The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to conduct a three-year nationwide audit of all import and export sheds operated by Gerry’s Dnata. This follows allegations of a massive cargo fraud and duty evasion scheme at Karachi’s Jinnah International Airport (JIAP), reportedly involving billions of rupees in losses.
In a formal order issued Tuesday, the FTO instructed the Member Customs (Operations) to ask the Collector of Customs at JIAP to initiate proceedings to suspend the company’s cargo shed license. A Show Cause Notice (SCN) must first be served to Gerry’s Dnata’s CEO, followed by a hearing. Depending on the audit results and investigations, the license may be cancelled if charges are proven.
These recommendations were made under Sections 29 and 30 of the Federal Tax Ombudsman Ordinance, 2000. Furthermore, the FTO has ordered the Collector of Customs to investigate the involvement of Customs officials allegedly complicit in the scheme. After a fact-finding inquiry, the case will be referred to FBR for disciplinary action under the E&D Rules, 2020.
The investigation was initiated suo motu under Section 9(1) of the FTO Ordinance. It was prompted by an October 2, 2025, report alleging that a UAE-based cargo handler at JIAP had illegally removed high-value imported goods over the past 18 months. The fraud allegedly involved collusion with Customs personnel.
The scheme reportedly included at least six consignments of expensive electronics removed without payment of duties and taxes. Fraudsters allegedly used forged Goods Declarations (GDs) and recycled machine numbers from previously cleared pharmaceutical GDs. Many of the importing companies involved were found to be bogus entities with falsified business credentials.
The FTO noted that although Customs authorities have arrested some suspects and uncovered part of the fraud, the scale of the operation suggests active collusion by Customs staff stationed at the shed. Gerry’s Dnata, as a licensed terminal operator under the Customs Act 1969 and Customs Rules 548-556E, is legally obliged to comply with all Customs procedures.
The FTO stated that repeated failures by the Customs Department to prevent violations constitute maladministration. A similar theft involving large quantities of mobile phones had been reported previously, yet no meaningful action was taken against Customs officials. The ongoing pattern of revenue loss and institutional inaction points to systemic oversight failures, which the FTO classifies as maladministration under Section 2(3)(i) and (ii) of its Ordinance.
The nationwide audit aims to uncover the full extent of the alleged fraud and hold both the company and any implicated officials accountable. License suspension or cancellation, if implemented, would be a significant step toward restoring oversight and preventing further revenue losses.
