Bribes galore as VAT fraud investigation nets 25 - so far

The police have compiled enough evidence to take court action against at least 25 individuals in Malta’s largest VAT fraud investigation to date, The Sunday Times reports.

Six VAT Office employees, a number of businessmen and a criminal gang are expected to face charges related to defrauding the VAT Department of hundreds of thousands of euros, possibly millions.

It has emerged that the kingpin was a VAT Department clerk, who roped in other colleagues and a number of intermediaries, some with a criminal background, in a three-way fraudulent deal. It is believed that the clerk pocketed more than €190,000 over three years, often meeting clients after office hours.

He initially requested bribes to waive their accumulated fines and subsequently devised more elaborate schemes that involved illegitimate refunds being issued to businesses that agreed to be part of the scam. Inspectors were allegedly bribed to either cover the illicit transactions or even, in some cases, to waive garnishee orders filed against defaulting customers.

The police have also unearthed a number of cases where expenses were deliberately inflated. In at least one case, a businessman with a pending court case approached a middleman to waive pending VAT fines and interest. He also tried to ensure that the money he owed would be reduced. The company submitted nil returns for a number of years and recently submitted returns with a credit balance of over €10,000 – the same balance owed to the VAT department.

The businesses implicated in the scam include carpenters, restaurants, a major air conditioning supplier and a paint manufacturer.

Finance Minister Tonio Fenech, who kicked off the investigations after being alerted about the racket by a businessman, had pledged his full support to the investigation not only by giving investigators full access to information but by also attaching a number of senior key officials within the department to support the investigation.

Read the full story in The Sunday Times.