Vaswani brothers and tax evasion

By Casmir Igbokwe

 Published: Sunday, 26 Apr 2009

 There is this popular traditional musician generally perceived in Igboland to have mystical powers. He used to showcase this power during the annual Ikeji Festival in his native Arondizuogu in Imo State. Part of the myth around Perry Como Okoye in his heyday was his alleged encounter with tax collectors in a city I can’t remember now. According to the story, the taxmen carried him up in an attempt to bundle him into their vehicle. Just as they were about to do this, they reportedly became transfixed. They could neither drop Okoye nor even move from that spot. The man purportedly remained hanging in the palms of his assailants until a barrage of pleas softened his mind to release them.

This happened in those days when the fear of the taxman was the beginning of wisdom. Even as a student, you dared not visit such cities as Onitsha and Aba if you had some strands of beard on your chin. The taxman would harass you.

There seemed to be a lull in this type of aggressive revenue drive until recently when the global financial crisis precipitated a new drive by different levels of government to buoy up their revenue base. Unfortunately, civil servants and workers in some private firms are largely at the receiving end of this new drive.

Some wealthy Nigerians and companies are paying little or nothing compared to what they earn. Two Sundays ago, this paper reported that the Federal Government had lost billions of naira to tax evasion by companies operating in Nigeria. To these delinquent companies, there is no need to pay the correct duties for goods imported into the country.

 Many times, officers of the Nigeria Customs Service release reports of their exploits in combating smugglers. Most times, what they display on television are either tons of seized frozen fish or frozen chicken. Nobody can exactly say where the illegal arms and ammunition that flood this country come from. Nor can we say what exactly prevents our Customs men from apprehending car smugglers at the borders. What they do these days is to go and mount roadblocks at such places as Ore, Asaba, Shagamu, and Lagos-Ibadan Expressway to confiscate people‘s second-hand cars and demand outrageous fees, or fine if you like, before releasing such vehicles.

 This brings me to the case involving the Vaswani brothers and the Economic and Financial Crimes Commission. Last Monday, the EFCC announced the deportation of the Vaswani brothers – Mahesh, Harish and Sunil. According to the chairman of the commission, Mrs. Farida Waziri, the brothers, through their company, the Stallion Group, evaded payment of N2.5bn duty on rice importation through the manipulation of documents.

 For instance, as at August 30, 2008, one of the first three vessels allegedly involved in the fraud, MV Golden, was said to be still loading in Thailand. Waziri said it was expected to depart on September 21, 2008 and arrive in Lagos and Port Harcourt on October 7 and 30, 2008 respectively. But even before the arrival date, the EFCC boss alleged that the officer-in-charge report seat of the NCS, Area 1, Port Harcourt, had stamped and signed the accompanying documents such as the Bill of Laden, cargo manifest, etc. by September 26, 2008. The allegation is that the Stallion Group did this to exploit the Federal Government’s duty waiver on rice importation of May 9 to October 31, 2008.

Upon the recommendation of the EFCC, President Yar‘Adua approved the deportation of 28 top officials of the Stallion Group and their banishment from Nigeria for a period of five years. The EFCC also vowed to prosecute Customs officers and those found culpable. The Obasanjo administration had deported the brothers in 2003 for allegedly short-changing the government of tax revenue worth about N4bn, but Yar‘Adua permitted them to return to Nigeria in 2007.

The defence of the management of the Stallion Group is that the action of the Federal Government was a violation of subsisting court orders and due process. It said it had a clean record for the past 40 years of business operations in Nigeria and other countries and that no single allegation of wrongdoing had ever been proven against it.

 It will be interesting to know why the Federal Government is after a company that is supposedly clean and of no blemish. Somebody should tell me why Yar‘Adua, who pardoned the Vaswani brothers in 2007, will be too eager to sign their deportation warrant less than two years after.

 The EFCC action against Stallion, if the company actually did what it was accused of, is noble. But since the company says it‘s in court, I think the commission‘s action would have been nobler if the court process had been allowed to run its course. That would have given the government enough ground, if the allegation is proven, to deport the directors of the company not just for five years but, perhaps, forever.

 The EFCC should not just stop at Vaswani. Many other companies, as the Federal Inland Revenue Service had alleged, are tax evaders. Nigerians need to know these companies and what punishment is being meted out to them.

 No serious government tolerates tax evasion by individuals or companies. In such countries, leaders lead the way in the payment of taxes. For instance, President Barack Obama of the United States and his wife, Michelle, made $2.7m last year. Much of this came from royalties from his books. As a Democratic senator from Illinois, he only earned $139,204 last year before leaving his seat on account of the November 2008 election. Michelle‘s salary from the University of Chicago Hospitals, where she was an executive, was $62,709. The couple’s total federal tax reportedly came to $855,323, or 32 per cent of their adjusted gross income of $2,656,902. They were said to have overpaid by $26,014 and elected to apply that amount to their 2009 taxes.

This is transparency at work. How many of our public officers will support and encourage the ideals of an open society? How many companies in Nigeria declare the true worth of their earnings? There is no need blaming any particular individual or company. Collectively, we are guilty. And it will take the collective efforts of all of us to change the situation.

The first step is to pass the Freedom of Information Bill. Many Nigerians have shouted and implored those who claim to represent them in the National Assembly to pass the bill to no avail. If we continue to do our things in secret, many more foreign companies will exploit that to cheat us in our own game. And like Perry Como Okoye, the country will remain transfixed in the palms of corruption.


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