Some weeks ago the government gave details of companies that had been blacklisted after having been found guilty in the case of VAT corruption. The unravelling of that case took a long time in coming. Some details were made public after a number of individuals were arraigned on various charges. A number of them were found guilty and given sentences that were considered light by some sections of public opinion. Counter-arguments justifying the sentences were also issued.

That was as far as the involvement of the law courts went. The government also announced that thorough internal investigations had been made. Few details were given other than those which underpinned the charges before the courts. No one was made to bear administrative or political responsibility, notwithstanding the fact that the Minister of Finance revealed that fraud had been uncovered because a businessman informed him of it.

The striking point from all that was not that the fraud of the government had been carried out. Criminal minds seeking to work outside the laws will, like the poor, be with us forever, whoever is governing and whoever is bearing the burden of being in charge of the country's finances.

The point was that the government's internal mechanisms intended to see that everything was done above board and to deter criminals from trying to abuse the system had not functioned.

The aftermath of the case was that some companies were blacklisted. For instance, in reply to a parliamentary question it was revealed in the House of Representatives that, between 2004 and 2008, three air-conditioning companies - Medairco Ltd, Mega Air Co. Ltd and S&R Ħandaq Ltd - were blacklisted. The Health Minister also revealed that on occasions, the ministry had granted the companies direct orders. (The Times, April 29).

The Leader of the Opposition enquired whether, as a result of this, the ministry would no longer request the services of these companies. The Health Minister confirmed that, once companies were found guilty of the tax evasion case, they would automatically be blacklisted and they would not be awarded any other contracts. The minister added that no company (presumably none of the three companies) had been given a direct order or (awarded) a tender last year.

The Finance Minister also confirmed that the contracts office would blacklist all companies found guilty of VAT corruption.

Not long after this there was egg on the government's face. The Opposition Leader revealed that one of the named companies had, in fact, subsequently been awarded a contract. Not a huge one, but an award just the same. A clearly embarrassed Finance Minister quickly distanced himself from the matter, saying he did not intervene in the award of contracts.

The Prime Minister went a step further. He indulged in a bit of legal sophistry, indicating that in the VAT fraud case individuals had been found guilty, not companies. That contrasted with the exchange which took place over the reply to the VAT corruption parliamentary question. Still, sophistry or not, there did seem to be some legal doubt in the air about whom to blacklist. The government undertook to clear that with suitably focused legislation.

One hopes that the authorities will not take long to place such legislation before the House of Representatives. It will not be an easy task to draft it. The drafters will have to untangle the distinction between an individual, a director and a company to which they belong. They will have to indicate what will happen when a director sits on more than one company; that is, whether being blacklisted in one company, he also blackens other companies, or whether he will carry the blacklisting with him when he becomes a director of another company. The length of time of the blacklisting will also have to be covered.

I'd say that the eventual process will have to start at the Partnerships Registry. Perhaps the requirement of responding to an MFSA personal questionnaire when offered a directorship on, say, a financial company should be properly extended to directors of domestic-owned companies.

The legal beavers have a lot to look into before they come up with a draft, and then the House of Representatives will have much examining to do, particularly at the committee stage.

All that is in the (hopefully near) future. More immediately I remain concerned over the apparent relative inability of the tax-collecting departments, which should soon be merged into one according to the Budget Speech for 2010, to weed out malpractices. I say that in the context of one of the main advantages of value added taxation, which is the creation of an audit trail started through the VAT mechanism.

How many such trails have been followed since VAT was introduced? And with what conclusion? I suggest the VAT department offers its response to these two questions. If that is not forthcoming maybe some public-spirited MP can place related parliamentary questions. I also dare say that this is a suitable matter for the Public Accounts Committee and the Auditor General to look into. Are the tax systems working nearly as well as they should be? Are they linked together through audit trails?