ISLAMABAD: The Supreme Court on Saturday asked the federal government to initiate an inquiry into identifying officers of the Federal Board of Revenue (FBR) responsible for awarding a contract to NLC Construction Solutions (Pvt) Ltd (NCSPL) for tracking and monitoring of imported cargo in real time in the Afghanistan transit trade.

“The officers of the FBR decided to select an unqualified, inexperienced and highly conflicted party (NCSPL) to award the contract,” regretted Justice Qazi Faez Isa in a judgement he authored.

Justice Isa was heading a two-judge Supreme Court bench also consisting of Justice Aminuddin Khan that had taken up an appeal of the finance department against a Feb 12, 2019 Sindh High Court verdict that set aside the contract.

Justice Isa regretted that the FBR officers took it upon themselves to pursue the interests of NCSPL instead of the bureau and the people of Pakistan, when under the related laws the board was expected to uphold the values of integrity, professionalism, teamwork, courtesy, fairness, transparency and responsiveness.

Verdict notes ‘highly conflicted’ firm didn’t possess licence nor had experience in tracking, monitoring of cargo

The FBR contravened the law under which it was set up and in doing so, the interest of the people of Pakistan was disregarded, the judge observed. The Federal Board of Revenue Act 2007 envisages enhancing the capacity of the tax system and collecting due taxes through application of modern techniques as its primary duty, the judgement recalled.

“Unfortunately, the facts of the present case show that the FBR was uninterested in ensuring the integrity of the cargo and that applicable customs duties and taxes are not evaded.”

The tracking and monitoring mechanism of cargo through GPS, as envisaged in the Tracking and Monitoring of Cargo Rules (TMCR) 2012, constituted application of modern techniques, it said, regretting that had the FBR followed the TMCR and awarded the contract to an independent party, it would have prevented the cargo from being removed without the payment of applicable duties and taxes.

The TMCR provided a mechanism on how to track and monitor transit cargo, petroleum, oil and lubricants exported to Afghanistan, trans-shipment cargo and safe transportation of these cargoes throughout the journey from the port of entry to the port of exit or from one warehouse to another, on real-time basis and envisaged licensing of companies for tracking and monitoring of cargo.

The judgement also noted that the NCSPL was stated to be fully owned by the National Logistics Cell (NLC), which itself was owned by the federal government and operated by army personnel.

Similarly, the NCSPL website reveals that the company was a manufacturer of blocks, pavers and kerb stones and had no experience in the tracking and monitoring of cargo. But, the FBR awarded the contract to it, that too after the cut-off date for the submission of bids, the judgement stated.

During the hearing, Justice Isa also noted the Federal Tax Ombudsman report which in pejorative findings had highlighted how the containers earmarked for transmission to Afghanistan did not get there, or the cargo in them was pilfered in Pakistan and consequently billions in the customs duties and applicable taxes were lost.

The report had also mentioned that the available cross-checks within the FBR were found to be highly vulnerable to fraud, corrupt practices of different actors involved in the Afghan transit trade and that the estimated loss to the national exchequer during 2007-2010 based on 7,922 pilfered containers was worked out at Rs19 billion.

The verdict also explained that the relevant law does not absolve either NCSPL or NLC from the public procurement laws, besides the Public Procurement Rules (PPR) also do not permit a company, in this case the NCSPL, which participated in the bidding process without meeting the stipulated criteria in the expression of interest.

Similarly, the PPR also did not permit a company, which has no experience or requisite technical skills and ability to undertake the project when the objective of the procurement laws was to prevent wrongdoing and ensure transparency.

When it came to light that shipping containers were going astray, imported goods were being removed or pilfered from the containers and, as a consequence, the exchequer was being deprived of billions of applicable duties and taxes, the TMCR were enacted in exercise of powers conferred by Section 219 of the Customs Act 1969.

The TMCR stipulated that no company shall carry out tracking and monitoring of cargo unless it has obtained a licence under these rules, and prescribed the criteria for grant of a licence. They also mandated the monitoring and tracking, on a real-time basis, of containers and vehicles carrying the cargo and required the use of the latest technology to prevent the massive loss of revenue and theft.

The judgement noted that the NCSPL did not possess the requisite licence under the TMCR, nor was it compliant with its requirements. The company also had no experience in the tracking and monitoring of cargo. However, despite these blatant violations of the TMCR, the NCSPL was awarded the contract to undertake the project, it regretted.

The judgement also expected that the FBR would comply with the SHC order to initiate de novo tendering process in accordance with the law, and while declining the appeal also ordered to furnish the copies of the judgement to all FBR members and to the law secretary.

Published in Dawn, April 24th, 2022