How FG Incentivizes Layers Of Corruption At Ports- Prince Shittu

The maritime industry is blessed with many very experienced and knowledgeable professionals cum resource persons whose pieces of advice could guide and direct any willing policy- maker. Painfully, their stock is being depleted by nature. Many of them are in their 70s and 80s. One thing very common with this group is the passion and altruism that run in their advice or mentorship. Their engagement is underscored by truth and nothing but the truth because of who they are and also the zest to leave robust legacy behind. Many of them are not digitalization savvy but they have what the information technology age cannot do without. However, a few of them that are digitally-inclined are rounded in generations and professionalism and as such when they spare their thoughts for advice it is worth millions of dollars if not priceless.

This latter class is where Prince Olayiwola Shittu belongs. He is the Group Chief Executive Officer(CEO) of Skelas Group of companies and a former President of the Association of Nigerian Licensed Customs Agents(ANLCA). He also chairs the Nigerian Ports Process Manual(NPPM) committee. He speaks frankly and fearlessly always.

In this interview with MMS Plus, he gives another insight into the Customs duty benchmarking; how the absence of penalty for corruption in the customs service fuels unethical practices among them; he is of the opinion that the Customs Comptroller General, Wale Adeniyi should be ready to step on toes if he must succeed and he is unapologetic about how the government’s decision to lift foreign exchange restriction on 43 items contributed to the pressure on the dollar against the naira. But are there solutions to these myriad of problems? Find out!   

We talked about the claim by some freight agents that N17million is required to clear a 40foot container excluding freight cost in Nigerian ports as a result of hike in customs duty rate. You said it sounded like a blackmail.  What is the insight to this?

What do people call benchmarking, that they are using to frustrate import and all that?  We need to ask ourselves, what is the meaning of benchmarking?  Now, what many people think about benchmarking, they say it’s because Customs want to hit their target. Yes! Target itself is not good for ease of doing business, to start with.

You cannot have ease of doing business and trade facilitation, and at the same time be having a target. These are two opposite sides. We took up this matter when I was the president of our association.

And then Kunio Mikuriya, the former secretary general of World Customs Organization (WCO), made it clear to us that the service of an average Customs organization in any country is based on the desire of the country on what it wants to use it for. Some countries use it for anti-smuggling purposes, some countries use their customs for trade facilitation, and some people use it to generate revenue that we should look at it from that angle. But Nigeria’s own is mixed breed, they do everything. For example, you don’t have a Customs command that touches the issue of money in some countries, like the U.K and U.S. It is the custom broker that prepares documentation and pays the actual money to the treasury which they turn here to customs and banks.

The job the banks are doing in preparing documents is the job of the agent, however, everybody is trying now to circumvent the process..

I’ve always said that smuggling cannot be eradicated, because government itself is an enabler for smuggling and I’ll tell you why.

Assuming by your nature and your integrity, you are a straightforward person who wants to do things the right way and then whatever profits you get, you leave it for God. The circumstances and the operational exigencies within the port will not encourage you to maintain your sanctity because you’ll be operating at a loss when your competitors are doing something different and they are getting richer by it. You are telling an average customs officer that you come together to raise 5 trillion and you know the factors of revenue generation and you don’t mind. What you have just done is like asking road safety officials that their salary will be realized from the fine they give on the road, what other job would they be doing? What they would be doing is to make sure they fine people because that is where their livelihood comes from.

That is the same thing you are encouraging when you put on that target. Now, Customs may not be blamed because they will tell you that by their Commands and their existence, they are to obey policies from government. If government decide today to say that remove control for anything in Nigeria, it should be 0%, it’s going to be 0%. You as an officer, you are not expected to change it, but rather to enforce it.

Customs always use that loophole as an excuse for whatever stringent measures they are going to put in place. But our people, the importers and the agents, they also have part of the blame.

Because that person who is a straightforward person, godly, who wants to do the right thing, is also being punished at the same time with those who don’t want to do the right thing. So you don’t even know where the line is drawn, so that you can maintain your sanity and your sanctity, which is not being encouraged by the circumstances around the port.

That’s where the issue of benchmark comes in and let me analyze it this way, so that you can understand it. That was an area I tackled when I was the president of our association. If you are bringing in cargo from Italy, and you are bringing in cargo from UK, they are not far from each other but what they sell in UK might be different from what they sell in Italy, I mean the price and other factors including your patronage to them, that’s the establishment of customer relations, so they bring down your price so that you can continue to buy from them, but because of proximity, any cargo you load coming to Nigeria, the difference in freight should be very minimal, because the same vessel or shipping line that operates in Italy, operates in U.K as well.

And there comes this issue of minimum declaration, where the importer gets his documents and all that, they carry it and give it to the bank and the same bank arranges the documentation with Customs, until when the PAAR is issued, you as the agent will on the PAAR, be the declarant, the name of your company will come with that. So whatever transpired in UK, you don’t know anything about but when it gets down here, through that documentation that is given to you, you will be able to know what they are doing and they are insisting that PAAR can correct what you declared in your invoice, the reason being that any documentation that is coming from these countries, based on your relationship with them, can be done not to the statutory pricing, but by their own, know your customer and the attendant gains that you must have.

 Therefore, if the freight here is £5, you should expect this one to be plus or minus 0.5 of that same £5. What the Customs should be expecting is that £5 could be your expected freight from any of these countries. Imagine you now declared it as £2, which you know is not practical between these two countries to come. What they are saying is that your minimum that you should pay is not even the £5, giving room for flexibility or your bargaining power, okay pay a minimum of 4. You say no, that that is benchmark. That all the freight for the cargo that is coming, you have now said should not be less than 4. But if you say it should not be less than 4, are you not right? Is the customer not also still helping by giving a little bit of allowance? That’s what people are complaining about. You discover that so many consignment coming in from China, because majority of them come from China and when you look at the topography of China, it’s a very large country, so many ports, but the invoice is showing where it is coming from. Your parking list is showing where it comes from and you are telling me that from China to Nigeria is $2,000. That is not practicable. So what the Customs now did is that as long as it’s coming from China, let’s help you people, the minimum you should declare for freight should not be more than this amount.

Is that benchmark? Benchmark is like, let me tell you the difference. Benchmark is when you say this container, no matter the content, go and pay $10 million. That’s benchmark, because there are factors responsible for you deciding how much to pay, correct classification, that is the major thing, then freight charge, then insurance, to make up the CIF, Cost, Insurance and Freight. So if those three factors are not right, one way or the other, it can be corrected.

But there’s no way a Customs officer will say, for every 40 foot container, you should not pay less than so-so amount. Do you know what they carry? What are the contents? If they query contents, your value will not be the same but in declaring freight and insurance, it should be the same, the content is a different thing, nobody can do benchmark on freight. The freight from London to Nigeria is the same, If you like, put newspaper inside that is the difference between benchmarking and correct declaration.

A Comptroller I was chatting with over time, he just retired now and we have known each other in the industry. He said, “Alhaji, I’ve gone to rest”.

Upon all the efforts you made when you were the president, things have not changed. He said, how somebody can have ten 40-foot containers and pay #200,000 for each container as customs duty for 10 containers.

I told him, I said it’s not possible. He said, how? I said, does the container fly, does it not have value? Because there must be a value for it. Even if you don’t go to the contents, what about the other charges? What do you expect us to do? Meanwhile, the law says that is total false declaration. Very good for seizure. But how many people, apart from the issue of seizure, declared as agents have been sent to jail? That is the reason, when I was the president, we were having an argument with Customs officers and I told them to take it easy. There are factors driving these officers. If they want to do the job the way the job is supposed to be done, even though it will affect them also, when we challenge them, we say go and do it, we always come back to say, we’re not trying that, otherwise you cannot survive it.

If you don’t give them money, they themselves will not have money, they can do without money, because the government has given an incentive every month to get salary, although it’s small.

Do you know what happened to me? Even when I was the president, even though I was no longer in charge of my job, my own is, I don’t want contraband. And the people who are making the money, are people who are supposed to have position. 

 The volatility in Customs duty rate, to me, I think, this is even one of the things CFRFN should also be bringing to the table to discuss. What do you say about this?

CRFFN is not in a position to do it, you know the organizations that have a power to do it? Just like Maritime Workers’ Union, when they sneeze, everybody shakes and that is where the associations should have been empowered according to their profession. For example, if you talk about anybody in the port, you classify them into different groups. Say, freight forwarders, you now put transportation along with custom brokers, etc. That is where we are making a mistake. People should specialize in where they belong. You don’t mix people together because what freight forwarding has ended up doing for Nigerians is to give them the opportunity to go to the ports, whether they have any business there or not, they go to the ports.

Customs brokerage does not encourage you to go to the ports, because your documentation is done in your office and you must go and do your examination. You don’t need more than one person witnessing the examination. In foreign land, they don’t need the broker to come to the port for examination, they do the examination on their own, write their reports. But in Nigeria, everybody wants face-to-face, whereby “What you see is not what you saw.” So in order to make it possible, we need to see ourselves to bargain and to have the envelope that we are requesting for, that’s the reason.

If not, these jobs are supposed to be done seamlessly and all this crowd of people, like marketers in the port is very, very unnecessary and every effort to digitalize the operation is being frustrated by the government people themselves because they need to see the victim before they extort. So that’s why the digitalization, one- stop- shop and all that is necessary. When we say single window, it should be one single window for everybody but every government department is doing their individual single window, for selfish reasons. Look at NPA permit, officially it is #6,500, but if you don’t have #20,000, you cannot register even with all your documentation. 

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 Is it different from the one Shippers Council is asking to be registered for? 

Yes, of course, everybody is registering. You see, that’s why I told you about government as a corruption enabler because now all those revenues are regarded as Internally Generated Revenue (IGR). They just do it this way whatever amount you collect, share it 50-50, send 50 to treasury, the other 50 do whatever you want to do with it. All of them, then if you were to be in charge of a government department that has the ability to levy or to ask for one resource or another, because it’s in your act, they establish you that you can raise funds through whatever obnoxious reasons, then you’re already in money. With that money, the 50% that you are running is not liable to government audit because you have given 50 to the federal government. This is the corruption we’re talking about. It’s been there. It’s not today. That’s why you see the idea of identity, why a Customs broker is meant to renew permits, license, etc on various front but a freight forwarder does not have to do all these. All you do is register with CRFFN, because you don’t have a Customs license because all the other permits, including terminal permits, you still attach the copy of your Customs license. So a freight forwarder is not required to get NPA license, because you need a Customs license to put this on and you cannot be a Customs agent without having an office, Customs inspection, Customs license. After that, you will now be talking about CRFFN, NPA, all the regulatory agencies, shipping companies.

 You register with all of them, so the existence of CRFFN meant to regulate freight forwarders for whatever reason, if you look at the meaning of freight forwarder and the customs broker, you will see the difference. Now, they have so been ennobled by their desire to use CRFFN to make money. To even be a customs broker, you have to be registered by corporate affairs commission and have a license, but a freight forwarder, if you like, you get a company, If you like, you don’t get company. Once you know who has a job, who is bringing in a container, and you corner him to a place and convince him and he carries the job and give you, you now go and look for a customs broker who is licensed to do those performances, that’s why more people come into the port. As a customs broker, you only employ the people you need but as a freight forwarder, you don’t need to employ anybody. So the regulation of CRFFN is on paper,

None of them has ever done it right. I was a member of the council, I know what we did in those days that was the period when I used to quarrel with the chairman.  Because I didn’t know that the man had political sense, while I was looking at professionalism and all that. That’s how I did it. Anytime they want to do private arrangement, they put me aside.  But it’s not in my nature  to live on promissory notes.

That’s why the place is moribund, that’s why you see people struggle. People now become godfather, appointing those who will go to the council. That is it. All the government officials you see in the council today are appointed by different ministries. What has been the impact? Nothing. Just put the ministries that are in the council. Leave the freight forwarders now. The ministries that were in the council, how come you say you want to do an election for freight forwarders? You will now be asking for the person to bring customs license as part of the requirement?  Why? If your council is to regulate freight forwarders, you don’t need Customs license. That means that you are regulating a crowd of people who desire to be in the port for whatever purpose. .Transporters are supposed to be members of the council. Warehousing, Packaging are all there in the Act.

  All those IGR are official graft, because the parastatals will issue the receipt to you, for that IGR. So when you give them the money or you pay your money to them through their own one line payment and all that, they remove the one for the Federal Government, the rest goes to them. They use it for whatever they want. So rather than people being encouraged to do things the right way they are encouraged to find enemies. So they would rather give that regulatory agency boys in the ports money to circumvent the regulation. That’s why you see all this biohazard, unregulated products, fake products that’s how they enter the market. Because the idea is how much are you bringing back, If you don’t bring enough they remove you from the port. Those government agencies if they post them to the port they to go and do thanksgiving. But that’s what they do because your lifestyle will change.

I try as much as possible to do things that will enable more people to benefit than individuals. And a lot of people know me for that. And I’m okay with that too.

 What is your assessment of the Customs CG Wale Adeniyi and even the new ANLCA boss, Emenike Nwokeoji? 

Wale Adeniyi is on the right path because he has the advantage of being a career person and by virtue of his profession in the public relations he knows how to reach out to people and his love for digitalization, I hope it works. It will help to a good extent because the face to face meeting is what is promoting corruption and extortion and even the importer would be able to know the stage where his clearance is. He should be ready to step on toes because it’s a big burden and it not easy for people who are used to making money through a certain pattern to embrace change, it becomes a problem. Importantly, as he is making effort to train officers, he should also make effort to train Customs Representatives, because unknown to many of my colleagues, they still call themselves Customs Agents, but the new Act calls them Customs Representative, as we now owe more of our loyalty and patriotism to Customs.

As for the ANLCA, we have laid the foundation, this is the only association that does regular election to change their leadership. With this, we have built an institution and we know the direction ANLCA is expected to go. We don’t hurry for people to join and we give people equal opportunity and this makes it easy for every new president to look at what has been done before and build on it and he has the privilege of working as a vice president for eight years and by this, he wouldn’t have any excuse not to carry the burden of the members. He is an advocate of digitalization and so far I have not seen any challenge that will encumber him.

 Do you see any explosion in smuggling because of the Customs duty rate at the port and the people trying to cut corners to avoid this?

Yes, it would be because of lack of incentives for those who do the right thing. Because you need two to tango, there’s no activity in the port today that an average Customs officer is not involved. Whether, flying of container with wrong documentation or smuggling, somebody somewhere will play a protective gap to see that it goes through. But if there’s no penalty, there’s no discouragement. Officers are not being penalized but they would claim they do, but you can’t punish someone in the secret and expect others to learn. If for the past ten years I have not received a query for a job I have handled, both with the valuation and post audit, then they are supposed to give me a sort of commendation. The issue of smuggling through the bushes is a bigger huddle meant for the Nigerian government and the agencies.

The cause of dollar crises in Nigeria is just demand and not based on unavailability. It is based on the taste of the individual, that thing you demand, can you do without? Can we look at countries that when we watch them on television, they all look alike because they are wearing the same clothe? What value a lace material from Holland would add to our individual lives? So the demand for dollar is very unnecessary in this our country. Everyone wants to use items made abroad. The class of import of the things we don’t need in this country is the pressure we have on the dollar and the nomination of dollar as the primary currency, I think we ought to have a rethink. Look at the 43 items that were banned and no one has died, but for whatever reason,  they revisited the ban so that people will now recalibrate their necessity for which type of goods to bring in again, thereby bringing pressure on the dollar that you were running away from earlier, without even discussing with the stakeholders. All the infrastructural development that has stood the test of time were all done by the military except the stadium that was constructed during Obasanjo’s regime.