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ISO's Secretary General Mujica Once Led Chilean Customs Agency Accused of Facilitating Tax Evasion, Drug Trafficking
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11 January, 2019 - 5:38 PM
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Sergio Mujica, 2006

ISO Secretary-General Sergio Mujica once led the Chilean customs agency which was later accused of facilitating tax evasion, contraband importation and drug trafficking due to incompetence and understaffing. Mujica himself was criticized for having landed the leadership role despite having no experience in customs.

A former director of the National Fisheries Service in Chile, Mujica was granted the position of Director for the Servicio Nacional de Aduanas (Official Customs Service) in 2006, under the presidency of Michelle Bachelet. Mujica’s appointment was denounced by officials within the Customs Service itself, who bemoaned his lack of any prior experience in customs:

In a public statement, officials expressed their annoyance and frustration with government authorities, particularly those of the Ministry of Finance, following the appointment of Mujica.

The text states that the Executive maintains the irresponsible policy of appointing persons at the senior Customs office who are not related to this service and who are unaware of customs duties.

An economist from Chile told Oxebridge that Mujica was “a savvy self-promoter,” who quickly “ingratiated himself” to power brokers in the Bachelet government. As a result, by 2009 Mujica was put forth to take on the role of Deputy Secretary of the World Customs Organization. Mujica won that role, while simultaneously holding onto his role in the Chilean customs agency. During her second Presidency, Bachelet’s reputation was nearly obliterated under the cloud of the Caval corruption scandal.

Mujica became Secretary-General of ISO in 2017, and stepped down from the WCO. Oxebridge founder Christopher Paris said Mujica’s ascent represents “an example of failing upwards on the global scale.”

But according to 2016 reporting by the Centro de Investigación Periodística (CIPER), the customs agency run by Mujica and his successors amounted to a “crisis” that facilitated drug smuggling, tax evasion and the illegal import of contraband, going back at least to the Mujica era. Rolando Castillo, a customs inspector and whistleblower, reported in 2009 that mineral exports lost billions in revenue due to inefficiency and corruption. Specifically, Castillo revealed that shipments of copper concentrate from the La Escondida mines failed to declare the presence of molybdenum, resulting in at least $700 million lost revenue.

A similar situation, said Castillo, has occurred for decades with sulfur and minerals such as silver and gold; and metals such as rhenium and selenium that are obtained from molybdenum. Castillo’s assertion is supported by a report from the Comptroller’s Office about the inspection performed by Customs officials in 2013 to the laboratory that provides boarding control services to the La Escondida mine. In the field, they concluded that the procedures used were not sufficient to guarantee that the extracted sample was representative and that the controlled weight was the declared one.

Mujica’s agency ignored Castillo, and Chile only took action after $6 billion of copper concentrate was stolen years later, in 2014. Mujica’s successor, Gonzalo Pereira Puchy, “acknowledged that the control of mining exports is the worst weakness and problem of the [Customs] service.”

CIPER also found irregularities and conflicts of interest related to quality control laboratories responsible for the analysis of precious metals, services which the Customs Service opted to outsource since 2002 and throughout the Mujica years. CIPER found that the labs were owned by the mining companies they processed samples for:

The evident conflict of interest to the detriment of the State was exposed by the Comptroller’s Office in January 2015, in the report “On eventual irregularities in the National Customs Service regarding the sampling of minerals“. There it is affirmed that the organisms of inspection and issuers of weight reports “cannot have relation with the exporter to whom they provide service“.

Those labs were accredited by Chile’s national standards body, INN, which is the country’s official representative body to ISO. This means that ISO’s current Secretary-General ignored quality control conflicts of interest by one of ISO’s members when he was a Chilean government official. Ironically, Mujica has since gone on a massive social media tour to tout ISO’s flagship product, ISO 9001, a quality management standard.

Under Mujica’s leadership, ISO has moved standards development away from representative delegates provided by the world’s member nations, and has instead allowed a non-democratic bureaucratic body called the Technical Management Board (TMB) to write standards instead, skirting ISO procedures and WTO regulations under the Technical Barriers to Trade (TBT) regulations. WTO has since admitted it has no mechanism to enforce its standards development rules on ISO, despite having written them specifically for ISO. Despite the use of the TMB to write standards, Mujica and ISO continue to market ISO standards as being developed by “volunteers,” “industry experts” and under “consensus.”

In 2009, Mujica openly criticized the United States, and specifically the “100% Scanning Law” which was implemented after the 9/11 terrorist attacks.

This story is developing.

 

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