Nigeria Customs Service’s Failed e-Auction

Eromosele Abiodun posits that the electronic auction introduced by the Nigeria Customs Service has been marred with irregularities and sleaze

After the uproar that trailed his order that owners’ vehicles in the country whose customs duties were not paid should do so or have their cars impounded, the Comptroller General of the Nigeria Customs Service (NCS), Col. Hameed Ibrahim Ali (rtd.) has been enmeshed in another battle.

This time, the fight was with the Nigeria Association of Auctioneers (NAA), who made good their threat of all-out war by heading to court to stop the plan by the NCS to auction seized and contrabands goods by e-auction. The NCS had early last year announced that it would begin auction of seized and condemned goods to qualified persons on July 1, 2017.

According to the Service, the decision to reopen the suspended auction scheme after about 18 months was taken following successful test running of the new electronic auction portal.

Ali had suspended the auction of seized and condemned goods to allow for a more transparent and electronic method that would allow for equal opportunities for all participants.

‘’After repeated tests of the e-auction platform, NCS is now set to deploy the e-auction portal on July 1, 2017,” the service said in a statement.

The statement added that the portal has been fully networked to designated banks to ensure that money accruing from the auction gets to the Central Bank of Nigeria (CBN) Treasury Single Account for transparency and accountability.

Many More Battles
Although Ali suspended his planned duty collection drive on motor vehicles suspected to have been smuggled into the country without duty payment, the NCS boss’s much reported fall-out with the National Assembly over his refusal to put on uniform of the customs service as it’s Comptroller-General was another needless controversy.

Stakeholders believe the leadership of the NCS under Ali’s watch failed because of its desperation to drive the mandate given to it by President Muhammadu Buhari.

On appointment, Ali was given three basic tasks: go to customs, reform customs, restructure customs and increase the revenue generation, “I don’t think that is ambiguous, I don’t think that is cumbersome,” Ali had told news men on assumption of duty.

This, analysts believe, may have forced the NCS leadership to employ measure it thought would help it meet its set-out targets.

However, the drive to meet its target set the NCS leadership against major stakeholders in the maritime industry.
It is not just the NAA that were battling the NCS leadership, last year, the Association of Nigeria Licensed Customs Agents (ANLCA) and National Association of Government Approved Freight Forwarders (NAGAFF), shut down the ports over unfriendly policies by the NCS and the federal government.

In a bid to suspend the strike action, Ali and top management of the Nigerian Ports Authority (NPA) and the Nigerian Shippers Council (NSC) paid an unscheduled visit to the secretariat of both associations pleading for understanding and cooperation.

New Directive
Few days after the peace deal was reached with ANLCA and NAGAFF, the NCS announced its decision to commence the auction on July 1, 2017.

In a swift reaction, the NAA warned the NCS not to embark on the proposed e-auction of seized and condemned goods from July 1, until the court rules over the matter.

The auctioneers said such a decision was against the law of the country and cannot stand since the court has not ruled on the suit brought by way of originating summons by the association against the NCS.

The association had dragged the NCS and Ali, before a Federal High Court sitting in Abuja over the plan by the NCS to conduct online auction sales of seized vehicles and other items.

In a suit brought by way of originating summons, the auctioneers prayed the court to hold that by virtue of its incorporation, registration and accreditation pursuant to the relevant laws of the federation, an auction sale cannot be conducted by a committee appointed by the NCS.

The legal counsel to the association, Wale Yusuf said since the matter was still in court, all the parties involved must not do anything that would threaten the decision of the court.
According to him, the Customs lawyer filed a motion of adjournment at the last court sitting and the matter had been adjourned to September.

“Technically, the rule says every party in the dispute must hang up; nobody must do anything that will jeopardise the decision of the court; they will not force on the court a situation of helplessness by doing anything contrary to the determination of the suit. For now, the injunction is still hanging in the court till September; Ali cannot carry out that e-auction until the court decides.

“He will not even try it, or we will file for contempt. I think he has been trying to monitor the matter and thought the case will finish by June, but I think he will also have to adjourn the commencement of the proposed exercise, “he said.

Similarly, the Secretary of the Caretaker Committee of the association, Goke Adedokun, said: “We are registered auctioneers and we have been paying our taxes. We have all the necessary documents, we are registered with the Customs. Recently, 120 members of the association renewed their licences as auctioneers. If the NCS have jobs like this, we are supposed to be called upon to do it because we don’t have any other job.”

“If Customs goes ahead with the e-auction, it will deny our members of jobs. We want to generate revenue for the country in a transparent manner. If we are allowed to do the job, it will be a physical exercise.

“The United States of America’s system of e-auction that the NCS is trying to copy allows open bidding and allows auctioneers to carry out the bid. The Procurement Act of 2007 gives us the right to carry out such exercises,” he stated.

The Failed Auction
As against the earlier promise by Ali to increase federal government’s revenue by auctioning seized and abandoned cars, vehicles worth over N20 billion have been rotting away at various ports and warehouses of the service.
Apart from the over N10 billion worth of seized cars rotting away in customs warehouses across the country, about 6,000 vehicles worth over N10 billion have been abandoned by importers at the Lagos ports.

This is because Ali has due to inefficiency abandoned the e-auction system he introduced to auction seized and vehicles.

In the first week after the system was inaugurated, Spokesman of the service, Joseph Attah, had said that the service generated N272,115,366 from the auction of 646 vehicles under its electronic auction scheme.
Since then, nothing has been heard from the service concerning the auctions despites frequent seizures and its warehouses going out of space for vehicles.

THISDAY checks revealed that the vehicles, imported through Apapa and Tin-Can Island ports, were abandoned because of the owners’ inability to pay the Customs Duty within the stipulated period.

The Duty Paid Value (DPV) of about 1,000 of the vehicles, Customs sources said, is up to N4 billion.
The market value of each of the vehicles is between N4 million and N4.5 million.

Sources said that instead of the importers looking for ways to pay the duties and levies, they resorted to bribing some Customs officers. They also sought ways to ‘fly’ the vehicles out of the ports through “unscrupulous agents.”
Over 3,000 of the vehicles, it was learnt, have been moved to some bonded terminals. Some sources believe are still at both terminals contributing to the ports congestion.

The source alleged that some of the importers delayed payment until the vehicles were declared overtime cargoes.
Their thinking, he said, is that such vehicles will be sold to them later at very cheap rate through auction.
An official of one of the bonded terminals where about 1,500 of the vehicles are informed THISDAY that some importers abandoned some of the vehicles declared as overtime cargoes when they realised that they have to pay 70 per cent duty and levies to clear them.

Speaking on the condition of anonymity, an importer said: “As importers, part of our efforts was to ensure that we patronise Nigerian ports and don’t divert our cargoes to the ports of neighbouring countries, but rather than this gesture being recognised and compensated, the federal government through the NCS is busy breathing down on our necks, asking us to pay 70 per cent duty and 70 per cent levy on every brand new vehicles imported into the country.

“Ditto used vehicles. We must pay 35 per cent duty and 35 per cent levy. When you calculate the amount involved, you will understand the reason why people abandoned their vehicles.

“We have invested heavily on each of the vehicles abandoned at the ports. We ought to be encouraged. Even some of those the government is buying vehicles from find ways of bringing them out of the ports without paying the appropriate duty so that they can break even.”

A senior Customs officer at the ports, said the NCS’ position on duty collection had not changed.
The Customs, he said, would collect the duty on the vehicles, adding that the importers would be sanctioned by declaring their vehicles as overtime cargoes and auctioning them.

“We are committed to the recovery of the duty payable on every imported vehicle. We have the government’s backing on this and the management has no reason whatsoever to shirk its responsibility in this regard,” he stated.

How Trouble Started
Ali had introduced the process as a way of enhancing transparency, reduce human contacts and ensure that only the highest bidders for any auctioned item takes it.

Aside Tax Identification Number (TIN) by prospective bidders, other terms and conditions included exclusion of customs officers and their families from participating in the bidding process either directly or by proxy.
The guidelines also indicate that auctioned items cannot be replaced or funds paid refunded to bidders.

Successful bidders, findings revealed, were expected to make payments within five working days as auctioned items whose winners fail to pay within the period forfeit the auctioned item to the second highest bidder.

Successful bidders were to be given a period 14 days from the date of payment to remove the item bided for or forfeit it at expiration of the period.

According to the NCS, “any auctioned item not removed from the warehouse within 14 days from the date of payment shall revert to its pre-bidding status which makes such item open for sale again.”
Winners in the auction process were to pay 25 per cent of the auction amount to the Terminal Operator with another 25 per cent of the auction amount to the shipping line operator.

“Owners of seized items are excluded from bidding for them but may however participate in the bidding of other items while owners of overtime items with evidence of payment of duty and other charges has priority over a successful bidder of the item provided the item has not been exited out of the Customs control,” it added.

Aside being transparent, the NCS had promised that the new method will also increase the amount of revenue government makes from auctions as bidding will be competitive and devoid of bias or favouritism.
Hitherto, the service had done auctions through issuance of documents to beneficiaries with which such beneficiaries approached the warehouses before making payments to designated banks.

The method was viewed as not being transparent as beneficiaries of the auctions were believed to have been selected through a non-competitive process.