ATHENS, Greece (BRAIN) — The seizure of 2,435 shipping containers here valued at least 250 million euros ($294.4 million) — including at least 500 filled with e-bikes — led to the European Public Prosecutor's Office (EPPO) charging six people including two customs officers for importing Chinese goods into the EU market and evading customs duties and value-added tax.
Of the 500 e-bike containers discovered in June at the port of Piraeus, 360 had not been declared to customs, and according to the EPPO, they would have been either not declared or undervalued to avoid anti-dumping duty payments. A total of 7,133 e-bikes and 3,696 e-scooters were secured.
"On average, only 10% to 15% of the actual number of e-bikes in a container were declared," according to the EPPO. "The damage to the EU budget for these e-bikes alone is conservatively estimated at 25 million euros in unpaid customs duties and 12.5 million euros in VAT losses."
It's also a reminder that the tariff increases can lead to customs fraud including undervaluing that would affect U.S.-based wholesalers, distributors, and retailers. Pat Cunnane, a business consultant and former CEO of Advanced Sports Enterprises, said the EU news should serve as a cautionary tale. Cunnane is active in trade issues and has been for the past 35 years and has testified on trade issues.
"There's a great risk in cheating, and people need to understand the risk," Cunnane told BRAIN and added that the consequences are back-tariff payments, fines, and criminal prosecution.
Bob Margevicius, senior advisor to Specialized Bicycles, agreed.
"It should serve as a warning to keep market order from both circumvention, mismarking, and also customs undervaluing products coming into the USA."
To illustrate his point, Margevicius cited a U.S. Customs notice in August about the creation of a cross-agency Trade Fraud Task Force to enforce importers who seek to dodge tariffs and other duties as well as bringing in prohibited goods.
The EPPO investigation code-named Calypso uncovered the fraudulent import network. In addition to e-bikes and e-scooters, other goods included textiles and shoes. Authorities said the scheme is believed to have caused estimated damages of about 700 million euros.
Calypso involved 14 countries: Bulgaria, China, Czechia, Denmark, France, Germany, Greece, Hungary, Italy, Poland, Portugal, Slovakia, Slovenia, and Spain. Chinese nationals mainly control the import networks, the EPPO said, adding they are also involved in money laundering and sending profits back to China.
"The EU is much more tough than customs in the USA," Margevicius said. "The way these investigations happen is that someone tips off customs. In this instance, they were working together. For sure Calypso is a huge operator with lots of financial leverage to navigate.
"I do think they will discover lots of counterfeits and other products which do not meet regulatory provisions or violate IP. Likely, there are other similar businesses in Europe, so this may be a shot across the bow."
According to the EPPO, only some of the containers have been inspected by Greek customs officials.
The two customs officers have been charged with repeated false certification, causing unlawful gains and damage to the EU budget of more than 871,000 euros, and with abetting customs fraud. Also, four customs brokers have been charged with repeated customs fraud, involving more than 871,000 euros in evaded duties and taxes, as well as with inciting false certification.
"It's very difficult to stop companies from cheating," Cunnane said. "Europe has done a much better job for a long time in enforcing trade policies."
