Special Prosecutor recovers GH¢1.074 million from Council of State member's company, Labianca

Emmanuel Ebo Hawkson Politics Aug - 08 - 2022 , 06:13

The Office of the Special Prosecutor (OSP) has recovered GH¢1.074 million from Labianca Company Limited, owned by a member of the Council of State, Ms Eunice Jacqueline Buah Asomah-Hinneh.

The amount represents a shortfall in import duties the frozen foods company paid to the state.

In an investigative report, a copy of which has been seen by Graphic Online, the OSP accused Ms Asomah-Hinneh of influence-peddling for allegedly using her position as a member of the Council of State and member of the Board of Directors of the Ghana Ports and Harbours Authority (GPHA) to get a favourable decision from the Customs Division of the Ghana Revenue Authority (GRA), which led to a reduction in the tax liabilities of Labianca Limited.

Influence peddling

Influence-peddling or trading of influence is a form of corruption in which a person uses his or her position or political influence to gain unmerited
favours.

The OSP faulted a Deputy Commissioner of Customs in charge of Operations, Joseph Adu Kyei, for issuing what it described as unlawful customs
advance ruling which reduced the benchmark values of the frozen foods imported by Labianca Limited, thereby reducing the company's tax obligations to the state, reports Graphic Online's Emmanuel Ebo Hawkson.

"The OSP finds that there is strong evidence to suggest that Mr Kyei's decision to issue a customs advance ruling for the applicant was procured
through influence peddling or trading of influence by Ms Asomah-Hinneh by employing her position as a member of the Council of State and member of the Board of Directors of the GPHA, the report, signed by the Special Prosecutor, Kissi Agyebeng, stated.

The investigative report, dated August 3, 2022, is titled: "Report of Investigation into Alleged Commission of Corruption and Corruption Related Offences involving Labianca Group of Companies and the Customs Division of the Ghana Revenue Authority.

No wrongdoing

Ms Eunice Jacqueline Buah Asomah-Hinneh has, however refuted any wrongdoing and has told Graphic Online that she was not aware of the report of the OSP or its findings and would speak to it once she apprised herself of the facts from the management of Labianca Company Limited.

"I cannot give any comment because I have not seen any report from the Special Prosecutor. I do not even know that the report is out," she told Graphic Online.

When asked if she was aware of any investigations by the OSP into her company, she answered in the affirmative.

On whether she was aware if the Special Prosecutor had directed Labianca Company Limited to pay the amount to the state, she said the management of the company usually dealt with those issues and she might not be immediately privy to any such payments, as she had
not been around.

"I have not been around, but the office is there and so next Monday or Tuesday I will call and ask them. It is the management so I will ask them, she added.

She indicated her readiness to grant a full interview to Graphic Online when she returned to Accra.

Petition

Ms Asomah-Hinneh was re-elected a member of the Council of State representing the Western Region for a second term last 2021.

She was a member of the Board of Directors of the GPHA from 2017 to 2021.

The OSP commenced investigations into Labianca Company Limited and the Customs Division following a petition filed by one Frank Asare on November 16, 2021, pursuant to Section 27(1) of the OSP Act, 2017 (Act 959).

Mr Asare, in the petition, accused the Customs Division of the GRA and Labianca Company Limited of involvement in an alleged corrupt deal, whereby the products imported by Labianca were not subjected to the required taxes.

In response to the petition, the Managing Director of Labianca Company Limited, Etse Gadegbeku, told Asaase Radio in November 2021 that the
petition was nothing but an attempt by Labianca's competitors to destroy the reputation of the company and that of its owner, Ms Asomah-Hinneh.

"We operate in a highly competitive environment and t strongly believe that these are bad tactics by our competitors to smear the image of the company and the Chief Executive Officer, Eunice Buah Asomah-Hinneh, to gain an advantage for the upcoming busy Christmas season.

"We strongly deny the allegation of corruption and import duty evasion. Labianca went through all the legal and proper application processes before the discount was given," Mr Gadegbeku said,

Order to pay

The OSP, in its investigations, found that the reduction in the benchmark values by the Customs Division of the GRA was unlawful and, therefore, on March 21, 2022, the Special Prosecutor directed Labianca to pay the shortfall of GH¢1.074 million to the state.

Labianca complied with the directive by the Special Prosecutor and accordingly paid the money on March 31, 2022 into the Asset Recovery Account of the OSP.

GRA customs advance integrity plan

Apart from recovering the tax shortfall from Labianca, the Special Prosecutor also directed the Commissioner-General of the GRA to submit an integrity plan on customs advance ruling made by the Customs Division to the OSP by December 31, 2022.

This is aimed at preventing corruption in the exercise of discretion by officials of the Customs Division, especially in respect of rendering of rulings," the report added.

As a result of the findings, the Special Prosecutor further directed his outfit to open wider investigations into all customs advance rulings given by the Customs Division of the GRA between July 2017 and December 2021.

Institutionalised corruption

According to the investigative report, the OSP found that even though the Commissioner of the Customs Division, Colonel Kwadwo Damoah (retd), was not directly responsible for the unlawful customs advance ruling, he could not be "absolved of the ultimate responsibility for the apparently contrived decision" because he gave approval to Mr Kyei's action.

Again, the OP said Mr Kyei's action, coupled with Col Damoah's approval, was a clear warning of institutionalised disregard to curb impropriety at the Customs Division, a situation which it said "indicates a high propensity to engender corruption and corruption related activities Customs advance ruling Per Section 12 of the Customs Act, 2015 (Act 891), following an application by an entity, the Customs Division of the GRA can issue a customs advance ruling which gives an interpretation or application of the customs laws or regulation in relation to a transaction by that
entity.

Customs advance rulings can affect the classification, origin, benchmark values of goods, tariffs or any other activity that falls within the purview of customs laws.

Findings

In its investigations, the OSP found that Labianca commenced operations in 2014, but the company started applications to the Customs Division of the GRA for a reduction in its benchmark values from 2017, which coincidentally was the same period Ms Asomah-kinneh was elected the Western Regional representative on the Council of State and also appointed a Board Member of the GPHA.

"It would appear that the coincidence of the indicated applications and the public office appointments of Ms Asomah-Hinneh were not altogether accidental. There is strong evidence to suggest that the events are products of influence-peddling; the Special Prosecutor said.

One significant application, it said, was on April 6, 2021, two months after Mr Kyei had been appointed a Deputy Commissioner of Customs.

With that particular application, it said, Labianca wanted between 50 and 60 per cent reduction in the benchmark values of its imported frozen foods, but that was rejected by Mr Kyei.

However, the OSP said, surprisingly, after rejecting the application, Mr Kyei issued a customs advance ruling to lower the benchmark values of the goods imported by Labianca to between five an 10 per cent.

"Mr Kyei claimed that he based his decision on proper procedure - being a letter dated 6th February, 2018 authored by Isaac Crentsil, a former Commissioner of the Customs Division, and that his decision resulted in the prevention of loss of revenue to the state," the report said.

It further indicated that Mr Kyei also contended that his decision to reduce the benchmark values for the applicant was founded on the practical guidelines for valuation control by the World Customs Organisation issued in June 2012, particularly on pages 22 and 23.

However, according, to the OSP's findings, the application by Labianca was not in conformity with the requirements for customs advance rulings, as stipulated under Section 12 of Act 891, but Mr kyei went ahead and issued the ruling, leading to Labianca paying lower taxes.

"Mr Kyei's decision to render an advance ruling was wrongful and not supported by the requirements of the law for the issuance of customs advance rulings. Mr Kyei wilfully put aside the law by embarking on his own predilections, the Special Prosecutor added.

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Attached below is a full copy of the report