Chinese prosecutors have charged an employee of Swiss commodity trader Gunvor Group who has been held for a year for allegedly smuggling fuel and evading taxes on sales from the Philippines, according to a legal document viewed by Reuters.
In May last year, Chinese authorities seized a tanker and detained several people as part of a probe into suspected tax evasion on imported oil. A Gunvor senior executive based out of Singapore was one of the people detained, a source briefed on the matter told Reuters.
Yin Dikun, managing director of Gunvor Singapore, was charged with smuggling 1.3 million tonnes of fuel and evading nearly 378 million yuan ($55.7 million) of taxes, prosecutors in Guangzhou, the capital city of Guangdong province, said in the document dated June 2 and seen by Reuters.
Gunvor confirmed in an email an employee had been charged by Chinese authorities in a customs dispute between China
and the Philippines. It did not identify the person, but said it continues to do business in China.
"Gunvor itself has not been charged," it said. "The company views this situation as a purely political matter."
It said it was not liable to pay duties because it was not the importer of record into China.
"Given that Gunvor is not the importer, legally the charges don't make sense," the company said.
The prosecutors did not respond to a request for comment.
Yin Dikun has been held by Guangzhou police since May 2016. An official warrant of arrest was issued in June of last year.
Charging an employee of a foreign company is the latest sign that Beijing is broadening its efforts to crack down on tax evasion in the world's top oil importer. Recently the central government has also tightened scrutiny over tax matters of independent refiners, known as teapots.
The charges against Yin centre on Gunvor's sales of light cycle oil (LCO) from the Philippines to Chinese buyers over a two-year period.
Gunvor had supplied (LCO) on a delivered basis to Chinese importers and provided certificates indicating the LCO fuel was produced in the Philippines, according to the legal document.
The prosecutors said in the document the LCO, a refinery by-product for diesel blending, had not originated from the Philippines. They did not say from where they thought the LCO had originated instead.
Under a free-trade agreement between China and the Association of Southeast Asian Nations (ASEAN), goods that are manufactured in ASEAN countries are exempt from import tariffs. The Philippines is an ASEAN member.
"Knowing that the LCO fuel it supplies are not manufactured in the Philippines, Gunvor Singapore nonetheless
provided its Chinese customers ASEAN certificates for them to clear the customs," the document said.
Investigations by Chinese police found Gunvor Singapore was suspected of supplying 36 shipments of LCO under these arrangements between 2014 and 2016, it said.
Gunvor said in its email to Reuters that
Philippines customs have confirmed the documentation was issued in full compliance with rules and regulations.
Gunvor said it maintains rigorous corporate compliance protocols and has taken a "conservative approach to the Chinese market in general, given the known business risks it poses".
Reporting by Chen Aizhu in BEIJING and Dmitry Zhdannikov