Smuggling of agricultural products: ever-changing tricks, endless devious schemes

In the small hours, in Tansan Village, Naliang Town, Fangchenggang City, Guangxi, on the China-Vietnam border, 30-year-old Tang Moumou was arrested at home by customs anti-smuggling police. He is suspected of smuggling Vietnamese rice into the country from a non-designated crossing point by way of "guaranteed cargo."

And far to the north, in the coastal city of Dalian, when customs officers conducted an on-site inspection at a factory, they found that an enterprise, during production, had substituted domestic cotton materials for part of its imported bonded cotton materials, and after making the surplus imported bonded cotton materials into finished products, had sold them on the domestic market without customs permission to profit, with the initial estimated case value exceeding 100 million yuan and suspected evaded taxes of more than 30 million yuan.

Cotton, rice and other important agricultural materials have long been subject to quota management. Because price gaps at home and abroad are relatively large, agricultural materials have become high-risk smuggled goods, highly "favored" by smugglers. Since the start of this year, customs has carried out a one-year "Green Wind" special campaign against the smuggling of agricultural products. To evade customs supervision, smugglers keep inventing new tricks and coming up with devious schemes.

Illegally opening channels to sneak goods in

The river before our eyes does not look especially clear. Several small boats are moored at the bank, some debris floats on the surface, and not far away on the opposite bank, at a simple pier, people can be seen busily unloading goods from container trucks.

Soldiers wearing "Guangxi Public Security Border Defense" reflective vests and camouflage uniforms, along with police wearing helmets and carrying walkie-talkies, are on duty here. Under the trees by the river stands China boundary marker No. 1371 -- clearly, this is no ordinary river. This is the border river between China and Vietnam, the famous Beilun River in Dongxing, Guangxi.

"The river channel here is narrow. At low tide it is only about ten meters wide, and the water is shallow. Add to that the tangled mountain paths on the bank and the many forks, and these 'natural advantages' make smuggling very convenient. Sometimes they set up a ladder at the bank, unload one or two boxes of goods from a boat, and a motorcycle hauls them away in just a few minutes." At the Dachuanbu joint law enforcement station by the river, an anti-smuggling police officer on duty there told an Economic Information Daily reporter.

In the small hours, 30-year-old Tang Moumou was arrested at home by customs anti-smuggling police. He is suspected of smuggling Vietnamese rice into the country from a non-designated crossing point by way of "guaranteed cargo." When the upper reaches of the Beilun River run low, some sections are only a few dozen centimeters deep. To make smuggling easier, Tang Moumou and other smugglers simply laid cement precast slabs on the riverbed and organized trucks to sneak Vietnamese rice across the border, then transported it to Fangcheng, Qinzhou and other places for stockpiling.

Guangxi and Vietnam are linked by mountains and rivers, forming a series of natural barriers. In recent years, because rice prices inside and outside the border differ, smugglers, driven by profit, have ignored the law and used these natural barriers to illegally open channels, set up private ferries, and rest by day while moving by night, bypassing designated crossing points to sneak smuggled goods into the country for profit.

"In July and August this year, we repeatedly seized trucks transporting smuggled rice in Fangcheng, Dongxing and other places, and the rice packaging was identical." Zeng Wenning, deputy director of the Dongxing Customs Anti-Smuggling Sub-Bureau, found the situation unusual. "By questioning the truck drivers, we learned that someone was organizing the smuggling of Vietnamese rice into the country from non-designated crossing points."

"The smuggling site was hidden in a village far from the highway, and the smugglers used the wall of a lumber mill to block the entrance to the passage." An investigator with the Dongxing Customs Anti-Smuggling Bureau said, "Tang Moumou smuggled by way of 'guaranteed cargo.' He helped cargo owners transport rice to Dongxing City or Fangchenggang City, earning 270 yuan to 410 yuan per ton, but if caught by law enforcement along the way, he had to pay about 3,000 yuan per ton in compensation." Because the "cost" of being caught was so high, to avoid capture Tang Moumou hired dedicated people to "watch the water" along key routes, and as soon as there was any "suspicious situation," they would immediately pass on the tip.

It is understood that, in order to illegally seek huge profits, after ordering rice in Vietnam, smuggling gangs first sneak the rice into the country through non-designated crossing points along the China-Vietnam border in the area of Naliang Town, Fangcheng District, Fangchenggang City, Guangxi, then transport it to warehouses in the area near Fangcheng District, Fangchenggang City, Guangxi, and in the urban area of Qinzhou City for stockpiling and repackaging and changing specifications, and afterward transport it by large trucks to Nanning City, Guangxi, and other places for sale.

"The Beilun River is 60 kilometers long, with a navigable distance of 18.5 kilometers. The long distance and narrow channel make supervision relatively difficult. In recent years, smugglers have often adopted the ant-moving approach of small quantities many times: first using small motorcycles to haul goods to private houses, then loading them onto small vans, and then concentrating them at the next point." Liao Kefu, deputy director of the Nanning Customs Anti-Smuggling Bureau and concurrently director of the Dongxing Customs Anti-Smuggling Sub-Bureau, said, "This is the characteristic of smuggling crimes at non-designated crossing points. On the surface it looks like scattered, sporadic cross-border sneaking, but in fact it is often carried out in an organized and premeditated way under the planning and control of professional smuggling gangs."

Since the start of this year, Nanning Customs has successively busted 4 major rice smuggling cases in Nanning City, Dongxing City, Chongzuo City and other places in Guangxi, taking down 10 smuggling and trafficking criminal gangs suspected of rice smuggling in one stroke, involving a total of 48,700 tons of rice, with a total case value of about 290 million yuan, suspected evaded taxes of about 121 million yuan, and 38 main criminal suspects of the involved gangs arrested.

In the courtyard of the Jinfeng warehouse of Dongxing Customs, all kinds of seized vehicles are parked everywhere. An Economic Information Daily reporter saw that these cars, which look no different on the outside, have been modified beyond recognition inside. Most have had their rear seats removed and connected to the trunk to expand capacity, their chassis steel plates modified to carry more weight, and thick film applied so that even a strong flashlight cannot shine into the car... An anti-smuggling officer pointed to a minivan and said that after modification it could carry one ton more cargo than before. He took out a triangular conical iron device to show the reporter. This is a tire puncturing device, which smugglers often scatter on the road while fleeing to evade pursuit.

Real and fake contracts play tricks

In a case recently busted by Shenzhen Customs involving suspected smuggling of rice into the country by underreporting prices, the smugglers played tricks with real and fake contracts.

The suspect involved, Yang Mou, established Le Mou Company in 2002, specializing in domestic rice trade. In 2006 he began engaging in rice import and domestic sales business, and set up a processing plant. After determining the variety of rice to be imported, Yang Mou would usually call multiple foreign suppliers to ask for quotes, then ask the lower-quoting suppliers to send samples, and even fly personally to the suppliers to inspect samples. Only after confirming that the rice quality was acceptable would he sign a purchase contract.

But when signing the contract, Yang Mou would agree with the overseas supplier on an underreported rice price, have the supplier directly produce a fake contract with the underreported price, and then privately sign a real contract with the true quoted price. Le Mou Company would use the quotation on the fake contract to declare the imported rice to customs. After successful entry, the overseas supplier would issue Le Mou Company two kinds of invoices, A and B. The payment on invoice A was the payment stated in the fake contract; for this part, Yang Mou would arrange for someone to transfer it to the supplier through normal foreign exchange payment channels. The payment on invoice B was the price difference between the fake contract and the real contract; Yang Mou generally transferred it to the supplier through underground banks. Customs seized at the scene 30 containers totaling 750 tons of imported Thai fragrant broken rice. Evidence shows that Le Mou Company used the above smuggling method to falsely declare this batch of Thai fragrant broken rice at 640 USD/ton as Thai white broken rice at 320 USD/ton for smuggling import, with the underreported price reaching as high as 50%.

In addition to smuggling rice by underreporting prices and falsely declaring product names, smugglers also evade large amounts of tax by illegally buying and selling the "Agricultural Product Tariff Quota Certificate."

According to the introduction, China currently implements an import tariff quota management policy for imported rice and some other key agricultural products, and issues the "Agricultural Product Tariff Quota Certificate" to grain enterprises or trading companies that meet certain application conditions, with imports made according to the quantity and category allocated in the certificate. To seek high profits, smugglers buy, sell and mix use the "Agricultural Product Tariff Quota Certificate" to achieve imports at low tax rates.