Chinese firm swindles Nigeria N178m in chemicals under declaration

Taiwo Hassan

A Chinese firm Zhe Long, owned by two Chinese indigenes, Wang Fuzeng and Chen Yuping, has allegedly defrauded the Nigerian government N178m in chemicals under declaration.

The firm, which has no exact location, allegedly defrauded the federal government about N178 million in goods false declaration following importation of chemicals. The firm imports Polyol, but usually presented it as Polyacetals at ports.

The reason for short-changing the Federal Government may not be unconnected with its modus operandi, which was to operate in secrecy without any valid functional registered office.

The firm uses a Nigerian law firm, Augustsons and Obidi &Co as its corporate head office in Lagos to perpetrate its atrocious act of false declaration, security breaches, tax evasion, forgery, illegal immigration, concealment and Customs duty evasion.

According to the Corporate Affairs Commission, the company was incorporated in Nigeria on the 11^th January, 2018, with an official address at 4, Eric Moore Road, Surulere, Lagos. But there is no trace of Zhe Long, rather the said address is being occupied by Augustsons and Obidi&Co, a law firm.  

In a document made available to our correspondent, Zhe Long has been shipping in Polyol chemicals meant for the production of foams and mattresses in the country from China, whereas in its shipping manifest, it declared it as Polyacetals so as to evade the right duty payment to the Nigeria Customs Service.

According to the import and shipping documentations, it was discovered that since last year, Zhe Long has been falsely declaring a chemical known as Polyol as Polyacetals.

Indeed, Polyols are a group of low-digestible carbohydrates derived from the hydrogenation of their sugar or syrup. 

Polyols react with isocyanates to make polyurethanes, which can be used to make mattresses, foam insulation for refrigerators and freezers, home and automotive seats, elastomeric shoe soles, fibers (e.g. Spandex), and adhesives.

On the other hand, polyacetal is an engineering thermoplastic used in precision parts requiring high stiffness, low friction, and excellent dimensional stability.

It is among plastic materials, with the most crystalline structure. It is also known for its good fatigue/creep resistance, low friction and good performance in cold temperature.

According to sources, the reason for this false declaration by the firm is that Polyacetals global pricing is $6,000 per metric tonnes as against $2,000 for Polyol.

Similarly in the report, it was alleged that the company is also guilty of declaring a chemical called TDI as Toluene during shipping into Nigeria.

For instance, the global pricing of Toluene is $6, 000 as against TDI’s $2,300.

According to economic experts, consequence of this false declaration by the firm is duty under-payment and also defrauding government of necessary duty and Valued Added Tax (VAT) on these imports transactions.

Aside the loss of revenue accruing to the government, there is major security implication for the false declaration of TDI. 

In the report, it was alleged that presently there is no evidence to show that Zhe Long has End User Certificate (EUC) for its TDI’s importation, which according to security experts, constitute a serious national security breach.

Apart from a chemical used in the production of polyurethanes, primarily for flexible foam applications including furniture, bedding and carpet underlay, as well as packaging applications, TDI is also used in the manufacture of coatings, sealants, adhesives and elastomers.

But due to TDI’s potential explosive properties, the material is a controlled substance that requires an End User Certificate, EUC issued by the Office of the National Security Adviser (NSA) for its importation to Nigeria.

When our correspondent visited Zhe Long’s official address at 4, Eric Moore road, Surulere, in Lagos as incorporated in the Corporate Affairs Commission, Abuja, there was no Zhe Long rather than Augustsons and Obidi & Co, a law firm.

When our correspondent demanded to speak with the owner of the law firm, who is the company secretary of Zhe Long, to clarify the import and documentation allegations, a representative of the Augustsons and Obidi & Co, Emeka Uzordinma, explained that the law firm registered Zhe Long to operate business in Nigeria, but without official office in Nigeria, rather a factory or warehouse in Ota where the firm stores its products importation.

Emeka pointed that the law firm has lots of Chinese firms operating in the country as clients, but was not aware of Zhe Long engaging in alleged false declaration in chemicals importation.

He further said that his law firm was not aware of the types of chemicals Zhe Long is dealing in. He, however, promised to get back to our correspondent by Friday.

When quizzed further, Emeka declined comment, insisting that he cannot speak on behalf of the firm since his law firm was only a legal adviser to them. He stressed that the law firm was not aware of the firm’s chemical importation.

Emeka said: “I don’t know what the company does; they are basically our client. I will have to check the records. I know they do a lot of things, but I can’t give you answers unless I check their records with us.”

On where Zhe Long office is situated in Lagos, Emeka replied: “I don’t know, but I will also need to check their records with us since we have many Chinese companies with us.”