FTO Demands Nationwide Audit, Calls for Gerry’s Dnata License Cancellation Over Alleged Multibillion-Rupee Fraud

The Federal Tax Ombudsman (FTO) has directed the Federal Board of Revenue (FBR) to launch a comprehensive three-year audit of all import and export sheds operated by M/s Gerry’s Dnata at Karachi’s Jinnah International Airport (JIAP), following allegations of large-scale cargo fraud and duty evasion.

In an order issued on Tuesday, the FTO instructed the Member Customs (Operations) to have the Collector of Customs (Airports), JIAP, serve a Show Cause Notice (SCN) to the company’s CEO and provide a hearing. Pending completion of the audit and investigative proceedings, the company’s cargo shed license may be suspended or cancelled if the charges are confirmed. The directions were issued under Sections 29 and 30 of the Federal Tax Ombudsman Ordinance, 2000.

The FTO also called for a probe into the role of Customs officials allegedly involved in the fraud. Following a fact-finding inquiry and hearings, any implicated staff are to be referred to the FBR for disciplinary action under the Enforcement & Disciplinary (E&D) Rules, 2020.

The investigation, initiated suo motu under Section 9(1) of the FTO Ordinance, was triggered by a news report on October 2, 2025, which alleged that the UAE-based cargo handler had facilitated the removal of high-value imported goods worth billions of rupees over the past 18 months. The scheme reportedly involved forged Goods Declarations (GDs), fake importing companies, and the reuse of machine numbers from previously cleared consignments, particularly in pharmaceuticals and electronics. At least six high-value consignments were allegedly removed without payment of duties and taxes.

The FTO noted that the scale of the fraud strongly suggests active collusion by Customs personnel stationed at the sheds. As a licensed terminal operator under the Customs Act, 1969, and Customs Rules 548-556E, Gerry’s Dnata is legally required to follow all Customs procedures. The Ombudsman stated that repeated violations, revenue loss, and the failure of Customs authorities to prevent these incidents indicate systemic maladministration, falling under Sections 2(3)(i) and (ii) of the FTO Ordinance.

The directive marks a major step toward restoring oversight and accountability at JIAP’s cargo facilities, with potential license suspension and disciplinary actions aimed at preventing further revenue leakage and ensuring adherence to Customs regulations.