No officials expected to resign yet on VAT fraud

Prime Minister Lawrence Gonzi yesterday indicated there would be no resignations at the VAT department before the police conclude their investigations into tax fraud that is believed to be on a massive scale.

Asked whether he felt top level officials should resign in the wake of the arrests of employees made on Friday, he said he would not interfere.

"I have always believed that the police have their role in the country and we should not influence it," he said, adding that if necessary, steps would be taken against anyone found responsible.

The statement comes as the scale of the fraud came further to light following a report in The Sunday Times which said that the money siphoned off is believed to run into millions and that the scam probably has been going on for years.

The news of the investigation, which has been underway for three months, first broke on Friday when the police arrested eight employees of the department, including a pregnant woman.

Sources say prominent businessmen are also being investigated.

The case could well turn out to be one of the biggest cases of fraud involving a government entity. The figures owed in VAT could rise in the coming weeks since sources said the findings are the "tip of the iceberg".

Still, neither the Prime Minister nor the Opposition Leader Joseph Muscat chose to comment yesterday, the latter omitting any mention of the arrests in a speech he gave in Rabat.

Dr Gonzi was speaking at the airport on his arrival from the Czech Republic, where a two-hour meeting between US President Barack Obama and EU heads of state at a summit yesterday "seemed to be writing a new chapter in relations" between the US and the 27-strong bloc, he said.

The talks touched upon the importance of a strong and united Europe and good relations between the two continents. Dr Gonzi said this strong partnership was required to overcome current global challenges.

He said the heads of state discussed the need to continue working together to overcome the global economic downturn and build upon last week's G20 meeting, which decided on a $1 trillion economic stimulus package and measures to control financial markets.

"This is very important for our country because Malta depends on the success of these measures and we will continue to look closely at their effect," he said, echoing Mr Obama's emphasis on the joint responsibility of all countries in the fight against the economic downturn.

Dr Gonzi said he agreed with Mr Obama's call for more dialogue based on friendship and reciprocal respect with the Muslim world.

"I believe that this strong, positive and constructive dialogue with the Muslim world should take place to find the best way forward for our country's development," Dr Gonzi said.

Discussions also revolved around Afghanistan, Iran and the Middle East, including the importance of a two-state solution for Palestine and Israel.

Referring to Mr Obama's backing for Turkey's bid to become an EU member, Dr Gonzi said Malta agreed with its accession as long as Turkey abided by all the qualifying criteria for membership.

Yesterday, Mr Obama said the US was prepared to lead in the global effort against climate change, which Dr Gonzi described as a "big change" in the US's position. The former Bush administration had failed to commit the US to climate change targets, despite being the world's biggest polluter, as Europe set ambitious ones of its own.

"He made a categorical statement that the US will be at the forefront, together with the EU, to address climate and energy challenges," Dr Gonzi said, adding that this was a very valid statement for the island which had energy challenges that needed to be addressed and ambitious targets to reduce greenhouse gas emissions by 2020 over 1990 levels.

"We need to start working now and take all the needed decisions even if they are difficult ones."