Ford Motor Co. agreed to pay $365 million to settle charges levied by the Department of Justice (DOJ) that the automaker purposefully dodged import duties for years by mislabeling and undervaluing hundreds of thousands of cargo vans it brought into the United States from Turkey.
The settlement resolves allegations discovered through an investigation by the DOJ’s Trade Fraud Task Force, which partnered with Customs and Border Protection (CBP), the DOJ announced in a press release Monday.
The penalty is one of the largest negotiated by the CBP. Ford argued in settlement negotiations that after the CBP allowed a certain number of vans to enter the United States as passenger vans, it constituted an established and usual practice and that the CBP was in violation by reclassifying the vans to cargo vans.
The details: From April 2009 to March 2013, Ford told CBP officials cargo vans it was importing from Turkey were passenger vehicles, allowing the automaker to avoid paying higher tariffs, according to the settlement agreement.
The company allegedly undervalued some of the vehicles, to lower even further the amount it would have to pay in import duties.
Ford hatched a plan to install temporary rear seats to make it appear its Transit Connect vans were legitimate passenger vehicles to avoid a 25 percent duty rate applicable to cargo vans, the DOJ said. The rear seats had no headrests or safety air bags, and other expected features were lacking, the agency said.
On paperwork Ford submitted to the CBP, it classified the vans as “motor cars” and other vehicles used primarily to transport people, the DOJ said. After the vans cleared customs, they were brought to a nearby port facility where the back seats were pulled out, the DOJ said.
“[The] settlement is a victory for American taxpayers and for our efforts to combat trade fraud and ensure compliance with United States trade laws,” said Benjamin Mizer, acting associate attorney general, in the DOJ’s release. “Companies that attempt to evade customs duties with sham representations and workarounds will not be rewarded.”
Company response: “Ford strongly disagrees with many of the characterizations in the DOJ’s statement and admits no liability in this matter,” a company spokesperson said in an emailed statement. “But in the interest of moving on from this complex, decade-old dispute, we have agreed to settle the matter once and for all.”
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