars that have not paid Customs duty to the amount of Rs.150 million,” sources alleged.

The sources also said how the RMV had changed manufacturing years of vehicles at the time of the registration.

“The RMV officials charge Rs.50,000 to Rs.100,000 to change manufacturing years of vehicles at the time of registration. From the files given to the AGs Department investigative officers, they have unearthed 26 cases where manufacturing years had been changed. When checked, the chassis numbers of three vehicles manufactured in 2007 had been changed to 2009, two vehicles manufactured in 2009 and 2011 had been changed to 2011 and 2012 respectively, while another 21 vehicles manufactured in 2012 had been changed to 2013. The auditors have unearthed more than 200 other vehicles where the manufacturing years had been changed. The RMV takes money and changes these data to mislead future prospective buyers,” sources alleged.

 

RMV makes ‘detours’ by not registering vehicles

Meanwhile, the sources further added how the RMV has made detours by not registering vehicles under certain numbers between KV 7001 and KW 0658 to enable the Department to fill the numbers with illegal vehicles.

“The auditors have found out that there were blank spaces in front of 24 numbers between KV 7001 and KW 0658. When the vehicles are registered, the data is fed to the computers. It is questionable as to how the RMV has done detours when registering vehicles. This too is part of the racket that we were talking about,” he said.

According to the sources, when new registration forms are given, the RMV has to compare vehicle importation details with the Customs Department data in the system.

‘If the applicant has provided accurate details, it tallies with the Customs Department online data. If the details are accurate, the RMV can register the vehicle. But if the applicant has not provided the accurate details but fraudulent documents, RMV cannot register those vehicles and has to take quick action to apprehend the applicant for providing fraudulent documents.

“Why have the RMV officers failed to carry out their duties and what action the Commissioner General has taken against them as per the Establishment Code.” The sources further said how vehicle importers import vans under special purposes where the Customs duty is less, while the Customs duty for passenger vans are ranged around Rs.2.5 million.

“The vans imported for special purposes have only the driving seat and as they are imported for special purposes, the tax is around Rs. 200,000 to Rs. 300,000. There again this has now become a racket as the vehicles that have been imported for special purposes are converted to passenger vans and are registered. The RMV knows the racket and they get a commission and register them as passenger vans,” he alleged.

He further said how the RMV vehicle registration section gives priority to agents of vehicle dealers when registering their vehicles to get commissions.

“Instead of getting their own vehicles registered by the buyers, they ask the vehicle dealers to get their vehicles registered. The vehicle dealers in return give it to an agent and pay money for each registration. The RMV gives priority to the documents these agents bring and register those vehicles before the individual cases as they get commissions from the agents,” sources said.

Meanwhile, the sources accused the RMV officers of having misplaced all the files that carry fraudulent documents.

“When the government auditors wanted certain files to check, none of them were available as they had gone missing ‘secretly’. Had they been given all the files, they would have unearthed more frauds,” he said.

4 Comments for “Corruption ‘Steals’ Rs. 10 Billion Annually From RMV”

  1. SAM

    Pot calling kettle black, Customs is the most corrupt department with RMV and Police coming in a very close second. I write with authority and evidence, the system is now established. Case in question a container of bicycles released to a Government Minister recently.

  2. patriot

    What shocking reports we continue to hear of the frauds taking place in different Govt. Departments again and again. The President and Cabinet seem to be unconcerned and the crooks continue regardless.
    Obviously,the spoils may be shared. After making hay while the sun shines, it may be time for the crooks to retire or resign and settle down abroad taking with them what they have amassed. No meaning in probes or investigations after that.
    What a state of affairs in this ‘Miracle of Asia’!

  3. Avb

    AKD explained how God father changed the import duty when his son imported 19 prestigious sports cars. which caused losses of Rs.300 millions to the public. How can we expect management of customs to be genuine public servants?

  4. CHIMPA

    It is the minister, head of Dept. & other relevant officers dealing with this subject
    who are responsible for this. It may be all are not involved but they are responsible. How this Country develop when this type of things happening.
    Ultimately who is responsible?

Comments are closed

Photo Gallery

Log in | Designed by Gabfire themes