10 RMG factories laundered $35m in guise of export

The Directorate of Customs Intelligence and Investigation has exposed a major money laundering scheme involving 10 export-oriented garment factories.

These factories, operating under the guise of exporting ready-made garments, have managed to illicitly funnel a staggering $35.3 million (Tk 3.8 billion) out of the country.

The alarming report was disseminated through a press release on Monday.

The companies include Pragya Fashion Limited, Fashion Trade, MDS Fashion, Hong Kong Fashions Limited, Three-Star Trading, Fortune Fashion, Anupam Fashionware Limited, Pixi Knitwears Limited, Stylize BD Limited and Eden Style Tex.

All 10 companies are alleged to have used fraudulent methods to export their products through the Chattogram port.

Rather than repatriating their foreign currency earnings to Bangladesh, they smuggled the entire export value abroad.

According to the investigation, these companies forged bills of export and manipulated export protocols, essentially using the Exporter's Reference (EXP) codes of other exporting firms.

This was further facilitated by the use of the "sample code 20" in column 24 of the bill of export. Customs Intelligence claims to have unearthed numerous instances of such fraudulent activities recently, where one company uses the illegal codes and EXPs of another firm.

Evidence suggests that the 10 companies have committed such fraudulent acts in the shipment of 1,234 consignments, weighing a total of 9,121 tonnes. These shipments are believed to have a total potential repatriable foreign exchange value of around $35.3million (Tk 3.8billion).

The products smuggled include T-shirts, tops, women’s clothing, trousers, baby sets, and polo shirts. The destination countries for these goods ranged from the United Arab Emirates to Malaysia, Qatar, Saudi Arabia, and Nigeria, among others.

A thorough review of the related documents indicated significant discrepancies.

"The bill of export of these ten organisations did not match the information stated in the bill of export and EXP," the Directorate said in its notification.

In addition to the initial findings, recent information has emerged that further complicates the already complex case of export fraud.

According to data received from Southeast Bank, as cited in the bill of export, none of the 10companies have any lien with the bank. This disconnection implies that Southeast Bank, having no involvement in the business activities of these companies, has neither recovered nor has the opportunity to recover the export value mentioned in the sales contract or Exporter’s Reference (EXP).

Shamsul Arefin Khan, the Joint Director of the Directorate of Customs Intelligence and Investigation, briefed reporters, stating that the Clearing & Forwarding (C&F) agents and the exporting companies have smuggled more than $35.3 million through forged documents, in mutual cooperation and collusion.

“Due to the non-functionality of the EXPs, there is no scope for the repatriation of this foreign currency back to the country in a lawful manner. That essentially means money laundering has occurred,” Khan said.

The process of taking appropriate legal actions against the implicated ten exporters is currently underway.

This incident is not isolated. Previously, the Customs Intelligence and Investigation Directorate disclosed a similar case involving the smuggling of approximately Tk 3.79 billion through four different organisations in an analogous manner.