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Published : 25 Feb 2016, 05:21 PM
Some importers found the business of selling ATMs an unresolved mystery and therefore decided to call it quits.
Some others are, however, making money through sale of the money-dispensing machines, a situation that baffles tax authorities.
Customs officials say the number of ATMs at every other street corner across Bangladesh is way higher than that imported through official channels.
Inquiries by the National Board of Revenue (NBR) and the Customs Department reveal that most of the automated teller machines (ATMs) have been brought into the country through false declarations.
Investigators say that knocked-down ATMs are imported as computer accessories or through courier services as samples to avoid paying customs duties.
“The import cost of a good quality Chinese ATM is at least Tk 800,000,” says a former importer, “but banks are buying US-made NCR machines for an incredibly low price of Tk 600,000.”
One simple explanation is, the frustrated importer says, the stipulated 37 percent duty on such imports is not being paid.
The FoB cost of an ATM made by the US-based NCR Corporation should have been around Tk 1 million.
Banks have bought ATMs for a price much lower than duty-paid cost; the magical price has been offered by Information Technology Consultants Ltd (ITC) and Technomedia Ltd. These two companies, according to evidence obtained by bdnews24.com, import these ATMs from China, Germany and the US.
The Customs Intelligence and Investigations Directorate is now on the hunt for details about ATMs used by banks.
The Directorate has written to the chief executives of commercial banks earlier this month and given them 10 days to provide specific details about the number of ATMs procured and when. The deadline is Feb 26.
"We are also looking into whether ATM imports have been used to launder money," Customs Intelligence chief Moinul Khan told bdnews24.com.
ITC and Technomedia have denied any irregularities and said that Customs officials should recheck their records.
Meanwhile, the chief executives' body of the banks, the Association of Bankers, Bangladesh, has said it will take steps if any wrongdoing is detected.
It was Standard Chartered Bank (SCB) which introduced ATMs in Bangladesh. The first booth was set up at Dhaka's Banani in 1993.
Twenty-three years on, the bank has 83 ATM booths, most of them in the capital as well as in Narayanganj, Chittagong, Khulna, Sylhet and Bogra.
Today’s market leader is Dutch-Bangla Bank, which launched its ATMs almost a decade after SCB and now boasts over 5,000 ATM booths across the country.
Eastern Bank Ltd (EBL) has more than 200.
Central bank records say 53 banks now have 7,000 ATMs.
"We have found that the number of ATMs being operated is way higher than the number of imports," said Khan, the director general of Customs Intelligence and Investigations Directorate (CIID).
Investigators have found that altogether 604 ATMs have been brought in through the Customs point in Chittagong since October 2013.
All of them but one were imported by Information Technology Consultants Ltd. The other one was by a company named 'Vortex'.
No records were found of imports by Technomedia Ltd between October 2013 and January 2016.
Imports before that through the Chittagong Customs were recorded manually on paper. So, any details before that are hard to obtain.
CIID has told banks to provide all kinds of details, ranging from when and through whom they bought ATMs as part of the procurement process, such as whether the procurement was made through a bidding process, direct buying or any other method.
It has also sought the VAT registration numbers of suppliers, the number of ATMs bought, their brands and model numbers as well as the amount of tax at source paid for these purchases.
"We will scrutinise documents after getting the details (from the banks). The actual price of ATMs and the declared one while importing will be also checked," said CIID chief Khan.
Officials said that the CIID is also checking the quality of ATMs after reports of fraud recently came into the limelight.
Records of ATMs imported through sea freight are kept with Chittagong Customs. Absence of records indicates that imports have been made with false declarations to avoid payment of duties.
ATMs are imported as knocked-down kits, which resemble computer accessories.
Computers and its accessories can be imported without any duties and Customs officials suspect that many ATMs have been imported declaring them as computer accessories.
Customs officials say ATM imports involve 15 percent value added tax (VAT), 5 percent duty, 5 percent advance income tax and 4 percent advance trade VAT.
The 4 percent advance trade VAT is not required when the banks directly import ATMs. But records show that no banks opted for that in the last two and a half years.
Officials said that ATMs are also being imported through air freight. They are also brought in as samples, requiring no taxes.
"Our investigation is on. We are collecting previous records of ATM imports," Zakir Hossain, CIID deputy director in Chittagong, told bdnews24.com.
The issue of ATMs surfaced after the recent reports of fraudulent activities.
Skimming devices and video cameras were illegally installed at six booths of United Commercial Bank, Eastern Bank Limited (EBL) and City Bank to steal client information.
Altogether 1,200 transactions took place after the devices were installed. As many as 40 bank cards were cloned to withdraw Tk 2 million, according to media reports citing police sources.
Police have arrested a Ukrainian national and three Bangladeshis, who are employees of City Bank's IT division, over their suspected involvement.
Speaking to bdnews24.com, Anis A Khan, chairman of the bank chief executives’ body, did not say much on illegal imports of ATMs, citing “illness”.
"I am unwell...can't say anything much on this right now,” Mutual Trust Bank MD Anis Khan said. “But if anyone had imported ATMs by false declarations or any other illegal means they need to be identified and punished."
A Dutch-Bangla Bank official told bdnews24.com that the bank had started ATM operations in 2004.
"In 2010, we went for a massive expansion,” the official said asking he not be named, “1,000 ATMs were installed in 2011 and another 2,000 last year."
The official said that they import their ATMs through Technomedia Ltd. "All of our machines are from the NCR Corporation of the US. So far, these are the best."
Technomedia says it offers such services as supply, installation and maintenance of ATMs.
It's Business and Development Manager Jakir Hossain said that the firm provided maintenance services for around 2,500 ATMs.
"Of the ATMs, about 150 were not imported by us. The rest we brought in and supplied to different banks," he added.
Referring to the NBR's report saying most ATMs were not imported legally, Hossain confirmed that all of their imports were made through proper channels. "I don't know about others."
Asked how much an ATM costs, he replied: "It differs from case to case. A specific price can't be mentioned."
Hossain said that they import through LCs (letter of credit) after banks place orders with them.
He added that they had supplied ATMs to 21 banks, including Dutch Bangla Bank, BRAC Bank, City Bank, Dhaka Bank, Standard Chartered Bank, United Commercial Bank (UCB) and IFIC Commercial Bank. It also provides maintenance services for those ATMs.
On the issue of importing through proper channels, the top official of Information Technology Consultants Ltd (ITC) echoed Hossain of Technomedia.
"I am aware of the figures provided by Customs. I think they need to check them again," said Managing Director Kazi Saifuddin Munir, referring to the records Chittagong Customs maintains of 603 ATMs imported by them since 2013.
"I can guarantee that the number is at least 2,000. It can be proved by checking the Customs' records," he said, adding that records originating from times before the automation of the port city Customs should be also obtained.
According to Munir, large-scale imports of ATMs in Bangladesh started after 2010. "Before that, it was nothing significant. Amra Technology and LEADS used to import ATMs back then."
He also asked the authorities to consider whether ATMs brought by air freight could be at all profitable.
Asked whether ATMs can be brought in without declaring them or by any other means, he said: "I can't say that. That's the investigators' job to find out."
He said that they had imported all ATMs through LCs. "We have all the documents for imports. The banks as well as the customs also have them."
