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Used-car dealers manipulating auction system at Customs - Reese

Published:Sunday | November 29, 2015 | 12:00 AM

Commissioner of Customs Major Richard Reese is raising concern about what he calls the manipulation of the auction system by some importers of motor vehicles.

The Jamaica Used Car Dealers Association (JUCDA), in a release last week, accused the commissioner of being on a destructive mission which would see many used-car dealers going out of business.

This came after Reese took a decision to suspend automatic discretion to release vehicles that have been put up for public auction.

The decision by Reese became a concern for the JUCDA because, according to that body, past commissioners of customs have facilitated clearance of motor vehicles that were previously published for public auction, so long as clearance is done before the auction date.

"The decision of Major Reese to curtail such a practice is inconsiderate, draconian and lacking in vision of a public official who should want to see the growth of small and medium enterprises (SME) in the country," the JUCDA said.

Reese has, however, said he had to take those measures in order to curb a problem of manipulation of the auction system which has not only been negatively affecting the Customs department operations but has also resulted in financial loss to the agency.

Reese explained that some dealers have been ordering vehicles which they are unable to pay for when they arrive at the port. These vehicles can remain uncleared for months on end, creating a shortage of storage space at the port.

Reese argued that the tendency of dealers to incur storage charges at the ports for non-clearance of vehicles goes against good business sense given that the storage charges at the ports are higher than those elsewhere.

He also highlighted a worrying practice of vehicles being delivered for dealers who claim they did not order them.

"Why are vehicles consigned to them and they make the claim that they did not order them ... ? Why would a supplier ship vehicles and incur cost? So I don't understand why they would say that people would just send them cars that they did not order," Reese told The Gleaner.

Reese went on to explain that he has been streamlining auction operations at Customs in order to increase efficiency at the ports.

"We were not auctioning as often as we should have, and that is what we are doing now. We are improving our efficiency incrementally, and basically just applying the law, so the discretion comes about in extenuating circumstances. In other words, you may have an elderly person or returning resident, and after they ship the car, they became ill ... but you couldn't have a wholesale delay because they use that to frustrate the auction, and that has been the experience," Reese said.

The delay Reese was referencing is a grace period which was previously given to used-car dealers to clear their vehicles. That discretion has, however, been allegedly abused by the dealers, who still do not come to clear their vehicles until the next auction, which is normally four months from the original auction date.

"It is costing us because when they pay the duties and clear it before the auction, we would have paid monies to list it, advertise it and so forth, so it's a further loss to us, and some of them go to the auction and buy it from the auction. We recover the duties and whatever excess is bid and clear our cost, but sometimes there is not enough money to pay the port or pay the owner, so they would bid on it and clear it and escape the port fees, so it's a kind of manipulation of the system," Reese said.

"So it's nothing about not having any mercy; it's about people trying to go around the system."