Money laundering in the name of bitumen import!

Tk 14,000cr laundered thru over-invoicing

Staff Correspondent

24 May, 2021 12:00 AM printer

A huge volume of money is being laundered through over-invoicing in the name of bitumen import.

Analyzing the volume of bitumen import, quality and international market price, it was found that around Tk 14,000 crore has been laundered through over-invoicing in the name of bitumen import.

According to the National Board of Revenue (NBR), 42 companies imported some 19,661 tonnes of bitumen in the first nine months of the current fiscal.

The value of this imported bitumen was documented at Tk 1,110 crore brought under 346 consignments. In an investigation, it was found that the imported bitumen has been unloaded from customs by declaring the product as 60/70 grade bitumen. Questions were raised over the quality of the imported bitumen by the experts as there is no reflection of the quality of bitumen in the roads.

However, importers claimed that the imported bitumen was of good quality. But in a lab test, the imported bitumen was found to be 102, 95 and 98 grade.

Bitumen experts said that imported bitumen is entering the country without any quality testing by BSTI, BUET and BPC. Following the fact, roads get damaged way sooner than the expected time. Though the importers declare to import 60/70 grade bitumen they are not doing so.

International market data suggest that the price of 80-100 grade bitumen fluctuates between $150 and $180 per tonne. Calculating the average value of imported bitumen at an average of $160 or Tk 13,600 per tonne, the total monthly import value stands at Tk 435 crore. But in nine months, the importers have sent abroad around Tk 1,522 crore.

According to NBR data, the price (per tonne) of unloaded imported bitumen has been shown as $560 or Tk 47,600. It means an additional Tk 34,000 was sent abroad against the import of per tonne of bitumen. This way, money is being laundered to foreign countries.

According to Chattogram Customs, every year importers import around 20,000 tonnes of bitumen. It is estimated that around Tk 1,428 crore is laundered every year in the name of bitumen import. 

Bangladesh Financial Intelligence Unit (BFIU) chief and former Bangladesh Bank deputy governor Abu Hena Mohammad Razee Hassan said they have the authority to check the facts if importers are involved in money laundering. As the issue yet to come to the fore, they will look into the matter.

According to the investigation, 42 companies have imported bitumen in 346 consignments in the current financial year. According to the Chittagong Customs House data, the amount of bitumen imported in the last financial year (2019-20) was 380,275 tonnes. In the financial year 2018-19, the import volume stood at 420,741 tonnes.

Sector insiders said although the price varies in grade, the duty of all bitumen is the same. Taking advantage of this opportunity, low-quality bitumen is brought at low prices in the name of high-quality bitumen. Money is also sent abroad at a higher rate.

It has been learned that the customs duty on import of petroleum bitumen in drums has been fixed at Tk 4,500 per tonne. In addition, 2 per cent advance income tax (AIT) and 5 per cent advance tax (AT) have to be paid. However, in the case of import in bulk form, the rate is fixed at Tk 3,500 per tonne in addition to 2 per cent AIT and 5 per cent AT.

Bangladesh Petroleum Corporation (BPC) is producing only 60,000---70,000 tonnes of bitumen against the country’s demand for 5.5 lakh tonnes per year. A strong syndicate of importers has been exploiting this opportunity to make hefty profits.

The organized circle is also ignoring the government’s directive to use locally produced bitumen to keep the money laundering strategy alive. As a result, the use of imported degraded and adulterated bitumen has not decreased at all.

Officials at Eastern Refinery said most of the imported bitumen is in the 80-100 grade. LCs are often opened to bring adulterated kerosene-mixed tar in the name of bitumen. The importers are also smuggling the money abroad by showing improved grades.

A director of BPC said on condition of anonymity that adulterated bitumen is being unloaded from the port without any approval from BSTI, BUET and BPC. As a result, the dishonest syndicate is getting through very easily.

Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh (PRIB) and chairman of BRAC Bank, said money is being smuggled through over-invoicing under the guise of bitumen imports.

In the context of low-quality bitumen, the economist said, “When I buy at a lower price, I will definitely get lower quality things. This is very normal. The quality of bitumen used in rural roads is very poor. Within a year, these roads collapse.”

He said that bitumen used in our country is not used in any other country in the world. So, the minimum quality of bitumen should be ensured.

Research Director of Centre for Policy Dialogue (CPD) Dr Khondaker Golam Moazzem said money laundering abroad through over-invoicing is still going on.

 “We always suggest the banks to look at the value of what and when they are opening a LC and at the same time check the information of the relevant products in the world market,” he said.

 “It should be cross-checked whether the price of the products that the importers are mentioning in the declaration is correct or not. It should be verified whether there is any abnormality in the quality and price of the particular product. Bitumen importers also need to be brought into a system,” he added.

International Bangladesh (TIB) executive director Iftekharuzzaman said importers are making additional profit by importing low-quality bitumen along with manipulating the procedure by over-invoicing.

 “In this process, the difference between the actual and the additional price is laundered to abroad,” he said.

Urging the authorities concerned to increase vigilance on the import of low-quality bitumen to prevent money laundering, he said the Financial Intelligence Unit of Bangladesh Bank has to identify the offenders by verifying the price and quality of the declared products in the world market along with bringing them to book.

“Otherwise money laundering through this way will not be stopped,” he further added.

Concerned officials also said road repairing cost has increased by four times in last one decade due to use of low-graded bitumen.

Despite the government’s efforts to prevent the use of adulterate bitumen, the use of low-quality bitumen continues unabated. 


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