According to today’s press reports, around 100 customs investigators searched a total of 25 apartments and business premises in Germany, Spain and Switzerland. Three men from Hamburg, Bremen and Stuttgart were arrested on the basis of an arrest warrant issued by the Augsburg District Court. They are accused of having evaded €35 million in anti-dumping and countervailing duties. This means that the customs investigation has once again struck a blow in connection with customs fraud involving solar modules from China. After evaluation of the confiscated documents, further raids and arrests can certainly be expected.
35 million anti-dumping duties avoided
The three men arrested are alleged to have evaded anti-dumping and countervailing duties of €35 million during the period from December 2014 to January 2017 on a total of about 400 import transactions in Germany and the Netherlands by false pretences or by circumvention of existing minimum import price regulations (MIPs). Essentially, it concerns two companies that operated independently but, with the help of various intermediaries and service providers, are said to have circumvented levies according to two typical patterns.
The anti-dumping and countervailing duties on solar modules from China, which have existed since 2013, are alleged to have been circumvented by shipping them to the EU with new documents via a by-passing country (transhipment), for example. In addition, the existing minimum import price regulations are alleged to have been circumvented by the fact that part of the invoice price was repaid in disguise (“cash back\”). The condition for the exemption from anti-dumping duty was thus illegally pretended.
Prison sentences and further raids on solar modules likely
Depending on the contribution of the offence and its position in the supply chain, tax evasion and tax fraud are the main offences considered in these circumstances. Prosecution for fraud and document fraud is also conceivable. The crimes can be punished with up to ten years imprisonment. With the amount of damage at issue here, a considerable prison sentence of several years must be expected.
The prosecution certainly affects not only the three men arrested, but also their helpers and possibly even unsuspecting business partners. In the fraud carousel, often uninvolved persons are used to conceal the machinations.
The customs investigation raid was foreseeable on the basis of earlier investigations. This is certainly not the last search carried out by customs in connection with solar modules from China. The documents currently confiscated should, as they did last time, bring further findings to light. Economic operators should therefore consider whether they may have become victims of fraud, whether they have committed a criminal offence and what possibilities exist for them.
O&W Attorneys at Law have been advising clients for years on anti-dumping duties on solar modules from China. Ask us now your personal questions or make an appointment in our office.