'Mastermind spent money on drugs'

The man believed to be the mastermind behind the VAT fraud earned about €186,000 which he burnt in a drug habit that cost him about €300 daily, a court heard yesterday.

Nigel Abela, 38, is facing a list of charges that include receiving bribes, corruption of VAT officials, money laundering, unlawful exaction, lending money without a licence, misappropriation and cocaine possession. He can face up to a maximum of 14 years in prison and a €500,000 fine.

Mr Abela, of Dingli, pleaded not guilty to running the scam, which led to 32 people, including himself and another five VAT department employees, six men thought to be middlemen, and 20 businessmen, being charged. Except for three who did not appear when summoned and two who were excused, the remaining 27 accused and their lawyers crowded the court room waiting for their case to be heard.

Describing him as "the mind behind these alleged crimes", Police Inspector Angelo Gafà said Mr Abela blew his money on drugs.

On April 4, the police arrested him and his partner Ruth Gatt in Ċirkewwa while they were on their way to Gozo. Ms Gatt, a clerk at the department, was also allegedly involved in the scam.

When arrested, Ms Gatt had white powder, suspected to be cocaine, in a rolled €20 note and about €1,755 in cash.

Mr Abela had a lifestyle beyond his means, Inspector Gafà said. When the police examined his bank accounts, they realised he had a turnover that ran into thousands of euros.

Even though he filed a not guilty plea, Inspector Gafà said Mr Abela had admitted to the police to taking bribes for several years in order to reduce money businessmen owed the VAT department.

Mr Abela thought up the scheme when he was at the department's customer care section after hearing people complain about the hefty fines. He would personally approach businessmen and offer to reduce their fines against a fee.

He claimed to take fees of between €100 and €5,000 but some people involved said they paid much more.

He eventually roped in other men to act as intermediaries. Among these were Saviour Micallef and Alfred Mallia who yesterday both pleaded not guilty to the charges of complicity in bribery and trading in influence.

The scam would take place either by deregistering the company and making its VAT number inexistent or by increasing the company's expenses when submitting the returns. In this way, companies that actually owed money to the VAT department would be registered as having credit, Inspector Gafà said.

Police Inspector Ian Abdilla, testifying against Ms Gatt, said that she and Mr Abela had jointly opened a savings account in June 2007. Ms Gatt told the police she knew Mr Abela was up to something and had warned him to be careful. However, she said she did not know whether there was anything wrong.

She also said the money in the joint account belonged to Mr Abela and her only involvement was when she signed some papers, Inspector Abdilla said.

Magistrate Doreen Clarke also heard businessman Emmanuel Farrugia, 46, from Gozo plead not guilty to acting as an accomplice in bribery, fraud and trading in influence.

The rest of the cases were put off to later this month.