The Finance Ministry launched an investigation in 2011 after receiving a tip-off that rogue oil trader George Farrugia was committing serious tax fraud, The Sunday Times has learnt.

A file with documented evidence was passed on to the Finance Ministry indicating rampant tax fraud at Aikon Ltd, which belongs to Mr Farrugia, the oil trader who was granted a presidential pardon in the Enemalta oil procurement scandal.

The dossier included Aikon invoices to Total’s Geneva-based subsidiary Totsa, which are being published today in The Sunday Times.

A ministry spokesman confirmed the tip-off had been received and that these invoices were part of the documentation.

He said such cases are taken “extremely seriously”, adding that the file was forwarded for investigation to the Tax Compliance Unit on August 25, 2011.

The details concerned allegations related to under-declarations of turnover.

“The ministry is informed that an experienced high-ranking official was appointed to investigate the case, investigations which are still ongoing,” the spokesman said.

Asked why an investigation which started towards the end of 2011 had still not been concluded, the spokesman replied: “Tax fraud investigations take as long as necessary to establish the facts, and are also dependent on the data that needs to be collected and analysed, the cooperation of the investigated parts and the nature of the case.”

The tax abuse had been also flagged in a 2010 investigative audit commissioned by the Farrugia brothers, owners of the John’s Group, when they discovered that their own 47-year-old brother, George Farrugia, was siphoning off business from their oil trading subsidiary, Powerplan Ltd.

Farrugia inquiry continues

Powerplan had exclusivity agreements with Total and Trafigura which legitimately entitled the company to a commission of $1 per metric tonne of oil sold to Enemalta.

However, Mr Farrugia, who ran the company, invoiced some of the sales under his own personal company Aikon Ltd.

The report, drawn up by audit firm FST Consulting, pointed out that e-mails found on the personal computers of Mr Farrugia and his wife contained addressed to officials from Totsa (Total’s Geneva-based subsidiary) and Trafigura B.V. with attachments of invoices on the letterheads of both Aikon and Powerplan.

The invoices discovered added up to some $1.56 million for the period 2004 and 2008.

However, the report also underscored that the list of invoices was not exhaustive because of the gaps in the invoice numbers of the documents found.

The investigative report estimated that Mr Farrugia had siphoned off some $8.6 million (€6.44 million) worth of commission from Powerplan to his company. Nonetheless, the company declared sales of some €55,000, €49,000 and €24,000 respectively for 2006, 2007 and 2008.

Asked whether it had acted on the contents of the investigative audit, the Finance Ministry said it was unaware of it. The Sunday Times has now passed on a copy to the ministry.

The case comes after a week of intensive police questioning of Mr Farrugia, who was granted a presidential pardon to tell all on the oil scandal.

A number of people have been arrested in connection with the case, including former Enemalta chairman Tancred Tabone and his former adviser Frank Sammut.

Documents published last month by Malta Today purportedly show that Mr Sammut received commission payments from Trafigura for Enemalta oil contracts.

Police also arrested Tony Cassar, chairman of Cassar Ship Repair, and Francis Portelli of Virtu Ferries in view of their involvement in Island Bunker Oil, which took over the excess storage capacity from the state-owned Mediterranean Oil Bunkering Company (MOBC) after it ceased bunkering operations.

mmicallef@timesofmalta.com

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