Customs lost US$1.4m lawsuit after state changed stand

The Maldives Customs Service lost an MVR22.7 million (US$1.4 million) lawsuit after the Attorney General’s office changed its stand and backed the claim by the country’s largest tobacco wholesaler.

The civil court on March 6 ruled in favour of CGT Pvt Ltd over a dispute that arose after the import duty for tobacco was hiked in March 2017.

The company contended it was charged the higher tariff rate for six containers of cigarettes that arrived in the Maldives on March 1, 2017, a day before the import duty hike came into force.

According to media reports last week, the state attorney representing customs previously argued the higher tariff was applicable because the shipment was cleared after the deadline on March 2.

But the AG office reversed its stand after the change of government in November and conceded that CGT was owed US$1.4 million. Citing the state’s admission, the civil court ordered customs to reimburse CGT within six months.

CGT was reportedly represented by Attorney General Ibrahim Riffath’s former law firm.

After media reports about the lawsuit, customs released a statement Thursday backing CGT’s claim.

The claim was based on a directive issued by the former commissioner general of customs, it explained. The directive stated that the import duty amendments would not apply to goods that arrived before 2pm on March 2, 2017 if inward clearance of the cargo ship was before the cut-off date.

According to customs, CGT consigned the shipment, completed the declaration, and paid import duties on February 17, 2017.

But customs later ordered CGT to pay extra under the new duty rate because the process of clearing the goods from the bonded warehouse was completed after the March 2 deadline.

The civil court judgment also stirred controversy because CGT’s shareholders include the suspended chairman of the state-owned Malé Water and Sewerage Company.

Ahmed Mausoom, a former chief of state at the president’s office and former finance chief of the ruling Maldivian Democratic Party, was relieved of duty after it emerged that CGT was among several local businesses that received payments from a company implicated in the country’s biggest corruption scandal.

Some US$5.7 million was transferred to CGT from SOF Pvt Ltd, a company that was used to channel the bulk of US$90 million stolen from state coffers, the Anti-Corruption Commission’s long-awaited investigation report revealed last month.

CGT claimed it conducted legitimate transactions with SOF to purchase US dollars, a defence that was also made by other prominent companies named in the ACC report.

In a statement released after his suspension in late February, Mausoom denied any involvement in the MMPRC scandal and stressed that he was a “silent shareholder” who was not involved in CGT’s daily operations.

He was never questioned by the anti-corruption watchdog, he noted, pledging full cooperation with ongoing inquiries.

Documents exist to prove CGT conducted legitimate currency exchange transactions with SOF, he added.

Photo of Root shop in Malé from CGT