The anti-fraud authority of the European Union (EU) said on Monday it had uncovered a multinational ring smuggling large quantities of textiles and shoes from China to the EU in a scheme to avoid millions of euros in tax and duties.

The large-scale fraud scheme in imports of textiles and shoes from China involved a band of Chinese, Hungarian and Austrian citizens, the European Anti-Fraud Office (OLAF) said in a statement, without specifying the number and names of the suspects.

An investigation by the OLAF in co-operation with the Austrian authorities found that the band smuggled large quantities of textiles and shoes from China into the EU by means of heavily undervalued and false invoices.

Products involved were jeans, T-shirts and other clothes as well as various kinds of footwear including sports shoes and casual shoes.

Although the actual financial impact in customs duties and value-added tax (VAT) was impossible to be accurately established yet as the investigation was ongoing, the OLAF estimated the loss could be more than 200 million euros in customs duties alone, including anti-dumping duties imposed on leather shoes from China since March 2006.

Quantitative restrictions on the importation of Chinese textiles, which were introduced by an agreement between the EU and China in 2005, were also circumvented.

The overall quantity of textiles and footwear affected by this type of fraud until now could be estimated at around 600,000 tons, which went on sale in several EU countries including Austria, the OLAF said.

The investigation revealed mainly small customs clearance agents were used to do the customs clearance on behalf of Asian citizens. The goods were subsequently cleared in the EU member state of arrival without paying the VAT and were then transported into another member state of destination.

In the scheme the majority of consignees were either non-existent or disappeared from the scene after a short period in operation.