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Tunisia trade fraud uncovered

WASHINGTON, DC: According to the World Bank, companies and individuals connected to former Tunisian president Zine El Abidine Ben Ali avoided paying US$1.2 billion in import duties between 2002 and 2009.

Ben Ali (right) fled to Saudi Arabia with family members and a reported US$50 million in gold after a bloodless coup in 2011.

In March this year, Tunisia applied to join the Geneva prosecutor's money-laundering case against HSBC's Swiss unit in a bid to recover a reported US$161 million from Ben Ali and his relatives.

The new World Bank study on Tunisian trade practices identifies tariff gaps by comparing data on exports from its trade partners with the value of imports reported by the country's Customs authority.

ben-ali-tunisiaThe declared value of imports by Ben Ali-connected firms was found to be 18 percent higher than average firms, with declared quantities of imports 21 percent higher, but reported unit prices were found to be on average 4.8 percent lower.

For imported goods subject to high tariffs, the reported prices were even lower at 8.1 percent. The bank says this type of underreporting allowed regime-connected companies and individuals to evade US$217 million in taxes in 2009 alone.

According to the report, "Tunisian Customs authorities are considered among the most corrupted of all government institutions by Tunisian citizens and companies. [And] while the Tunisian Customs code is consistent with best practices defined by the World Customs Organization, its implementation is discretionary."

Eileen Murray, World Bank country manager for Tunisia, said the avoidance of import duties by business associates of Ben Ali undermined competition and allowed wealthier, politically connected elites to amass greater profits by paying lower import duties.

"The fiscal losses we calculated are based strictly on the underreporting of prices, and do not factor in other forms of tax fraud such as underreporting the quantity of imports, or the bypassing of Customs entirely through smuggling," said Bob Rijkers, World Bank economist and lead author of the report.

Despite a 16.2 percent drop in tariff evasion since 2011 on products associated with the former regime, there has been a 5.7 percent rise in tariff evasion in other products: "The revolution has led to a decline in price underreporting by previously connected firms, but this has been coupled with a rise in tariff evasion among ordinary firms and an increase in informal trade," added Rijkers.

With help from the World Bank, Murray said Tunisia's finance ministry now wants to simplify import reporting procedures in a bid to boost exports and reduce opportunities for fraud.

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