Two men were acquitted of VAT fraud today after a magistrate ruled that the prosecution had failed to prove its case. The court earlier discounted statements which the accused had made to the police because a lawyer was not present.

Panel beater Stephen Buhagiar, 40, of Msida and Paul Grech, 43, an importer from Magħtab, were part of the VAT scam which dominated the headlines in 2009 when 32 people were charged.

Their returns, were allegedly altered by VAT Department employee Nigel Abela, who is himself, charged with being the mastermind behind the scam in which it is alleged he pocketed €186,000.

It is alleged that he would make it seem that it was the department which owed the businessmen money, rather than the other way round, and the money given to the businessmen by the department would then be shared with Mr Abela.

Mr Grech and Mr Buhagiar were charged with corrupting Mr Abela and defrauding the government.

Magistrate Doreen Clarke ruled that no evidence was brought by the police to sufficiently prove the case according to law.

She said that his police statements could not be taken into consideration because the accused had no access to a lawyer during proceedings but other documents in the form of VAT returns were presented.

Referring to the VAT returns, the court said that although suspicious there was nothing to prove that the accused had the specific intention to defraud the government.