Federal Board of Revenue (FBR) has been instructed by the Public Accounts Committee to restart the investigation into the MG Motors vehicle import & under-invoicing scandal. The issue was first investigated in 2021, when the automaker allegedly under-invoiced the import value of its Completely Built-Up Units (CBUs) and was engaged in tax embezzlement.
As per the reports at that time, FBR had managed to procure “documents” that the company had significantly understated the customs value of the MG HS vehicle, which was priced at $11,632 in Pakistan. In contrast, the same vehicle was priced at over $27,000 in the rest of the world. When the investigation was initiated, the Chinese company had already imported 400 units, and some estimated that the alleged scam potentially cost billions of rupees to the national treasury.
During last year, around 10,000 vehicles have been imported by MG Motors. Reportedly, the vehicles were highly under invoiced while the declared value of a CBU vehicle was drastically less than even the CKD kits of the same vehicle. That interestingly means that a vehicle in finished form was cleared at Karachi Port against a value even less than its non-assembled components.
FBR to re-investigate MG under-invoicing scam
According to sources, MG import scam was a nexus between Azam Khan, ex-Secretary to the then PM, Tariq Huda, Member (Customs-Operations) FBR and Javed Afridi (MG Motors). Azam Khan and Tariq Huda acted in close collaboration to extend illegal benefit to Javed Afridi and their close nexus was well known during the previous regime. Accordingly, Tariq Huda being Member personally pressurized the officers at Customs clearance Collectorates in Karachi who resisted for such clearances to ensure that the vehicles are cleared at the highly under-invoiced declared value. The loss due to under-assessment is reportedly around Rs. 8-10 Billion.
Javed Afridi who is a key figure behind MG Motors Pakistan tweeted when the company was facing the under-invoicing probe, and said: “as the new entrants bring in exciting new models at far lower prices, instead of competition, we expect maligning campaigns and baseless rumors.”
For decades, Pakistani automobile consumers have been exploited by cartels that cornered them with low quality, boring models at exorbitant prices. Plus, buyers had to pay billions of rupees to get delivery of the very vehicles the price of which they had already paid. 1/3
— Javed Afridi (@JAfridi10) February 14, 2021
He further added that “While we know that competition is an unfamiliar phenomenon in Pakistan’s automobile industry, we invite everyone to join in a fair competition to serve Pakistani consumers with a bigger and better variety of vehicles at lower prices.” While the FBR had closed the case after confirming that the reports were false, it has been ordered by the new government to further probe into the matter. The committee has demanded a report within a month.
Last year MG was also accused of fraud by its customers. Amidst facing delivery delays, several customers came forth claiming that until they paid On-Money/ Premium, the company kept delaying the delivery. Following the allegations, the company came along and blamed the delays in delivery on the shortage of semiconductor chips. Earlier this year, Karachi’s consumer court also fined MG for delaying vehicle deliveries. MG is expected to begin full-scale assembly of its vehicles in Pakistan, so far the company has been dealing in CBUs only.
In response to the re-opening of probe, Javed Afridi took to Twitter and said “We welcome this & ready for any kind of investigation. We have the right to defend ourselves & will prove that all transactions are absolutely legal/valid. By doing this you are also a part of conspiracy against Chinese investment in Pakistan. Let truth prevail.”
We welcome this & ready for any kind of investigation (court,pac,forums etc). We hv the right to defend ourselves & will prove that all transactions are absolutely legal/valid.By doing this you are also a part of conspiracy against chinese investment in Pakistan.Let truth prevail https://t.co/xoU3AN6QzC
— Javed Afridi (@JAfridi10) April 23, 2022
In another Tweet, Afridi once again reminded everyone that they reserve the right to take anyone to court who defames & spreads fake news about MG brand in Pakistan. He further said, “Let the court/PAC give its judgement & we will deal with these blackmailers & enemies of Pak-China Friendship through court.”
We reserve the right to take anyone to court who defames & spreads fake news about our Brand. Let the court/pac give its judgement & we will deal with these blackmailers & enemies of Pak-China Friendship through Court.
— Javed Afridi (@JAfridi10) April 23, 2022
A 3d animation professional with over 20 years of industry experience having served in leading organizations & production facilities of Pakistan, an avid car enthusiast and petrolhead with an affection to deliver writings to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com