Rs111 billion penalty imposed on 13 solar panel import companies for money laundering

The Customs Adjudication Authority has slapped a penalty of Rs 111 billion on 13 solar panel import companies involved in a major money laundering operation. The companies were found to have funneled Rs 120 billion out of the country using over-invoicing tactics.

As per reports, the ruling, issued by Dr. Erum Zahra of the Customs Adjudication Authority, uncovers a complex network of shell companies that manipulated banking systems to execute one of Pakistan’s most significant trade-based money laundering operations. The fraud involved inflating the prices of solar panels, which were imported under the guise of legitimate trade.

The investigation revealed that all 13 companies were fictitious entities with no actual business operations. These paper-based companies received a total of Rs 140 billion in deposits, with Rs 45 billion being in cash, despite having no physical presence or verifiable business activities.

The largest penalties were imposed on four of these companies, with fines ranging from Rs 53 billion to Rs 8.6 billion.

The fraudulent activities involved the importation of solar panels valued at Rs 120 billion at inflated prices. These panels were then sold locally at Rs 85 billion, creating a Rs 35 billion discrepancy, which facilitated the illegal transfer of funds abroad under the cover of legitimate trade.

The case has garnered attention at the highest levels of government, prompting the Prime Minister’s Office to set up an investigation committee to address the institutional failures that allowed such widespread fraud. 

The inquiry includes multiple government bodies such as banks, the Securities and Exchange Commission of Pakistan (SECP), Customs, Inland Revenue Service (IRS), and the Financial Monitoring Unit (FMU).

The Post Clearance Audit (PCA) has filed 13 FIRs involving 45 individuals, including company owners and facilitators. Despite multiple summons, none of the accused appeared before the authority, leading the authority to impose not only the record financial penalties but also personal fines totalling Rs 45 million.

Authorities have also seized 327 containers of solar panels at various ports, owned by the implicated companies, with the government expecting to recover Rs 1.5 billion from the auction of these goods.