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VAT
mafia buys luxury hotel in Dubai As more stunning evidence came out on how two of the alleged racketeers made so much that they invested in a 200-room luxury hotel in Dubai, so far five suspects have been arrested in the Inland Revenue Department tax fraud running into billions Following the arrest of former VAT Refund Division Chief and IRD Deputy Commissioner Gnanasiri Z. Jayathilake, the CID also took in Assistant Commissioner A.W. Ambeypitiya and private auditor M.H.M. Rizwan while textile tycoon S. Subramanian surrendered through his lawyers. The 26-year-old auditor Rizwan is alleged to have deposited some of the fraudulent VAT refund cheques to the value of hundreds of millions of rupees through an audit firm owned by his father, detectives said. Mr. Rizwan was arrested by detectives at the Bandaranaike International Airport while he was allegedly attempting to fly to India. Mr. Rizwan’s father is alleged to have fled to Japan on Mach 24. The sensational VAT fraud was first detected by the Auditor General who found that billions of rupees had been refunded fraudulently to fictitious companies in a huge racket involving top IRD officers and other racketeers. CID financial crimes detectives who were called in found that as many as 71 fraudulent cheques had been issued for a staggering 3.57 billion rupees and with more than 150 other checques believed to have been issued, the total might reach a staggering ten billion rupees, detectives said. With the possibility of other alleged racketeers might also attempting to flee the country, the BIA has been put on full alert to nab them. The other suspects allegedly involved in the VAT fraud include Mohamed Cassim Shaffik, M. Subayara, Bakir Mohamed Riyaz, R. Murshid, S.L. Abdul Kareem, Mira Sahib Liyakath Ali, S.L Abdul Kareem, A.K. Kularathna and Kamil Kuthubdeen. Among the alleged godfathers of the VAT mafia are shipping tycoon Kamil Kuthubdeen and textile businessman Rasheed Murshid. Mr. Kuthubdeen is alleged to have prepared the documents for the import and export while Mr. Murshid collected the fraudulent cheques allegedly approved by Deputy Commissioner Jayathilake, detectives said. Mr. Kuthubdeen is believed to have fled the country on a forged passport, was earlier alleged to be involved in cigarette-smuggling rackets to the tune of hundreds of millions of rupees. Mr.
Murshid who is believed to have fled to Malaysia was earlier allegedly
involved in a credit card fraud in Singapore, detectives said. From the fraudulent VAT funds last year, the two alleged racketeers are believed to have made a colossal investment in a 200-room luxury hotel in Dubai and shipping projects. Mr. Kuthubdeen who lives in Colombo 7 and Mr. Murshid had bought several textile companies including Minipe Garments (PVT) Ltd, Inimag Kandy (Pvt) Ltd, Inimag Dambulla (Pvt) Ltd, World Gate Apparel (Pvt) Ltd and World Gate Euro (Pvt) Ltd. Most of them were on the brink of bankruptcy and some were not even registered. Mr. Murshid, to avoid detection, is alleged to have changed his operating offices from place to place. When the scam was being exposed, Mr. Murshid is alleged to have destroyed computers, tax files and other documents. He allegedly began to register all his factories in the name of one company which is known as MASS World Garments (Pvt) Ltd. He did not only change the names and registration but also changed the board of directors. He even started making assets transfers in the name of his family members and even the minor staff in his company to portray an image of a Good Samaritan in the eyes of the law, the detectives alleged. In the meantime the duo managed to get several others involved in the scam. The CID is also hunting for Mr. Murshid’s brother-in-law Ashraff, who is alleged to have worked out a network whereby Customs officers were heavily bribed as part of the huge VAT scam. Besides Mr. Kuthubdeen and Mr. Murshid, the other major player in the alleged fraud was businessman S. Subramaniam, better known as Harry. Mr. Subramaniam who is in remand is alleged to have received five cheques for as much as Rs. 646 million as VAT refunds though his five companies were hardly involved in any trading. Mr. Subramanian who also lives in Colombo 7 is the owner of five garment factories in India and two in Vietnam. He is the owner of Lotus Apparel (PVT) Ltd, Lotus Garments (PVT) Ltd and Lanka Universal Exports (PVT) Ltd. Subramanian had received as VAT refund Rs. 98 million for Lotus Apparel (PVT) Ltd, Rs. 127 million for Lotus garments (PVT) Ltd and Rs. 139 million for Lanka Universal Exports (PVT) Ltd. Out of the three factories owned by Subramaniam and mentioned in the VAT fraud Lotus Garments (PVT) Ltd and Lanka Universal Exports (PVT) Ltd is not registered under the companies act and thus do not exist. The
only other director of these companies was Mr. Subramaniam's wife.
CID investigations have revealed Mr. Subramaniam has about Rs. 500
million deposited in the Hatton National Bank and the Indian Bank.
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