A news item in a leading newspaper alleging a revenue loss of Rs100 billion due to the launch of the Faceless Customs Assessment (FCA) system has been thoroughly rebutted by the Chairman of the Federal Board of Revenue (FBR) along with his team of senior customs officers during a media briefing today. The report was based on a misinterpretation of a preliminary audit report of the Directorate General of Post Clearance Audit (PCA) (Press Statement, FBR, 15 September 2025).
The Faceless Customs Assessment (FCA) system, inaugurated by the prime minister last year in Karachi to combat corruption, has incurred a revenue loss of about Rs100 billion in three months. This was revealed in a detailed analysis by the Pakistan Customs Audit, an internal arrangement of the Federal Board of Revenue, covering the period from 16 December 2024 to 15 March 2025 (Faceless Customs System loses Rs100bn in three months, Dawn, 15 September 2025).
The mafia-like operations prevailing in the Customs wing of the Federal Board of Revenue, highlighted way back in a 2011 report by Dr Shoaib Suddle, a retired senior police officer and former Federal Tax Ombudsman (FTO), unfortunately persist even in 2025. Several reports suggest that the state of affairs has, in fact, further deteriorated.
The situation has not improved even after the introduction of IT-based systems, ostensibly employed to curtail corruption in customs clearance processes. The reason is simple: the men behind the machines are the culprits, engaged in mega corruption. Many of them have not been brought to book even after a lapse of fifteen years, despite clear instructions given by the Supreme Court of Pakistan in Suo Motu Case No 16 of 2010 (PLD 2011 SC 997).
According to a report (Customs Fraud Causes Loss of Billions, The Tribune, 19 March 2025), “in a major system breach”, importers managed to tamper with over 10,000 Goods Declaration (GD) forms by altering originally declared quantities and descriptions of goods in connivance with the Pakistan Single Window (PSW) to evade billions of rupees in taxes. The culprits remain unpunished to this day.
The government in February 2025 ordered a fact-finding inquiry after an intelligence agency uncovered a network of 78 allegedly corrupt customs officers and smugglers involved in smuggling non-duty-paid goods from Quetta to Punjab and Islamabad (Govt Orders Inquiry into Smuggling, The Tribune, 15 February 2025).
In major tax frauds, the parties involved are officials, tax advisers and taxpayers. Cases where unilateral tax fraud is committed are rare, such as using fictitious bank accounts to obtain fake refunds. However, even in such cases, bank officials are often involved with tax officials. Historically, mega tax frauds in customs have caused losses of billions, with alleged involvement of staff backed by high-ranking officers.
A news report published in February 2022 revealed that the Customs Intelligence Department “unearthed a network of top officials involved in large-scale misdeclarations of description and value of imported goods in over 900 containers, causing losses worth billions to the national exchequer”. The most disturbing aspect of the report was the alleged involvement of “collectors or chief collectors linked to political circles or top bureaucracy at the federal level, using this clout to their advantage and causing huge revenue losses to the national exchequer”.
The involvement of FBR officials in the smuggling network raised serious concerns about the extent of its penetration within the country, potentially undermining civil-military efforts to combat illegal trade
The report mentioned that corruption had become so evident at the collectorate level that DG Customs Intelligence Muhammad Zahid had sent several letters to FBR Chairman Shabbar Zaidi calling for action against the officials involved. While lamenting that no action was taken against those officers, the report mentioned that only a few customs officers posted in Peshawar and Quetta were transferred and relieved of their duties with immediate effect.
Earlier, a report of 2020 revealed that the competent authority had dismissed seven customs officials from service over their alleged involvement in wheat smuggling during the wheat shortage and soaring flour prices across the country. Among the sacked officials were four collectors, additional collectors and deputy commissioners, who were part of the Torkham and Chaman customs operations.
In February 2025, Shehbaz Rana, a well-respected journalist covering FBR, reported that thirty-seven allegedly corrupt customs officials and forty-one smugglers had been identified as part of a network smuggling cigarettes, tyres and clothes from Quetta to major consumption centres in Punjab.
The report claimed that independent studies had suggested cigarette smuggling alone was causing Rs250 billion (£900 million) in revenue losses. It further revealed that FBR and the military establishment had jointly initiated an effort to tackle smuggling, which is severely damaging the economy and undermining domestic production. The involvement of FBR officials in the smuggling network raised serious concerns about the extent of its penetration within the country, potentially undermining civil-military efforts to combat illegal trade.
Prime Minister Shehbaz Sharif, who took much credit for the operationalisation of Pakistan Single Window (PSW) in March 2025, failed to take appropriate action against those who allegedly caused revenue losses of billions at its opening. The mega scam, according to reports, “has shaken the belief that documents carrying details of importing companies, agents, imported goods and due duties and taxes once filed online cannot be altered or changed”. The modus operandi was simple: the importer-PSW officer nexus targeted GD forms originally declared at Karachi port but destined for inland dry ports such as Peshawar, Multan, Lahore or Faisalabad. The common method of tampering involved declaring at least two types of goods in a GD, one subject to a high customs duty and another with a lower duty rate.
In this backdrop, the press release of FBR claiming that its Chairman emphasised in the media briefing that “the leaked audit observations, cited in the report, were preliminary, exaggerated and in some cases factually incorrect”, appears more like a cover-up.
The 161-page report provides a detailed analysis after scrutiny of 13,140 goods declarations (GDs), detecting several discrepancies in 2,530 GDs, raising serious concerns about the quality of assessments and indicating revenue and compliance risks. Without allowing Customs Audit to prove the veracity of its findings, the press briefing by the FBR Chairman was, even otherwise, not a prudent move.
Corruption can be minimised by using technology and better monitoring systems, but neither the Court nor the government has ever seriously considered this solution
The reports by credible journalists quoted above confirm beyond any doubt that tax evasion and the plunder of national wealth continue unabated, courtesy of the unholy alliance between unscrupulous tax advisers, greedy businesspersons and corrupt tax officials. Evasion of customs duty of billions of rupees is not possible without the connivance of this trio. It is time for the Chairman of the FBR to read the directions of the Supreme Court in Suo Motu Case No. 16 of 2010.
After considering the Report on the ISAF Container Scam by the Office of the Federal Tax Ombudsman and the one-man Commission Report of Ramzan Bhatti, ex-Member Customs, the highest court of the land passed strictures against FBR. It also asked for implementation of the Commission’s recommendations but, until today, no action has been taken against the culprits. The same is the fate of the three mega frauds involving senior officers of the Customs wing discussed above during the last five years. Thus, the words of Dr Shoaib Suddle remain relevant: “The picture that emerges is of gross inefficiency, maladministration and corruption in an organisation that is geared to further principally individual and communal self-interest of a few individuals at the cost of Pakistan and her people”.
The Supreme Court of Pakistan in its order of 4 March 2013 in CMA No 2243 and 3683 of 2012 in SMC No 16 of 2010 held: “The performance of the FBR, as indicated by the report, now submitted is far from satisfactory. Despite a lapse of almost one and a half years since the report was compiled by the Federal Tax Ombudsman, no progress worth mentioning has been made for the recovery of the loss identified, which is regrettable”. After twelve years of this order, it appears even the Supreme Court has lost track of it. FBR, as usual, has not retrieved even a single penny from the colossal revenue loss identified.
Suo motu actions from 2009 to 2018 became a frequent exercise of the Supreme Court, coming down hard on politicians and government officials and passing several orders but failing to establish any effective follow-up. This raised serious questions about solving governance issues through suo motu powers, now curtailed through the 26th Constitutional Amendment, even where issues of fundamental rights are involved. This has effectively nullified the fundamental duty of the highest court to safeguard and enforce the fundamental rights of the people. The result is perpetual and wilful non-compliance of judicial orders by the Executive.
While dealing with the case of missing containers, the Supreme Court failed to order the installation of equipment to x-ray and scan incoming and outgoing containers, which would allow for non-intrusive inspection of cargo and vehicles. These scanners, including drive-through and gantry systems, help to improve security, reduce physical inspections, detect contraband and increase cargo flow efficiency by allowing for the rapid scanning of containers and trucks. This is where the actual problem lies. Corruption can be minimised by using technology and better monitoring systems, but neither the Court nor the government has ever seriously considered this solution.
Way back in 2012, in an op-ed co-authored by this scribe, it was observed: “It is a disturbing reality that all containers, both inbound and outbound, are not scanned in Pakistan. In importation, the collector-businessman mafia deprives the nation of billions of rupees in the form of evaded duties on customs, sales tax and federal excise duty, wherever applicable”.
The goods, often grossly undervalued, once released without proper valuation, remain outside the scope of taxation under sales tax and income tax. This is the primary cause of the underground economy's generation. The customs mafia is not ready to accept simple technological reforms such as scanning all containers and baggage. The incumbent Chairman of the FBR must understand that proper collection of duties at the import stage would automatically lead to better collection of all taxes, namely general sales tax (GST), federal excise duty (FED) and income tax.
In its order of 30 August 2013 in SMC No 16 of 2010, the Supreme Court noted:
“In order to further ascertain the correct position about the smuggling of arms and ammunition as well as evasion of duty on different items at the ports of Karachi and Bin Qasim, we are of the opinion that there must be a strict check and full duty should be recovered because on account of evasion of customs duty, black money is also generated, which allegedly flows inside the country, particularly in the city of Karachi, and is used by the accused persons in order to promote their criminal activities throughout the country”.
The Supreme Court’s order for strict checks at ports was ignored as it could have curtailed the flow of speed money that goes into the so-called common pool for all the officers and staff of Customs. A viable solution to counter tax evasion at the importation stage is the installation of radiographic scanners that use X-rays or gamma rays to provide an image of the internal contents of containers. This not only increases the detection rate of contraband hidden in containers but also helps to detect any secret compartments within the containers. Such scanners are working successfully at the thirty busiest ports of the world, from Shanghai, Singapore, Los Angeles and Rotterdam to Jebel Ali. FBR must install the same without wasting any further time.
The plea by FBR that it requires huge investment in buying equipment and training personnel is nothing but a flimsy excuse, in fact, motivated by ulterior motives, as it would end their notorious era of mega corruption. The use of radiographic scanners is necessary to counter precious revenue leakages. One hopes that Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb will take up this matter on a priority basis.