In a settlement that showcases the cost of tariff evasion, Ford Motor Company is coughing up $365 million after it was accused of misleading the United States government. The auto giant allegedly imported vans with bogus seats to avoid higher duties, officials said. The Transit Connect cargo vans, which came from Turkey, were fitted with fake seats, making them seem like passenger vehicles during import to attract a lower duty rate.
From 2009 to 2014, the ploy involved installing temporary rear seats in these vehicles, the Department of Justice highlighted, claiming these were "never intended to be, and never were, used to carry passengers." Once the vans cleared customs, the seats were yanked, and the vans sold as they were initially intended: cargo vehicles. The settlement, according to ClickOnDetroit, is meant to resolve allegations that stem from this misclassification, that allowed Ford to pay a mere 2.5% duty instead of the heftier 25% that would have applied otherwise.
Despite the sizable settlement, Ford asserted a strong disagreement with many of the characterizations in the DOJ's statement and admits no liability in this matter, but highlighted that they chose to settle "in the interest of moving on from this complex, decade-old dispute," a Ford spokesperson told Malay Mail. Initially, Ford faced a potential penalty upward of $1.3 billion, an amount trimmed after legal wrangling and a decision from the Supreme Court not to hear the auto manufacturer's appeal in 2020.
The scam, said to have lasted from 2009 to 2013, involved nearly 163,000 Transit Connects, as per the Justice Department, was no small scheme. The settlement includes close to $184 million in restitution of unpaid customs duties, and the rest comes as penalties, Trends MENA reported. Though Ford held that the rear seats were genuine the, settlement conveys that the company took a practical route "to avoid the delay, uncertainty, inconvenience, and expense of protracted litigation."
Brian Boynton, head of the DOJ Civil Division, made clear that such tactics will not fly, stating, “The government will not permit companies to evade duties by adding sham features to their products and then misclassifying them,” an assertion that is likely to echo through the halls of corporations that might consider similar customs dodge in the future.
