Who is Afraid of Cargo Tracking Note?

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Comptroller General of the Nigeria Customs Service (NCS), Col. Hameed Ali (rtd.)

Francis Ugwoke
The ugly scenario in the nation’s maritime industry leaves much to be desired. To some extent, it would appear like a survival of the fittest. The fraudulent practices involve all layers of shipping, from the point of purchases and loading to the port of destination. If you are in the system, it cuts across board, from the providers of shipping services to the consumers.

The culprits are the shipping lines/ agents, shippers (importers) – their agents, unscrupulous customs officers and others. The target has always been to maximize profit, and the only way to achieve this is through under-declaration, concealment and under-invoicing. Many stakeholders had said that government can generate as much as N7 trillion annually from the maritime industry if the potentials of the sector are developed and the loopholes through which revenue is lost closed. This cannot be far from the truth, but achieving this remains a big task with all sorts of fraud in the ports.
Previous administrations had made efforts by introducing a number of reforms without success.

The current scenario in the nation’s ports is that there is more corruption in the system than ever before. It does not matter that the current Comptroller-General of the Nigeria Customs Service (NCS), Rtd Col Hammed Ali had threatened to jail and sack officers found to be involved in fraudulent practices. It does not also matter that the Customs is smiling to the banks, meeting its revenue targets, surpassing that of last year. Surprisingly, despite surpassing its targets, the Customs seized goods which Duty Paid Value (DPV) was put at close to N100billion.

A visit to the Federal Operations Unit (FOU) Ikeja is an eye-saw of the fraud in the system where hundreds of billions of goods have been seized and detained. Interestingly, importers and agents who have long legs can still get them released, perhaps after some level of settlement. The question is how much revenue did the Service generate as at six years ago when the value of Naira was N160 per dollar. It was about a N1trillion.

But that is by the way, the worry now is that some government agencies, particularly some customs officers are not seen as ready to change from being collaborators in import duty fraud. Agencies of government, including the Police, SON, NAFDAC, among others are not left out. The result is that it is the national economy that is losing. Few weeks ago, an Assistant Inspector General, (AIG) Marine Command, Muhammad Uba Kura, who is very conversant with what happens at the ports was full of lamentation. Kura opined that the problem requires a strong technology as is the case in advanced countries and most African states. He recommended the introduction of Cargo Tracking Note (CTN) which according to him has the potential to address issues on criminal activities in the nation’s ports. He was point blank that CTN was capable of curbing activities of those whose intention was to commit criminal acts in many ways.

How Revenue is Lost at Ports
Once an importer orders his goods, he simply waits earnestly to take delivery at the port of destination. Except in very few cases, most imports often have issues at the point of clearance. Such issues include under-declaration, concealment and under-invoicing. This problem is usually detected by customs officers and other security agencies during examination. What most importers do is to settle the matter with the agents by offering as much as required to be free. The main settlement goes to some officers in customs investigation units (CIUs) who raise Demand/Debit Notes (DN) for the importers after negotiation.

The importer will still have to settle some other customs officers such as the operatives of the Federal Operations Unit (FOUs) or Comptroller General’s Strike Force either within the ports or on the road. If he fails to do this, his consignment will be seized. So many consignments running into hundreds of billions of Naira investments belonging to importers who probably were not properly advised on what to do had been lost as a result. Billions of Naira revenue is equally lost on regular basis due to the arrangement between some importers and customs officers.

Perhaps, worse still is the fact that even contraband could be cleared at the ports with the right connection and cash. This could be part of the reason for the proliferation of arms and ammunition in many parts of the country and now used freely by either kidnappers, terrorists and other bandits. One other way in which importers try to cheat government is also through under-invoicing. In this case, if the value of a particular consignment is N20m for instance, a fraudulent importer can simply get his supplier to issue receipt for N5million since the duty payable is based on the value of the imports. He does this through the connivance of government agencies, needless to say the Customs.

How ship-owners defraud government
The charges paid to the authorities by ships calling at the nation’s seaports depend on the gross tonnage (GT) of vessels. But most times, this is manipulated by the shipowners and their agents to pay less. The manipulation is done in connivance with personnel of Nigerian authorities who receive their settlement in hard currencies.

How CTN Can Check Fraud at Ports
Corrupt practices in the ports have over the years defied solution since many are beneficiaries, including those who claim to be crying out loud. Recently, the National Association of Government Approved Freight Forwarders (NAGAFF) apparently angered by the level of corruption in the ports moved to address the issue once again. It was not the first time its leaders complained about corruption and high level fraud at the ports. The association inaugurated a compliance team to check corruption in the ports. Vice President of the association, Western Zone, Tanko Ibrahim said the association wants to partner with the federal government to ensure that corrupt practices in the ports are stamped out.

He told members at a meeting, “We would start from our importers, every importer should do 100 per cent declaration. Secondly, we the freight forwarders, it is our duty to ensure that all our cargo has been examined by the Customs Service. We are tired of being slaves to government agencies. Today, shipping companies and terminal operators, we are just like their slaves, we are tired of this. We have agreed now and we are ready to comply”. Just as NAGAFF was about carrying out its compliance at the ports, the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN) halted the move, saying it should wait for now. The freight forwarding regulatory agency instead announced its own measures to reform the freight forwarding industry for improved trade facilitation.

Chairman of the Council, Alhaji Abubakar Tsanni, directed NAGAFF to hold on with the activities of its Compliance Committee, while promising to set standard for best of practices to foster industry discipline and harmony. But observers believe that while the efforts of NAGAFF and CRFFN may be good intentions, it would still not stamp out fraudulent cases at the ports. This is considering that what happens in the ports is a clear case of connivance between the importers, agents and customs officers, among others in the system. The saying has always been that when you fight corruption, it will in turn fight you back. Just recently, a member of NAGAFF, Mr Segun Musa, claimed that CTN plays no significant role in shipping other than to add to cost.

This position however did not take into consideration the many benefits of the technology. His argument is that with the presence of such agencies like the police, Department for State Security (DSS), NAFDAC, SON and others in the ports, there will be no need for CTN. Musa appeared to have distanced himself from the lamentations of his fellow freight forwarders, even his own association, importers and other Nigerians over fraudulent practices at the ports in the presence of the agencies he mentioned.

Key industry stakeholders believe that the deployment of CTN technology as pointed out by the Police AIG remains imperative. CTN which is also referred to Bordereau de Suivi Cargaison (BSC) or Loading Certificate in global ports is a compendium of information on the cargo being conveyed by any ship. In some advanced countries, CTN is requested for clearance of goods with the number provided to the ocean carrier at the port of loading for an addition in the manifest and Bill of Lading. In these countries any cargo shipment must be accompanied with CTN before departure by an approved agent.

It is used in more than 20 countries, and became popular after the September 11, 2001 terrorist attack in the USA. For advanced countries, it is needed for safety and security and in accordance with the International Ship and Port Facility Security (ISPS)Code. Among the countries using CTN include European Union, Asia, the Middle East and the United States. African countries, including Angola, Benin Republic, Togo, Senegal, Niger, Burkina Faso, Camaeroun are not left out. Others are Ghana, Liberia, Sierra Leone, Republic of Chad, Guinea Conakry, Libya, Central African Republic, Congo, Burundi, Equitorial Guinea, Gabon, Guinea Bissau.

Nigeria had in 2010 introduced CTN through the Nigerian Ports Authority (NPA) but this was later suspended by the government as stakeholders complained of lack of public enlightenment and consultations. Government later directed the Nigerian Shippers Council (NSC) to handle the project leading to its reintroduction in 2015 but was later suspended again owing to unresolved technical hitches. Since then, the ports economic regulator in synergy with other agencies has been making frantic efforts and industry consultations to ensure that once given a go ahead, CTN will come back in grand style to address issues of security, safety and fraudulent practices in respect of goods coming into Nigeria.

Target of CTN
A maritime lawyer, technocrat and Director of Education and Research in the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN), Mr. Alban Igwe said CTN remains the best answer to issues of anomalies and security challenges in the country. Igwe explained that this was because CTN will improve the security and safety of supply chain as it will profile cargoes being imported into the country. “It will help us know the origin and destination of cargoes and help us know our enemies. Our enemies may be far away and stockpiling, with the CTN we are able to fish out these anomalies.”, he was quoted saying. One of the problems that CTN will address is a situation in which importers under-invoice their goods from the suppliers at the point of purchases to pay less duties. Similarly, CTN will check the trend in which manifests are not tampered with by ships for the purpose of cheating on GT.

The Executive Secretary, NSC, Mr Hassan Bello, whose Council is to handle CTN describes it as “another instrument that will add tremendously in shipping development”. According to Bello, “It will boost the revenue of the government in customs revenue collection in the sense that it will abate under – declaration and concealment. It will boost the revenue of NPA because there will be no more alteration of the manifests. It will boost the revenue of NIMASA because under – declaration on the weight of ships will not be there any longer. But most important is that the beauty of it is that CTN is a veritable source of data.

You will know everything that is coming into your country. We have had many African countries having this because it is the initiation of Union of African Shippers Council (UASC). Cameroun, Niger that is even land – locked and many other countries have Cargo Tracking Note. So, you got to know what is coming to your country. It is a security document because, if you knew, there will not be proliferation of firearms”. The question that has remained in the lips of some stakeholders is: If CTN could do so much for the country, including security and economic benefits, who are those who do not want it in Nigeria? Is their opposition genuine or just for the ills in the system to continue?