KARACHI: The FBR’s efforts to crack down on money laundering operations continue as the PCA South has successfully dismantled the notorious money laundering cartel that laundered a staggering Rs 106 billion through seven bogus companies.
This major breakthrough in the investigation marks a significant achievement for PCA South as they expose the network of bogus companies and lodge four FIRs against the involved elements.
The money laundering cartel employed seven bogus companies: M/s Sky Linker’s Trading Company Peshawar, M/s Sky Linker’s Business Chain Pvt Ltd. Peshawar, M/s Bright Star Business Solution Pvt. Ltd Peshawar, M/s Moonlight SMC Pvt Ltd Peshawar, M/s Pak Electronics Lahore, M/s Solar Sight (Private) Ltd Lahore, and M/s Royal Zone (Pvt) Ltd Peshawar.
These seven bogus importers were found to have engaged in over-invoicing and the use of illicit funds worth Rs 106 billion that were laundered abroad against solar panel imports, despite their financial worth being a meagre Rs 119 million under income tax declarations.
The syndicate, spearheaded by Rab Nawaz and his brother Ahmed Nawaz, utilized this web of bogus companies to carry out their intricate illegal operations.
Amidst the dire economic situation facing Pakistan, the said cartel perpetuated heavy economic losses by laundering billions. Out of the laundered Rs 106 billion, Rs 42 billion were deposited as cash deposits in the commercial banks to obscure the illicit origin of said funds.
All local sales of these bogus companies, amounting to Rs 85 billion, were declared in the name of unregistered and untraceable individuals.
The solar panels imported at the value of Rs 106 billion were subsequently sold at a much lower value of Rs 85 billion—thereby exposing massive over-invoicing at the import stage.
The investigation has also highlighted the complicity and potential negligence of shipping lines and banks in concealing the true value of goods reflected in insurance-related documents.
During the investigation, only five shipping line agents came forward with evidence directly pointing to the inflated values, signifying widespread over-invoicing at the import stage.
The original commercial invoices of China indicated that solar panels originally valued at US$ 0.15 per watt were subsequently imported into Pakistan at inflated values of US$ 0.35 to 0.70 per watt—reflecting massive over-invoicing to the tune of 235% to 500%.
One particularly striking revelation emerged from the scrutiny of operations conducted by M/s Solar Sight (Pvt) Ltd.
This entity brazenly employed a counterfeit name to pose as a legitimate private limited company, despite not being registered with the Security and Exchange Commission.
Further, the dummy proprietor of this entity, declared as a salaried individual in the income tax return, with an annual income of Rs 250,000 and business capital of Rs 450,000, astonishingly financed the import of solar panels worth Rs 2.5 billion.
Another significant aspect of this case is the duty/tax-free regime granted to solar panel imports, due to which the role of banks becomes very crucial with regard to money laundering considerations in the light of FMU’s red flag indicators. Banks allowed companies with poor financial standing to transfer undisclosed black money overseas under the guise of solar panel imports. Bank statements reveal that Rs 42 billion were deposited in the accounts of these companies before being swiftly transferred out of Pakistan.
The PCA’s investigation has also revealed that the illicit funds eventually flowed into the bank accounts of four China-based companies. Intriguingly, these companies were under the ownership of Rab Nawaz, who also operated the network of seven bogus companies in Pakistan, linking him directly to the broader spectrum of this money laundering scheme. These China-based companies also played a role in masking the actual export values of solar panels, adding another layer to the illegitimate operations.
The modus operandi of such bogus companies involves illegal facilitation to unscrupulous businesspersons to buy solar panels from abroad using illicit means like Hawala/Hundi. These goods are then consigned in the name of bogus companies for import purposes. After the import of goods, the unregistered operators take delivery of their goods, while bogus import companies show fabricated local sales to phantom buyers, misleading tax authorities with concocted invoices. Subsequently, the bogus importing companies offer money laundering services to the black-market players to transfer illicit funds abroad. In this manner, for each import consignment, the money is transferred abroad twice—once through Hawala/Hundi (by the unregistered operator/actual buyer of goods) and once through the banking channel (by the dummy importing company/black-market player). Resultantly, against every import, the country loses foreign exchange twice the value of imported goods—once through illicit financial flows by Hawala/Hundi and once through laundering of black money via banks (TBML). Mis-declaration to inflate import values further increases the quantum of illicit fund transfers, thus enhancing profit margins for the bogus company operators. The network of seven bogus companies exposes significant vulnerabilities in the current system. With the scandal laid bare, the focus now shifts to bringing the accused to justice, reinforcing processes, and safeguarding against future crimes.
The FBR continues to show zero tolerance towards money launderers and should be commended for its meticulous approach to unearthing this complex scam. By cross-referencing customs, sales tax, income tax, and bank records, this landmark detection was made possible. Led by the DG PCA Chaudary Zulfiqar Ali and Director PCA South, Sheeraz Ahmed, dedicated teams have played a pivotal role in uncovering the depths of this fraudulent scam. With special teams mobilized and the investigations accelerating, the FBR is determined to bring all culprits to justice. Chairman FBR, Member Customs, and their team are unwavering in their commitment to protecting the country’s financial system. The FBR’s efforts have dismantled this notorious network and the downfall of this syndicate marks a significant advancement in the fight against financial crimes.