Concerns raised after G$70M seized by GRA not deposited into Escrow/Consolidated Fund

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The Audit Office of Guyana has flagged several practices at the Guyana Revenue Authority (GRA) over its seizure of goods and currency, including the untimeliness of depositing seized cash into an Escrow Account or the Consolidated Fund.

This matter was highlighted in the 2020 Auditor General Report which dealt with matters for the fiscal year ending December 31, 2020.

It was noted that over the past three years (2017 to 2020), “it has been a concern that seized cash is in the possession of the Authority and not being deposited into the Escrow or the Consolidated Fund”.

The AG Report noted that at the 2020 year-end cash count, GYD$118,000, US$280,760 and EU$50,000 (equivalent to approximately G$70.878M), was in the possession of the GRA.

“It was reported that the Law Enforcement and Investigation Division (LEID) lodged the monies for safekeeping. As such, there is a breach of Part VII (44) of the Fiscal Management and Accountability (FMA) Act and there is room for the misplacement of these amounts,” the AG Report explained.

In fact, the AG Report contended that this practice “places the cash in a position to be more susceptible to loss or theft.”

In its response to this concern, GRA explained that when the monies were seized, they were handed over to the Central Data Processing, Registration and Revenue Accounting Unit in keeping with the Revenue Authority policy for same to be placed in Escrow, “in view that the matters were either before the courts or were subjected to police investigations, or further claims by the individuals from whom seized, since these persons have either fled the jurisdiction upon receipt of bail, and the courts matters withdrawn by their attorneys, forfeiture proceedings were instituted, and these monies will be deposited into Consolidated Fund”.

Notwithstanding, the Audit Office recommended that the GRA comply with the FMAA and ensure that seized cash is deposited promptly to the Escrow Account and transferred to the Consolidated Fund where applicable at the conclusion of the investigations.

Meanwhile, operating procedures that were established in accordance with Section 223-227 of the Customs Act 82:01 require that a file be opened and maintained for all cases of seizures until the matter is finalised.

At the time of reporting in September 2021, for the years 2015 to 2019, a total of 336 seizure files remained open. During the year 2020, the Authority did not close 67 files from a total of 275 files. It was noted that, due to pending sale of seizures, disposal of assets and the payment of fines and taxes, the 67 files could not have been closed.

In response to this, the GRA said it has closed an additional 128 files for the period 2015 to 2020, and that some 403 files remain to be closed.

Meanwhile, GRA recorded 275 cases in the seizure register for the year 2020. Audit
examination on the seizure register revealed 108 cases were still open. Further examination highlighted that three of those cases deemed closed were actually open. Also, seven of the cases were moved or cancelled and four cases were closed but stated as open in the register.

While the GRA provided an explanation for these discrepancies, the Audit Office recommended that the tax body continue its efforts to ensure seizure cases are addressed promptly so that all outstanding revenue are promptly collected and files are closed within a reasonable timeframe.

Of the 275 seizure files opened in the year 2020, 48.4% or 133 were in relation to motor
vehicles and spares, and undervalued goods, while the remaining 142 seizure files were in relation to alcoholic beverages, foreign chicken, prohibited items, investment agreements, fuel and others.

The Authority has implemented various measures such as the excise tax stamps affixed to alcoholic beverages and the ASYCUDA World which helped to curb that smuggling of alcoholic beverages and to identify undervalued goods during clearance. In addition, during 2020, the Authority reviewed Investment Agreements established through Go-Invest and GGMC for compliance. As a result of the review, items were seized and the relevant taxes were received by the Authority.

The graph below provides a comparison of the categories of seizures between the years 2020 and 2019:

Moreover, it was reported in the 2018 Auditor General’s Report that there were items that were seized and detained during the years 2016 and 2017 by the Law Enforcement Investigation Department at the Lethem Integrated Tax Office and the Authority took no action at the time of reporting in September 2019.

These items were stored in the walkway or the center of the Internal Revenue Department while others were stored in the Internal Revenue Department compound being exposed to the rigorous weather. As such, the delay in processing these seizures can result in deterioration of the goods and subsequent loss in revenue. At the time of reporting in September 2021, the Audit Office said it was unable to verify that the situation had been remedied.

In response to this, the GRA said “the seizures that were stored in the compound of Lethem, Integrated Regional Tax Office, were disposed of and the files regarding same are available for audit review. However, action will be taken to have the additional items properly disposed of immediately.”

Notwithstanding, the Audit Office recommended that the GRA take steps to ensure that the items are disposed of in a timely manner since delay to do so can result in the deterioration of the related items and subsequent loss in revenue.