After LG, Samsung Mired in $89m Fraud Case

South Korean electronics giant Samsung has been accused by the Islamic Republic of Iran Customs Administration of violating trade regulations to evade payment of 3.36 trillion rials ($89.4 million) in tariffs.

«This is similar to another violation by LG Electronics, which surfaced in December,» an IRICA official told Financial Tribune on telephone on condition of anonymity.

LG Electronics was fined almost three quarters of a billion dollars by IRICA for dodging the payment of 18.2 trillion rials (over $450 million) in tariffs by shipping disassembled products into Iran through separate customs bureaus.

IRNA quoted an unnamed IRICA official as saying that Samsung’s case is linked with refrigerators.

Iranian customs regulations subject home appliances to import tariffs of over 50%, when shipped as final products to Iran. However, the government imposes considerably less for parts used in domestic manufacturing to support local industries.

The move to fine the South Korean party is in accordance with statutes of the World Customs Organization’s Harmonized Commodity Description and Coding System generally referred to as «Harmonized System» or simply «HS».

Samsung and LG Electronics lead Iran’s home appliance market. While foreign products account for 65% of the domestic market, the two South Korean companies hold a 55% share.

Both companies are active in Iran through their representative companies.

IRICA also told us that LG Electronics has been trying to point the finger of blame at its Iran representative Goldiran. However, IRICA is insisting that the South Korean Company should take responsibility for its violation.

The preliminary December ruling for LG was due to be discussed in two arbitrator commissions. IRICA says the company was found guilty in the first session, as the customs administration has presented evidence about the charges.

IRICA says LG is highly likely to be found guilty in the final session as well.

The second commission will be attended by representatives of the Ministry of Industries, Mining and Trade; judiciary; and Iran Chamber of Commerce, Industries, Mines and Agriculture.