VAT scam: Documents altered to show company was owed refunds

A company which had to pay €838 to the VAT Department had its documents altered to show that it was owed refunds of €11,500, a court was told today when the first hearing into the alleged VAT fraud case was held.

Details of the scam were given by Police Inspectors Ivan Cilia and Ian Abdilla as the first group of people were arraigned over the case.

Inspector Cilia, giving evidence against alleged middleman Saviour Micallef of Siggiewi, said that Mr Micallef had received €186,000 in VAT refunds, with much of the paperwork having been handled by Nigel Abela.

Between October and December 2008 Mr Micallef handed four payments to Mr Abela for a total of €49,000.

Liliana Galea, a VAT Department employee (who is among the accused) used to help Mr Micallef submit the VAT returns and was given 1,000, the inspector said. He was not sure if the amount was in euro or Lm.

Mr Micallef also knew a certain Mark Camilleri, a businessman who had problems with the VAT Department and who paid €1,500 to Mr Abela for the outstanding bills to be waived, the inspector continued.

In another case a company, B&B Cabins, had to pay €838 to the VAT Department but after documents were channelled through Mr Micallef and Mr Abela, the company ended up with its documents showing €11,500 due as refunds. Mr Abela was given €3,500 as a result, the inspector said.

At the end of Inspector Cilia's testimony, defence counsel Veronque Dalli asked the inspector whether he was aware of two payments for a total €100,916 made by Mr Micallef to the VAT Department. The inspector said he had no information, whereupon Dr Dalli called for a VAT employee to whom the payment was made last September 4 to give evidence.

BANK ACCOUNTS INVESTIGATED

Inspector Ian Abdilla, giving evidence against VAT employee Ruth Gatt, who was Nigel Abela's partner, said the two had jointly opened a savings account on June 8, 2007 and by August of that year they had deposited Lm4,000. Another account was opened in December 2007 and within a year €26,000 were deposited there. Small amounts from this account used to be transferred to a current account and then withdrawn by Ms Gatt.

Inspector Abdilla said that Mr Abela and Ms Gatt were arrested while on their way to Gozo. A search revealed white powder, suspected to be drug, rolled in a €20 note, and a total of €1,755 in cash.

During interrogation, Ms Gatt said the two were friends and had lately been dating. She knew that Mr Abela had family and drug problems and had offered to go with him to Caritas. When asked about his lifestyle she said that he led a normal lifestyle but had previously led a 'comfortable' lifestyle.

She admitted that she knew that Mr Abela had been tampering with VAT payments and she had in some instances given information to him. There were occasions when he requested information from her while he was on leave or sick leave.

The inspector said that while she used to make bank deposits, Ms Gatt denied that the €26,000 in the bank account belonged to her. She however used to issue cheques from that account to Mr Abela and third parties. She also used an amount of the funds for her own benefit, including a trip to Euro Disney with her son.

She however denied ever having abusively tampered with VAT returns but admitted that the white powder found in her possession the trip to Gozo was cocaine.

Inspector Abdilla said there had been yet another bank account in which Ms Gatt had made three deposits which the police viewed as suspicious. One was for Lm900, which Ms Gatt said were lotto winnings, another was of €700 which Ms Gatt said were casino winnings and the third, of €4,737, which Ms Gatt said were given to her by the Housing Department to refurbish her residence. The police subsequently confirmed the grant by the Housing Department.

Giving evidence against Alfred Mallia, accused of having been a middleman in the alleged scam, Inspector Abdilla said Mr Mallia had met Mr Abela in a bar. At one time Mr Abela bought Mr Mallia's Mercedes for €12,000 but never paid for it. Mr Mallia then used to direct people needing VAT assistance to Mr Abela and used to get paid commissions. These people included Joseph Vella and Paul Magri, although it was not clear if a deal was made with the latter.

Others included Alexander Scudamore. Inspector Abdilla said Mr Mallia had told the police that Mr Scudamore had complained of his VAT bills. Mr Mallia offered to assist and asked for payment of €4,000, keeping €3,000 for himself.

But, the inspector said, Mr Scudamore had told the police that he actually paid €10,000. Mr Mallia then admitted he took €10,000 and did not give anything to anyone.