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SARS Busts VAT Fraud Syndicate

by Robert Lee,, London

19 February 2009

The South African Revenue Service (SARS) has publicized its latest victory against value-added tax fraudsters with the announcement that five Ivory Coast nationals were arrested on February 16 for their alleged involvement in a fraud syndicate.

It is alleged by SARS that the suspects, through at least fifty fictitious businesses, claimed millions in fraudulent refunds from the South African government.

The arrest of the five men follows a five month investigation by SARS, the Organized Crime Unit of the South African Police Service (SAPS) and the National Prosecuting Authority.

According to SARS, members of the syndicate allegedly registered fictitious businesses as VAT vendors with SARS with the sole purpose of claiming fraudulent refunds. It is alleged that when investigators suspected irregularities and stopped refunds to these entities, attempts were made to recruit and bribe SARS officials to authorise the pay-out of fraudulent refund claims.

SARS reported that at least fifty entities are involved at this stage of the investigation - a number that is expected to rise as the probe unfolds.

The charges against the accused will include fraud, corruption and racketeering. The defendants were due to appear in court on February 18 for a bail hearing.

SARS has recently significantly tightened procedures around registration of entities as VAT vendors as a measure to combat VAT refund fraud.

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