Kurt Sansone
VAT Dept. review chairman resigns
31 to be charged over VAT fraud on Wednesday
The chairman of a new VAT department review committee set up after the discovery of internal fraud has resigned barely three weeks into his appointment, The Sunday Times has learnt.
It is understood that the chairman, a former civil servant who worked in the income tax department, felt "uncomfortable" about investigating people who were professional colleagues.
When contacted, Finance Minister Tonio Fenech confirmed the resignation and said another individual had already been approached to fill in the post.
"This person is reviewing the terms of reference and we are expecting a reply from him in the coming days," he said.
The committee was appointed in August. A private audit firm was also selected to assist it with its review, but the exercise has been delayed by the chairman's resignation.
The committee is tasked to carry out an internal review of the VAT department's processes, identify weaknesses in the system and suggest controls to curb abuse.
The minister has repeatedly said that any decisions related to change in the set-up of the VAT department would be taken after the committee concludes its task.
Last Friday, Mr Fenech ruled out an amnesty for VAT defaulters when launching an amnesty for income tax defaulters that would see their fines and interest slashed by 90 per cent.
Focus now shifts to the courts where, on Wednesday, 31 people are expected to be charged with various offences related to the VAT scam that is believed to have cost public coffers €10 million.
Six VAT department employees will be facing charges that include organised criminality and bribery, fraud, and, in some cases, money laundering. Five alleged middlemen will also face similar charges.
The rest, 20 businessmen, will mostly face bribery charges.
More people could be charged after the police broadened their investigation by questioning a number of auditors and financial specialists.
Those behind the scam face up to 10 years in prison, though any businessmen convicted of an offence are likely to receive lighter sentences.
When the scam began, four main actors were involved - a department official, a businessman whose relative worked at the department, and two individuals who acted as middlemen.
They took advantage of clients' ignorance of the fact that it was government policy to waive fines for late payment of VAT dues, and were taking bribes for doing so.
Eventually, the fraud became more complex, with different department officials working to waive money that businesses owed the department.
The list of businessmen contains few prominent individuals, with the majority being self-employed.
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Dominic Chircop
Sep 7th 2009, 12:48
As usual, correspondents are moved more by political axes they need to grind, rather than look objectively at matters.
In an opinion piece published by The Times on 30 May, I had mentioned the problems presently bestting the Civil Service. All Revenue-collecting departments could be prone to a scandal like the VAT Department one. As long as the pay of civil servants remains peanuts, the level will never rise above average.
It seems neither the Government, nor the MPO, seem perturbed by this. That is why civil servants in various departments leave Government employ.
If you pay peanuts, you get monkeys.
Or worse !
Jean-Pierre Aquilina
Sep 6th 2009, 19:06
@philip pace
It is one's duty to report irregularities, especially with facts in hand.
Of course, I understand that it is easier to blame the Minister.
r pace bonello
Sep 6th 2009, 18:56
Could not agree more with Ms Hansen. This is a public office and the person should be named. I, too, find his/her reason for resigning absurd. My gut feeling is that he he/she has come across some 'hot' information.
martin saliba
Sep 6th 2009, 15:59
Only one solution to get the maximun results , bring in someone from abroad.
Pamela Hansen
Sep 6th 2009, 15:39
Why is the chairman nameless? Surely it is in the public interest to know who s/he is? It is bad enough that certain people get preferential treatment and have their names withheld in court reports. But this is a public office.
c. camilleri
Sep 6th 2009, 15:36
As always it is a long long way to tippireri.
Lynn Zahra
Sep 6th 2009, 13:36
@Kurt Sansone
It would be educating the public if you would you kindly elaborate, what you mean by " .....it is government policy to waive vat fines for late vat dues ..........."
J Micallef
Sep 6th 2009, 11:45
Dear Minister - next time round please appoint someone with the guts to carry out the job.
I almost thought that this was orchestrated so that the investigation never gets anywhere...I wonder...
Anyhow, as the other contributors said, this familiarity with other staff will keep causing problems when it comes to the whistle blowing and undertaking investigations.
philip pace
Sep 6th 2009, 11:34
To the Minister,
The Pandora's box has been opened and I advise him to investigate other irregularities involved when a person has been investigated by a VAT official.
I know of one case, at least where I have the facts in hand.
The Chairman should be ashamed of himself as he should have resigned the minute that his appointment was approved as he knew about the feeling 'uncomfortable' upon investigating his collegues as he saw his personal interest first,then their interest secondly and finally the nations' interest ( if he ever thought in a responsible manner).
A blow to your plans dear Minister as this VAT scandal shall haunt you forever as it shall turn out very difficult to solve.
I suggest that every single VAT official has to be thouroughly investigated and answer to his/her actions taken in the last seven years and they have to declare all their assets of the same years. Those who are clean get promoted and those who are found under suspicion would get what they deserve!
Think well dear Minister as the nation is waiting for you to act justly or if you can't, resign!
Robert Callus
Sep 6th 2009, 11:17
@Noes Cutajar
In a land very far away, ''Gakbini'' like you are called whistleblowers. No matter what they are called, I still admire these kind of ''Gakbini''
E Vella
Sep 6th 2009, 10:42
Why did he accept the chairmanship in the first place? Bahri tal-bnazzi.
Paul Barrett
Sep 6th 2009, 10:17
There will always be a problem like this in a tight knit community like Malta.
First you have the problem of family/relatives, friends, friends of relatives or colleagues potentially involved.
Secondly you and your family have to live close to and amongst the people you are dealing with.
As an individual you can be super at your job, totally honest and above board but the pressures that can be applied may be greater than anyone can be expected to withstand.
The only other possibility in this situation, as much as it is hated, is to bring in outside help which has no axe to grind, no ties locally and can disappear from the local scene after the job is done.
Noel Cutajar
Sep 6th 2009, 09:59
It reminds me of a situation I was in when I had to divulge irregularities that were happening...when senior officials got to know about these irregularities they were more concerned who this 'Gakbin' was rather then these irregularities. I am proud to have been a 'Gakbin'.
M. Fenech
Sep 6th 2009, 09:39
"It is understood that the chairman, a former civil servant who worked in the income tax department, felt "uncomfortable" about investigating people who were professional colleagues."
That is why the VAT fraud has happened, coz everyone feels "uncomfortable" to report each other when systems are abused internally. So, either you resign or you quit your job, rather than be part of the system directly or indirectly.