31 in court today over €10 million VAT department fraud
31 people are to be arraigned in court this morning and to be charged with various offences related to the VAT scam that is believed to have cost public coffers a staggering €10 million.
Six suspended VAT department employees will be facing charges that include conspiracy to commit a crime, organised crime and bribery, fraud, and, in some cases even money laundering. Five alleged middlemen will also face similar charges.
20 businessmen will mostly face bribery charges.
More people could be charged after the police broadened their investigation by questioning a number of auditors and financial specialists during the last few weeks, and the Attorney General has already been consulted on the possibility of drawing charges against them.
Those behind the scam may face up to 10 years in prison. However, businessmen who are expected to admit their involvement could get away with much lighter sentences.
Police investigations revealed that when the scam began, four main people were involved - a department official, a businessman whose relative worked at the department, and two individuals who acted as middlemen.
They took advantage of clients’ ignorance of the fact that it was government policy to waive fines for late payment of VAT dues, and were taking bribes for doing so.
Eventually, the fraud became more complex, with different department officials working to waive money that businesses owed the department.
The list of businessmen contains few prominent individuals, with the majority being self-employed.
The man that police believe to be the mastermind, 37-year-old Noel Abela, from Dingli, a department employee, has the longest charge sheet and if convicted may face up to 10 years in jail.
Abela allegedly admitted to police officers under interrogation that he had pocketed more than €180,000 from the scam he had started.
As more people became involved, the amount defrauded eventually grew to an estimated €10 million.
The Office of the Prime Minister said in a statement that, with today’s arraignment, the government had shown clearly that it would not tolerate abuse.
“It is also a message that the government takes seriously reports it receives,” Prime Minister Lawrence Gonzi said, while pointing out that so far only the police investigations had been concluded and one would have to wait for the court’s decision.
The Labour Party insisted that someone should shoulder political responsibility for the scam, adding that the Prime Minister had a duty to see that this took place.
Only in this way could the government be taken seriously when it said it treated reports of abuse seriously, PL said.
On his part, Finance Minister Tonio Fenech said he would like to see the completion of an internal audit before taking a decision on the question of responsibility of department officials.
The police raided the department on 3 April following three months of investigations that were triggered by a businessman who brought the scam to the attention of Finance Minister Tonio Fenech. He in turn alerted the police.
Meanwhile, the chairman of a newly appointed VAT department review committee set up after the discovery of internal fraud has resigned just three weeks into his appointment.
It is understood that the chairman, a former civil servant who worked in the income tax department, felt “uncomfortable” about investigating “professional colleagues.”
Finance Minister Tonio Fenech confirmed the resignation and said that another individual had already been approached to fill in the post.
The committee was appointed last August, while a private audit firm was also selected to assist it with its review, but the exercise has been delayed by the chairman’s resignation.
The committee’s terms of reference is to carry out an internal review of the VAT department’s processes, identify weaknesses in the system and suggest controls to curb abuse.
The minister has repeatedly said that any decisions related to change in the set-up of the VAT department would be taken after the committee concludes its task.
Last Friday, Fenech ruled out an amnesty for VAT defaulters when launching an amnesty for income tax defaulters that would see their fines and interest slashed by 90 per cent.
Alleged middlemen • Saviour Micallef, Siggiewi.
• Herman Sant, St Paul’s Bay.
•Alfred Mallia, St Paul’s Bay.
• Jesmond Abela, Gżira.
• Carmel Sammut, Mosta.
Businessmen • Brian Zammit, Naxxar.
• Keith Stagno Navarro, Sliema.
• Roque Polidano, Żurrieq.
• Munther Ananbeh, Msida.
• Alexander Scudamore, Sliema.
• Anthony Muscat, San Ġwann.
• Emanuel Farrugia, Victoria.
• Maria Borg, Msida.
• Mark Anthony Camilleri, Baħar iċ-Ċagħaq.
• Giuseppe Vella, Naxxar.
• Keith Attard Portughes, Swieqi.
• Neville Mula, Għargħur.
• Pawlu Grech, Naxxar.
• Sebastian Bonnici, Qormi.
• Gregory Paul Brincat, Madliena.
• Stephen Buhagiar, Msida.
• Adrian Debono, Sliema.
• Maurice Agius, Swieqi.
• Ludwig Camilleri, Swieqi.
• Anthony Migneco, Attard.