Editorial

It is not just in court that the wheels generally turn at an agonising slow motion. In the government service, the situation is not much different. The case of fraud at the VAT department three months ago is a case in point. Now, it is quite understandable that police investigations have to be thorough and that this requires time as, otherwise, unnecessary speed could work out against the very interest of the investigations or court cases. Even so, considering the seriousness of the fraud case, it would seem that, judging by the replies given by the Finance Minister Tonio Fenech to a string of questions put to him by The Sunday Times, there are still a number of questions that have yet to be cleared up.

What particularly stands out is that, three months on, a start has yet to be given to the process of carrying out an internal review. The situation as to what exactly has been done since the fraud case was first reported is unclear as, while, at one point, the Finance Minister said that "a number of positions have changed in this period to beef up areas where we felt there was not enough control", he remarks in another part of the interview that "the internal evaluation needs to establish if there were enough checks and balances".

Clearly, however, there have not been enough checks and balances because, had there been, there would not have been fraud at the scale reportedly being investigated. True, few systems may be completely foolproof to scams but, in this case, reports of possibilities of wrongdoing had, apparently, been circulating for quite some time before the department and the police swooped in. What needs to be clarified is the reason for the inordinate delay in launching the review. Was it not possible for an audit firm to carry out the review without in any way hindering the police in the course of their investigations? As a key revenue source, the VAT department requires the highest possible scrutiny and monitoring to ensure efficiency and revenue security all the time.

There are other very important revenue sources, all of which ought to have internal controls that are strictly adhered to all the time, not just when the spotlight is turned on a particular department for a particular failure. For this reason, it is a good idea for the review planned to be carried out at the VAT department to be extended also to the income tax department, the tax compliance unit and the Customs department.

The minister said they had to ensure that these departments "are not subject to the sort of thing that happened at the VAT department". One preventive measure suggested by a correspondent in the discussion over the fraud case was the shuffling of workers in revenue collection units from one department to another. This has its good and bad points but its feasibility ought to be investigated by the firm that will be carrying out the review at the VAT department. Another point is that although, unfortunately, some people that have a personal tax grievance may be prone to taking revenge upon the government for this by simply spreading rumours of fraud, with hindsight, it is wise for the internal control officers not to ignore altogether such rumours.

Efficiency in the collection of government revenue depends on a number of factors but surely adequate and effective internal control and accountability are key requirements.