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Customs
probes under-invoicing, e-card rackets
The coins are cleared by a shipping company located in Fort. Earlier a courier company cleared the goods and customers were charged around Rs 9,000 as duty and taxes. Customs investigators said they had questioned management officials of the shipping company and around 50 customers in the under-invoicing probe. Though ultimate buyers had paid upwards of Rs 80,000 per gold coin the shipping firm which cleared the goods had allegedly declared a lower amount which was in some cases equal to the gold value. Customs are supposed to recover the duty on the transaction value which is paid by the ultimate buyer and not the price of raw material. According to Sri Lankan law it is the responsibility of the importer to declare the correct value to customs. The value added tax of 15 percent, import duty and surcharge on import duty amounts to around 19-20 percent, which means government should have received at least Rs 15,000 per imported coin. Customs sleuths are also probing the use of so-called 'e-card' - a kind of prepaid device used to make purchases from abroad. The use of e-cards amounts to illegal foreign exchange dealing, officials said. Meanwhile, central Bank officials said the new draft Banking Act prohibits pyramid schemes and introduces tough new penalties for those promoting such schemes. The draft act makes it "an offence for any person to directly or indirectly initiate, offer, advertise, conduct, finance, manage, supervise or direct a scheme where benefits earned by participants in the scheme largely depend on increases in the number of participants in the scheme or in the size of their contributions to the scheme." This section is called 'prohibition of pyramid schemes.' The act, drafted with the help of the IMF, also provides for a penalty - a fine and / or imprisonment. The quantum of the fine and length of the jail term is yet to be specified. In the section it says, "any person who contravenes the provisions of the above section shall be guilty of an offence and shall on conviction after summary trial before a magistrate be liable to imprisonment of either description for a term not exceeding (----) or to a fine not exceeding or to both such imprisonment and fine and where such offence is committed knowingly and will fully or with reason to believe that it will cause damage or harm to any other person, to rigorous imprisonment for a term not less than (--) and not exceeding (---------) and to a fine of (---) or twice the aggregated amount in Sri Lankan rupees revealed or divulged to have been received from participants in the scheme.”
Letter to the editor These types of pyramiding which is shrewdly masked by various names such as multi-level marketing and chain referral is banned in Europe, in India as well as in other Asian countries because the governments of these countries treat pyramiding as a social evil similar to gambling and prostitution. It is high time that our legislators bring laws to ban such illegal schemes to save many innocent people from being cheated of their hard earned money. I am sure this will receive the attention of the finance minister before more people fall prey to them. Nishantha Abeysinghe Queries
about Gold Quest The entrance fee to the presentation amounted to Rs. 50 each and there were handbooks of company regulations amounting to Rs. 350 each. The seating arrangements were done for nearly 100 people in a large conference room but approximately 30 people took part. We could see that many were young males except for two elderly gentlemen. All the ladies were in their early to late twenties. The presentation started on a very friendly note with a female presenter interacting with the participants. Later it took on a serious note with the presenter elaborating on the legitimacy and the authenticity of the company. When a participant asked whether Gold Quest was a pyramid scheme, the presenter snubbed him and asked him where he got that idea. She asked him whether he knew what such a scheme is in the first place. Apologising for her tone she said that she would explain the scheme for the benefit of the others and not for his sake. She reiterated that one must only convince two people, who are extremely close relations or friends and who have the 'drive' and the 'desire' to succeed. She said that those two friends or relations have to have immense trust in the person introducing them and this is a serious business. Referring to herself, she said there is hardly any need for her to work. When a participant asked about the saturation levels and whether it is not an eventuality, she in turn asked whether slaughtering cows will saturate the beef production levels. The presenter declared that all remaining questions should be directed to the introducers of the participants. Jail
quest for forex fraudsters? Authorities have started gathering data on Gold Quest's Tracking Centre Owners (TCOs) who fraudulently used credit cards to send foreign exchange out of Sri Lanka, on behalf of those in their and others' 'downline'. If there are 25,000 customers as TCOs claim, and customers paid US $ 800-1,000 for each gold coin, up to an estimated $15 - 25 million may have gone out of the country in the last 2-3 years. Some of these payments were made by TCOs on behalf of third parties thereby violating exchange control regulations. "At the moment there is some talk of trying to revamp the law," said Arittha Wikremanayake, one of the country's top legal experts and a former director-general of the Securities and Exchange Commission. "But the fact is the exchange control act still exists in the same form even as of today, so remitting money outside without the proper approvals still remains an offence." For minor offences, exchange fraudsters face an 18-month jail sentence after summary trial before a magistrate and a small fine. "If the prosecution is before high court, imprisonment is up to five years," said Wikremanayake. "The sanctions are fairly serious. The law still remains on the books, and it has been applied to various people at various times." Once authorities finish investigations, bankers, doctors and port officials and even some police and military personnel are among those who may face prosecution. Banks with credit card units say they are already collecting information to submit to the authorities. Counting among the biggest foreign exchange offenders are some team leaders who actively campaigned to persuade many others to join the Gold Quest's controversial referral marketing plan by selling foreign exchange to them via their credit cards. Gold Quest's money making plan was promoted mostly by Sri Lankans themselves, rather than company officials, with those with a standing in society taking the lead. After banning the scheme in Nepal in 2003, the country's Department of Revenue Investigation (DRI) filed suit against GoldQuest local agents, demanding a fine of Nepali Rs 1.66 billion, the Kathmandu Post reported. They were charged with violating the Foreign Currency Regulation Act by fraudulently taking currency away from Nepal through non-banking sources, the newspaper said. |
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