VAT scam charges mainly involve small businessmen

There are hardly any "big fish" among the 20 businessmen against whom charges were issued over the €10 million VAT scam.

The list of names, revealed by The Times yesterday, shows that among the better known names are those of Anthony Migneco, a former PN vice-mayor for Swieqi and a director of Medairco, a company which deals in air-conditioning, and Gregory Brincat, a director of S&R Handaq, a company that produces industrial paint and varnish.

Two restaurant owners were also implicated - Maria Borg, director of Trattoria Palazz, in Valletta, and Alexander Scudamore, director of the Greek restaurant Bouzouki in St Julians.

The rest are mostly small self-employed, including truck driver Emanuel Farrugia, electrician Adrian Debono and carpenter Maurice Agius.

Another three company directors, Sebastian Bonnici from turnkey company B&B Cabins, Giuseppe Vella from Ta' Natu and Dismar Ltd, Keith Attard Portughes from IVN Holdings and owner of Charles Garage Stephen Buhagiar will also be facing the charges. On Tuesday, the police filed charges against 31 people - six VAT employees, five men who were allegedly acting as middlemen and 20 businessmen - over the alleged fraud.

Among the department employees was, 37-year-old Noel Abela, of Dingli, who is believed by the police to be the brains behind the scam.

Mr Abela, along with another six department employees, will be facing charges that include organised criminality and bribery, fraud and even, in some cases, money laundering, as will the five alleged middlemen. The rest, 20 businessmen, will mostly face bribery charges.

Those found guilty of setting up the scam face a maximum of 10 years in prison. The scam was initially based on taking bribes for waiving fines on late VAT returns, with a department official, a businessman and two middlemen being involved, according to police sources.

Many people were unaware that because the fines on late VAT returns are draconian, it was the government's policy to waive them anyway when a business fell in line.

Eventually, other department officials started to waive money owed by businesses. In some cases, they would even arrange matters so that instead of owing money to the department, the companies were falsely owed money by it, the police believe.

The police raided the department on April 3 following three months of investigations triggered by a businessman who brought the scam to the attention of Finance Minister Tonio Fenech.