Customs fraud probe into textile sector

Calling the crunch “the most serious economic challenge in 80 years”, he said it had destroyed close to half a million jobs in the first six months of the year and threatened to permanently undermine the country's productive capacity and its ability to respond when the global economy turns positive.

Patel said the government, business and labour had started work on six of 12 agreed programmes to defend the economy, including increases in the prosecution of customs fraud and of anti-competitive behaviour.

Patel, who has previously been critical of the defence put up by the South African Revenue Service of embattled local industry, said yesterday: “Sars has now reported significant progress in respect of investigations and the confiscation of goods.”

Citing the example of the clothing and textile sector, in which he worked as a unionist before joining President Jacob Zuma's cabinet, he said:

• Sars planned to prosecute four companies for smuggling;
  
• South Africa's neighbours were being asked to help secure the prosecution of 15 companies for round tripping, which involves the export and re-import of goods to take advantage of incentives or rebates or to distort results;
  
• Fourteen companies are being investigated for the abuse of export incentives;
  
• Four companies face criminal prosecution for fraud involving import quotas designed to prevent the flooding of local markets with cheap imported clothes; and
  
• Eight companies are likely to be charged for making false declarations.

Patel said the Competition Commission had significantly accelerated the investigation of collusion to keep food prices high, with seven sectors currently in the spotlight. They include bread, milling, dairy products, poultry, fertiliser and fats and oils.

Source: Business Day

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