Investigation of fraudulent Chinese imports results in 9 million euros of recovered duties
A network of companies fraudulently importing Chinese tube and pipe fittings via several countries in South East Asia to evade high EU customs duties was discovered in investigations carried out by the European Anti-Fraud Office (OLAF) and authorities in several EU Member States, in cooperation with Indian and Taiwanese customs. The investigations led to the recovery of nine million euros in customs duties and were followed up by criminal proceedings in Germany and the UK, which resulted in prison sentences for three of the persons involved.
“This investigation is a good example of the results that OLAF and EU Member States can achieve when cooperating at working level. It is important that fraud is not only investigated but also prosecuted. Investigations confirming allegations must lead to prosecution and court rulings in the Member States,” said OLAF Director-General Giovanni Kessler.
OLAF investigations into the import of tube and pipe fittings from China were triggered by information from Commission services, the EU industry concerned and the customs authorities in several EU Member States. They had noticed changes in the trade pattern, namely away from the primary sources of tube and pipe fittings in the People’s Republic of China to unknown suppliers in countries not commonly known as producers of that product. Imports of goods claimed to be made in Japan by a German importer attracted the attention of the Belgian Customs Investigation because the freight was actually loaded in the port of Dalian in China and then routed via Japan to the EU. Close cooperation between German, Belgian and Dutch customs quickly led to the detection of further fraudulent imports into the EU from India and Taiwan with false commercial documentation of origin.
Evidence collected by a team of investigators from the EU authorities and OLAF, in close cooperation with authorities from several South East Asian countries, demonstrated that tube and pipe fittings supposedly originating from these countries were in fact of Chinese origin. The evidence led to duty recoveries of approximately 9 million euros in several EU Member States of which 6.5 million euros were related to imports from Taiwan and India.
In addition and as a result of the investigation with the Directorate of Revenue Intelligence in India, a German entrepreneur and two Directors of two UK-based companies were convicted in national criminal proceedings. The two UK offenders were sentenced to a 12-months' suspended sentence and two years' imprisonment respectively. A third faces an administrative financial penalty. In Germany, the founder and owner of the German company faces a two-year suspended sentence, and a penalty of 450 000 euros.
The OLAF investigation also had implications for a Taiwanese exporting producer of tube and pipe fittings which had channelled the Chinese product to the EU market. The supposedly semi-finished product, imported for further processing into Taiwan from China, was in fact tube and pipe fittings which were subsequently re-exported to the EU. The Taiwanese authorities requested from the company concerned the payment of approximately 1.8 million euros to cover the import duties and a fine for related breaches of the customs legislation.
An anti-dumping duty rate of 58.6% on certain Chinese tube and pipe fittings of iron or steel was imposed in 1996. The anti-dumping duty was subsequently extended to include imports from Taiwan, Indonesia, Sri Lanka and the Philippines as a result of circumvention practices identified.
The mission of the European Anti-Fraud Office (OLAF) is threefold: it protects the financial interests of the European Union by combating fraud, corruption and any other illegal activities; it protects the reputation of the European Institutions by investigating serious misconduct by their staff that could result in disciplinary or criminal proceedings; and it supports the European Commission in the development and implementation of fraud prevention and detection policies.
For further details:
European Anti-Fraud Office (OLAF)
Phone: +32 2 295 22 10