China Seizes Tanker in Tax Evasion Probe
China seized a tanker and detained several people last month, including one employee of Swiss trading house Gunvor, as part of a probe into suspected tax evasion on imported oil, Chinese and trading industry officials said.
Gunvor confirmed its employee had been detained for questioning without naming him. Gunvor said it has not been notified of a formal arrest or any charges against its employee.
"Gunvor itself has not been formally notified of any investigation involving the company," a Geneva-based spokesman for the firm said. He said that following the detention the firm had looked into the activities of its employee and found no wrongdoing.
China has stepped up efforts to crack down on fuel smuggling, which has increased after authorities raised consumption taxes on oil products in 2014, creating price gaps between prices abroad and at home.
China imports the lion's share of commodities it consumes from many trading houses and has probed their employees before. Chinese customs views import tax evasion as smuggling.
The customs office for Guangzhou, the capital of Guangdong province in southern China, said in an email it had seized a foreign-flagged tanker and detained several individuals.
It said it was investigating suspected smuggling of light cycle oil (LCO), a refinery by-product for diesel blending, without identifying the vessel or the individuals.
A senior official at China Changjiang National Shipping Group said that its vessel, the Hong-Kong-flagged CSC Friendship, had been held "to help investigations" of Guangzhou customs.
Gunvor said it had delivered oil products aboard Friendship into China on May 10-14 but added that "no vessel while under charter by Gunvor has been detained."
"Gunvor's business in China is otherwise ongoing," it said.
Two Chinese industry sources with knowledge of the situation said the detained Gunvor employee was Yin Dikun, managing director of Gunvor Singapore.
Gunvor declined to disclose the identity of the employee. Gunvor said that following the detention of its Singapore office employee it had appointed Timothy Legge, its chief risk officer, as acting managing director of Gunvor Singapore.
Under Chinese customs rules, taxes on fuel imports must be paid by local importers. Gunvor did not say who it sold the cargo to.
Zhou Jule, Chairman of China Base Ningbo Group based in eastern city of Ningbo, said his company had been the import agent for the cargo.
He said the cargo had been detained as part of a probe and that his staff had been summoned by the Guangzhou customs but not detained.
China Base re-sold the cargo to Twinace Oil, a Guangzhou based fuel dealer, according to Chinese sources with knowledge of the transaction. Twinace declined to comment.