Charge of organised crime over VAT fraud
Two VAT officials caught red-handed
The architects behind the €10 million scam at the VAT department are to be arraigned on charges of bribery, fraud and organised crime and will face up to a maximum of 10 years in prison.
The mastermind is an employee at the VAT department who during interrogation admitted to pocketing more than €180,000 from a relatively small scam he had started out with, police sources said.
Eventually it mushroomed into a racket suspected to involve about 30 people, six of them department officials, who will probably be brought to court next Tuesday or Wednesday.
The people to be charged also include a number of businessmen in the catering, air-conditioning supply and construction sectors.
At first the scam entailed taking bribes for waiving fines on late VAT returns. At that point, four people were mainly involved - the department official, a businessman whose relative worked at the department and two shady characters who acted as middlemen, according to police sources.
Because the fines on late VAT returns are draconian, it was the government's policy to waive them when a business fell in line, but many people were unaware of this and the scammers exploited it: They would ask people for bribes in return for purportedly having the fines waived.
Eventually, however, the tentacles reached wider, with different department officials working to waive money that businesses owed the department. In some cases, they would even arrange matters in such a way that instead of being in debt to the department, the companies were falsely owed money by it.
The department ended up owing more than €370,000 over just two years to one company that was meant to have a debt with the department.
The police raided the department on April 3 following three months of investigations that were triggered by a businessman who brought the scam to the attention of Finance Minister Tonio Fenech.
The six department officials were arrested on the day (a couple of them being caught red-handed) and suspended. However, no top ranking official has so far assumed responsibility for the debacle and Mr Fenech said he would like to see the completion of an internal audit before taking a decision on this point.
"I was the person who instigated investigations that were then passed on to the police," VAT Commissoner Joe Sammut said in his defence last April as he dismissed the idea of handing in his resignation.