EU warns UK-centred China import scam may shift to Europe's "Silk Road" (updated)

Piraeus Port Authority SA

06/06/2018 11:24

(adds quotes, details)
    By Francesco Guarascio
    BRUSSELS, June 6 (Reuters) - European Union anti-fraud
investigators suspect Greece and Hungary may have become the
main EU centres of a multi-million-euro scam involving imports
of Chinese clothing and footwear  that uses the infrastructure
of China's new "Silk Road".
    The large-scale fraud, which involves underdeclaring the
value of imported goods to pay lower duties and sales taxes, was
first uncovered in Britain, where it had gone on for years,
prompting the European Commission this year to demand that
London pay 2.7 billion euros ($3.1 billion) in lost customs
duties to the EU budget  urn:newsml:reuters.com:*:nL5N1QQ5MV.
    Officials at the EU anti-fraud agency OLAF said they now
suspected the scam could have shifted to Hungary and to the port
of Piraeus in Athens, which has been majority-owned by China's
state-owned COSCO Shipping  601919.SS  since 2016.
    Hungarian and Greek customs data show a surge of undervalued
clothing and footwear imports from China over the past two
years, OLAF officials told Reuters. They stressed that this
trend had coincided with a drop in undervalued Chinese imports
into Britain.
    Customs duties in EU countries are a direct revenue for the
bloc's budget. They are collected by national authorities before
being sent to Brussels.  
    "We are worried about this," OLAF's director for
investigations Ernesto Bianchi told a news conference in
Brussels on Wednesday, adding that monitoring of import flows
would be enhanced.
    Reuters exclusively reported in April that Italian
authorities were investigating suspected import fraud by Chinese
criminal gangs at Piraeus port, the largest in Greece.
 urn:newsml:reuters.com:*:nL8N1S015A.
    Asked about the suspected fraud in April, COSCO Shipping
said: "The company has in its global operations consistently and
strictly followed local and international laws, and persevered
to operate legally and compliantly."
    Hungarian and Greek customs authorities were not immediately
available for comment.
    China wants to transform the Greek port into its "gateway to
Europe" as part of its $126 billion "Belt and Road" initiative,
which envisions a new Silk Road of land and sea routes with
trading partners.
    Under the plan, a fast rail and land route would connect
Athens to the Hungarian capital, Budapest, across the Balkans.
That same route could have been used by traffickers to move
underpriced and undeclared Chinese goods to Hungary,
investigators suspect.
    "It is maybe too soon to jump to conclusions, but it is
worrying that fraudsters are now obviously looking at
infrastructure investment as a business opportunity for them
too," Bianchi said, urging EU authorities to make sure that the
infrastructure built by the Chinese "is not exploited for
illicit traffic".
    In the British scheme, Chinese criminal organisations used
the German port of Hamburg as Europe's first arrival point for
undervalued clothing and footwear cargos. But goods passed
customs controls only after having been shipped to Britain's
ports, under EU rules that spare checks on items in transit
between the bloc's member states. 
    The British ports of Dover and Felixstowe were still the
EU's main hubs for undervalued Chinese imports in 2017, OLAF
data showed, but that flow has nearly stopped this year because
of stricter checks by British customs, EU officials said.
    Britain's decision to leave the EU's customs union might
have also persuaded the criminal groups that oversee this
business to find new routes to bring Chinese goods into Europe,
the officials said.
    The British government is contesting that frauds occurred in
UK ports. OLAF chief Nick Ilett said he expected the controversy
with Britain would last "some time" and would probably need to
be settled at the EU's court of justice.
    OLAF defines undervalued goods as those which fall far below
the average price declared in all EU customs.

 (Reporting by Francesco Guarascio; additional reporting by
Renee Maltezou in Athens; Editing by Gareth Jones and David
Stamp)
 ((Francesco.Guarascio@thomsonreuters.com; Twitter:
@fraguarascio; +32 2 287 68 17;))