Investigative Reports

Major Corruption Allegations Rock Somaliland Finance Ministry’s Recruitment for World Bank’s Public Resource Management Project

According to documents examined by Somaliland Chronicle, serious allegations...

Financial Turmoil and a New Questionable Venture Cast Shadows over Boodhari Mills’ Future

In our previous coverage, we explored Boodheri Mills, a...

Somaliland Office in Taiwan Rejects Sexual Misconduct Allegations

The Republic of Somaliland Representative Office in Taiwan has...

Sugar. Cellphones. Corruption: The Container that Claimed the Entire Leadership of Berbera Customs

In April 2020, a cargo container was taxed and cleared out of Berbera Customs only to be intercepted outside of Hargeisa city limits by government officials.

According to sources familiar with the incident, Berbera Customs officials taxed the container as sugar instead of its actual content – cellphones and a lot of them. Sugar and all other basic food staples such as rice and flour are assessed a lower tax than most other imports, including electronics.

How this happened and the exact revenue loss caused by this type of corruption at the country’s most important source of revenue remains to be a mystery as officials from the Ministry of Finance Development, including the Minister Hon. Saad Ali Shire did not respond to our questions to try to understand how the system failed to prevent corruption of this scale.

Here is the Director-General of the Ministry of Finance Development, Mr. Mohamed Ali Gurhan explaining Berbera Customs’ critical role to the functioning Somaliland government by being the single most significant source of revenue.

Mr. Gurhan was the Berbera Customs Manager as recently as February 2018, and in the above clip he explains that Berbera Customs generates 50 – 60% of the entire government budget. He has run Berbera Customs from 2013 until February 2018.

According to current and former officials at Berbera Customs who spoke on strict condition of anonymity for fear for reprisal and possible imprisonment, it is not usual to have a product taxed as something entirely different to assess a substantially lower tax than owed.

This practice is as common as the air we breathe and it’s not just Berbera customs, it is everywhere and requires the complicity of many moving parts of a complex system, including the officers who give the final ok for cargo to leave the customs,” said one official who did not want to be identified.

Sources add that it is a standard practice to tax almost half of the imported clothes as fabric or “unstitched clothes” to give a substantial and possibly illegal tax break. This specific allegation is supported by the Ministry’s latest Economic Performance Bulletin Report for 2020 Q1, which shows more garment fabric being imported and taxed than ready-made clothes. 

Besides small tailor shops, there are currently no garment factories in Somaliland to justify such quantities of “unstitched clothes”.

Sources add that the most corrupting influence comes from businessmen seeking the slightest advantage over their competitors and pay tens of thousands of dollars to a customs official whose monthly salary may be a mere few hundred dollars to ensure their cargo is never assessed the correct tariff.

For those that do not want to pay bribes, sources who have dealt with Berbera Customs as customers have described a culture of entrenched impunity that can ruin a business with a stroke of a pen and leave little choice for clients but to comply with the demand of corrupt customs officials.

Total System Failure

Arcane and purposefully convoluted

According to multiple sources familiar with customs operations, there are overlapping layers of checks at all customs, and especially Berbera Customs that ensure a cargo leaving the terminal has been properly taxed and has all of its paperwork in order.

Complicity from large parts or the entirety of the system is a prerequisite for the corruption of this magnitude to take place at Somaliland’s largest source of tax revenue.

Cargo xray technology

Although Somaliland government has awarded a no-bid contract for the deployment of a cargo scanner over a year ago to Universal Matrix, a company owned with business tycoon Mohamed Aw Saeed currently cargo inspection remains to be human capital intensive. 

In his latest supervisory visit to Berbera Customs in early February 2020, Minister Shire admitted the need to streamline customs processes.

Although the Ministry of Financial Development has not given an official reason the entire leadership of Berbera Customs including the manager Mr. Abdirahman Cirro, his deputy, the cargo inspection team and the customs police commander has been replaced.

There is no indication if any oversight entities such as the Auditor General were activated to look into this matter or if any procedures changes were put in place to prevent future occurrences of such incidents.

The outcomes of recent investigations by Somaliland Auditor General in Hargeisa Municipality, Ministry of Education and Science, the Civil Service Commission among others are unknown and have not been publicly released.

Below are the specific questions sent to the Minister of Finance Development Dr. Saad Ali Shire that were unanswered.

  1. There has been changes made to the Berbera Customs leadership, has anybody been fired, prosecuted for this issue or has there only been reassignments?
  2. To your knowledge has this sort of thing happened in the past, if so how many times and is there an active investigation to get to the bottom of it?
  3. For corruption of this magnitude to take place was there a systemic issue that enabled perpetrators to subvert existing procedures, checks and balances?
  4. Aside from the customs were there others from the ministry who were disciplined for this event?

It is unclear if President Muse Bihi Abdi who has run on an anti-corruption platform is aware of this incident. No one has been persecuted for corruption since President Bihi has taken the helm on November 2017.

Creative Commons License

Notice: This is an article by Somaliland Chronicle. It is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. Under this license, all reprints and non-commercial distribution of this work is permitted.

Latest

The Last Will and Testament of a Dictator: Djibouti’s Precarious Transition from Guelleh and Its Global Reverberations

As Ismaïl Omar Guelleh’s once-iron grip on Djibouti loosens,...

Somaliland Supreme Court Vacates Case Against MP Abib, Upholds Parliamentary Immunity

KEY POINTS: Somaliland Supreme Court vacated the case against MP...

Taiwan Commits $2 Million to Support Somaliland’s 2024 Presidential and Party Elections

The Government of the Republic of China (Taiwan) has...

Prodigal Sons of Betrayal: Why Somaliland is Unable to Close the Revolving Door to Mogadishu

In a land where loyalty to Somaliland is expected...

Stay Connected

Don't miss

The Last Will and Testament of a Dictator: Djibouti’s Precarious Transition from Guelleh and Its Global Reverberations

As Ismaïl Omar Guelleh’s once-iron grip on Djibouti loosens,...

Somaliland Supreme Court Vacates Case Against MP Abib, Upholds Parliamentary Immunity

KEY POINTS: Somaliland Supreme Court vacated the case against MP...

Taiwan Commits $2 Million to Support Somaliland’s 2024 Presidential and Party Elections

The Government of the Republic of China (Taiwan) has...

Prodigal Sons of Betrayal: Why Somaliland is Unable to Close the Revolving Door to Mogadishu

In a land where loyalty to Somaliland is expected...

Somaliland Orders Closure of Egyptian Cultural Center Amid Strategic Diplomatic Maneuver

In a bold diplomatic move, the government of Somaliland...

The Last Will and Testament of a Dictator: Djibouti’s Precarious Transition from Guelleh and Its Global Reverberations

As Ismaïl Omar Guelleh’s once-iron grip on Djibouti loosens, the Horn of Africa teeters on the brink of upheaval. Whispers of the president’s failing...

Somaliland Supreme Court Vacates Case Against MP Abib, Upholds Parliamentary Immunity

KEY POINTS: Somaliland Supreme Court vacated the case against MP Mohamed Abib Yusuf on constitutional grounds. The court ruled that MP Abib's arrest and detention violated...

Taiwan Commits $2 Million to Support Somaliland’s 2024 Presidential and Party Elections

The Government of the Republic of China (Taiwan) has taken a significant step in supporting Somaliland's democratic journey by committing $2 million for the...