Out of watch with legal shield

Why cannot the government touch the big players of the illegal liquor trade? In the last instalment of this two-part series, The Daily Star's Martin Swapan Pandey, Sohel Parvez, Zyma Islam and Shamiul Hossain investigate how all government attempts to audit this unlawful market ended up in court battles. 

Almost every time any government agency tried to ensure accountability and transparency of the duty-free liquor trade, it found itself in a legal limbo.

Over the last two decades, diplomatic bonded warehouses, who import duty-free liquor for diplomats and foreigners, filed writ after writ with the High Court challenging the legality of the government action.

As a result, the whole sector is now embroiled in a prolonged legal battle over who can monitor the diplomatic bonded warehouses and to what extent, with the authorities butting their heads trying to figure out their roles.

At least 48 such petitions now remain pending before the HC, making it impossible for the authorities to do what they are supposed to do -- check irregularities within the bonded warehouses.

In a long investigation beginning February this year, The Daily Star has unmasked how the country's illegal liquor business is booming with supplies from two sources -- leakage from some diplomatic bonded warehouses and smuggling (see our yesterday's story headlined "Given by ghosts").

Aware of the leakage and other irregularities, at least half a dozen state agencies took numerous steps to bring some sort of control, but only to be taken to the court.

The commerce ministry, home ministry, National Board of Revenue, customs intelligence, narcotics department, Customs Bond and the Anti-Corruption Commission have all been challenged by each of the six private bonded warehouses.

Keep reading - GIVEN BY GHOSTS

One such recent government move was in 2015 when the diplomatic bonded warehouses blocked an NBR probe.

On July 12, the finance ministry asked the NBR to inspect operations of the bonded warehouses. The revenue administration then formed several inspection teams to audit their activities.

The warehouses first kept asking for more and more time to provide the customs officials with the sales records and other papers. But as the NBR continued the investigation, at least two warehouses -- National Warehouse and Dhaka Warehouse -- filed separate writ petitions against the NBR.

Three years on, the audit has not seen the light of the day.

But this is nothing new.

In 2013, the Customs Intelligence asked the diplomatic bonded warehouses to furnish them with the sales records of 2009-2012.

In a letter, its director general ordered the department's officials to investigate whether "diplomatic bonded warehouses are illegally selling duty-free bonded products to anyone other than diplomats and other privileged persons".

But the warehouses zeroed in on a mere technicality and filed a writ petition.

This is what happened: The Customs Intelligence directive had asked a revenue officer and an assistant revenue officer to help a team of high-level officials, including the deputy director to audit the warehouses.

But in the writ, Dhaka Warehouse argued that Section 91(2) of the Customs Act 1969, which regulates them, says that the auditor cannot be of a position lower than the rank of an assistant commissioner. And that both the revenue officer and the assistant revenue officer would be lower than that.

Although their job would be essentially to help their senior officers, the lawyers of the two sides will have to fight out whether these "junior officials" are allowed to do so, or whether the senior officers will have to do the entire work just by themselves.

Again, the audit process remains held up as the matter is pending before the court, Khan Ziaur Rahman, lawyer for the Dhaka Warehouse, told The Daily Star last night.

TOS Bond, H Kabir and National Warehouse had also challenged the Customs Intelligence audit move, securing stay orders from the HC.

Dhaka Warehouse and H Kabir went further to claim in their writs that the Customs Intelligence was discriminating against private diplomatic warehouses. They also argued that Parjatan Corporation, a state-run diplomatic bonded warehouse, was not being audited by the Customs Intelligence.

"We cannot touch the bonded warehouses because they have made the sector sub-judice," NBR Chairman Mosharraf Hossain Bhuiyan told The Daily Star at his office in April.  

A similar predicament lay in store for Customs Bond Commissionerate in 2017 when it tried to bring some changes in the terms and conditions of their operations to ensure accountability.

In an office order in March 2017, the bond authorities noted that the record books of the warehouses are not transparent.

"The bond officers and warehouse staff run the establishments as they please, not following the rules. There are allegations that they sell products without passbooks [for privileged persons] and tax exemption certificates [for diplomats]," the order said.

It also went on to describe the many bookkeeping oversights that makes it difficult to account for all the bottles that the warehouses sell.

The Customs Bond Commissionerate, which operates under the NBR, made it mandatory for the warehouses to sell liquor only against valid passbooks, to ensure they are being sold to diplomats or privileged persons. It also instructed the bond officers to fill out specific details about the liquors being sold.

Within a month, Sabir Traders Limited (STL) challenged the order in court, saying new rules had to be published in a gazette to take effect. They also argued that the commissioner "is not the authority" to issue such orders and that only the NBR can impose such conditions or restrictions through gazette notifications.

Interestingly, neither of the cases is currently on the cause list of the court, because nobody appeared at court for the hearing which was in July last year. The process of bringing it back to the cause list is arduous.

"We do not have a panel lawyer. We depend on the Attorney General's office to represent us," said the NBR chairman.

The AG's office represents all government offices and the case burden is huge.

But there are delaying tactics by the petitioners as well.

"The diplomatic bonded warehouses employ various tricks to make sure that the cases go on and on. It is very hard to bring about a hearing for these cases because their influence goes very far," said Attorney General Mahbubey Alam at his office.

"The case files simply disappear. It is very much possible to hide a file so that the case does not come before the court for hearing. Vested groups do this," he added, angrily. 

"You have to understand that the diplomatic bonded warehouses are simply buying time with these writ petitions," said Anti-Corruption Commission's lawyer Khurshid Alam Khan.

The ACC itself saw a barrage of writ petitions when it tried to investigate allegations of tax evasion. All the six private diplomatic bonded warehouses filed writ petitions against anti-graft watchdog.

The HC, however, gave the judgment in favour of the ACC.

Shah Monjurul Haque, the lawyer representing National Warehouse, H Kabir and TOS Bond in this case, said they challenged the HC verdict with the Supreme Court.

"We import duty-free products. How can we be involved in any crime related to taxes?" said Sohel Murad, chairman of STL.

Asked why they filed writs against the narcotics department, Taufiq Uddin Ahmed, chairman of Eastern Diplomatic Services, said, "The Customs Bond is already monitoring our operations. Why the need for a double supervision?"

A Customs Bond official remains present at the warehouse at all time during office hours, he said. "Government agencies want to interfere in everything out of their own interest."

A similar situation can be observed in the case of the Department of Narcotics Control. Like the ACC, the department at least won in the HC -- but now that is being challenged by the diplomatic bonded warehouses in the Appellate Division.

The writ involves if the narcotics department can monitor the operations of the bonded warehouses by requiring them to obtain import licence from the department, as the import policy of 2014 stipulates.

Nakib Saiful Islam, who is representing several diplomatic bonded warehouses in the matter, said, "We appealed in the Supreme Court and obtained a stay on the High Court order. Law has many interpretations and the courts have not decided on it yet."

However, following a recent HC order, the narcotics department has swung into action.  

In May, the HC rejected a petition by a duty-free enterprise, which also imports alcohol. The petitioner argued that it does not require prior permission of the narcotics department to import alcoholic beverages.

Following the HC order, the department last month issued an order, asking relevant authorities to seize any liquor imported by bonded warehouses without the department's permission and file cases against them.

[Ashutosh Sarkar contributed to this report]