98
ALRAQABA . ISSUE 15
since there are many factors that make this product attractive to smugglers, however, two key
factors are discussed below:
1. It is some of the best quality Diesel in the region. Its high quality and low cost makes it very attractive
to fraudsters in the region.
2. It is low-cost relative to Diesel produced by other countries in the region. It is a subsidized fuel
product in Kuwait, making it the second cheapest selling price in the region. Diesel is more valuable
on the local market because smugglers can sell the product in other local markets for a much higher
price, and because they pay much less to fraudulently acquire the Kuwaiti diesel, their profit margin
is higher.
Fraud techniques: How do smugglers of petroleum products do this in Kuwait?
Smugglers of Diesel in Kuwait use multiple fraud techniques and they have several locations in
which they do so which makes it harder to reveal the fraud like Smuggling diesel from truck filling
stations located in refineries, smuggling through seaports, country borders, and illegal routes using
containers and jerry cans and Fraud and smuggling of some products using hidden containers in
tank trucks.
What made those fraud techniques easy?
As long as there is incentive, opportunity, and the ability to rationalize theft, fraudsters will feel
that petroleum products are an easy target. The fact that Diesel fraud has continued for several
years means that key internal controls are lacking, which results in an even higher fraud risk.
Since 2009 the State Audit Bureau has been reporting on Diesel fraud in its Annual reports. These
reports showed how weak the internal controls were in some of the petroleum industry companies,
describing many of the signs and symptoms of inadequate internal controls. Below is a list of some
of the inadequate controls mentioned by the State Audit Bureau in its annual reports regarding
Diesel smuggling:
1. Systems in the country are not linked, the system of the General Administration of Customs needs to
be linked with Kuwait Petroleum Corporation to enhance controls on exports of petroleum products.
2. Weak security controls in truck filling stations.
3. Lack of security surveillance cameras for the stations.
4. Poor accounting systems, especially in receipt of invoices.
5. The lack of coordination between different departments to review the monthly invoices of the diesel
product and verify the consumption rates.
STOP FRAUD: State Audit Bureau observations in action
The State Audit Bureau issued several observations, and after the submission of the investigative
report that included facts and quantities of smuggled diesel product submitted to the National
Assembly on May 2014, the topic became one of public interest and news headlines were all about
Articles
